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nsw_caselaw:54a636e73004de94513d96fd:34 | nsw_caselaw:54a636e73004de94513d96fd | "11.6 However, the concept of authorised share capital no longer achieves its original goal of allowing a company's creditors to assess the size of the company's business undertaking. There are 3 reasons for this:
(a) a company does not have to issue shares up to the amount of its authorised share capital
(b) a company may finance its activities through debt
(c) a company may increase or decrease the amount of its authorised share capital by ordinary resolution, and without notice to its creditors.
11.7 In light of these considerations, the Law will no longer include the requirement in current s 117(1)(b) that a company limited by shares must include in its constitution a statement indicating the amount of its authorised share capital. Consequently, there will be no need for a process to increase or decrease authorised share capital and current s 193(1)(a) and (e) will be repealed.
11.8 Currently, a company's authorised share capital may be used to prevent the directors from diluting the shareholders' interest in the company or bringing new members into the company without the consent of existing shareholders.
This facility may be particularly useful in the case of joint venture companies. However, the same effect can also be achieved by having a constitution which sets a numerical limit on the number of shares that the directors may issue."
169The reasons for removing the concept of par value were explained in the Explanatory Memorandum:
"11.22 A share is a proportionate interest in the net worth of a company's undertakings. A person trying to gauge the size of a shareholder's investment in a company would need to look beyond the par value of the shareholder's shares, because par value is simply an arbitrary monetary denomination attributed to the shares.
Rather, a potential investor would be interested in the proportionate size of the shareholder's actual contribution to the capital of the company.
For example, if a shareholder owns 10% of all issued shares in a company, a potential investor would be interested in the current value of those shares (that is, 10% of the current net value of the company's undertakings). The fact that the shares have a par value of, for example, $1 each would give no indication of the current value of the shares.
11.23 Par value may also be misleading to an unsophisticated investor. A share with a par value of $5 being offered for sale at $2 may appear to be a bargain. However, the share might in fact be worth less than $2.
11.24 In its November 1990 report, Shares of no par value and partly-paid shares (Report No 11), the Companies and Securities Law Review Committee canvassed the arguments about par value, and recommended that companies be given the option of issuing no par value shares.
However, the Bill does not adopt this approach because a system that permitted both par value and no par value shares would unnecessarily complicate the Law and its administration.
11.25 The Bill will provide that shares no longer have par value (Bill Schedule 5 Item 10 s 254C). This will also apply to shares issued before commencement of Schedule 5 (Bill Schedule 5 item 31 s 1444).
These changes will have the effect of preventing companies from issuing par value shares. The Bill will preserve the effect of existing contracts and other instruments, executed before commencement, that refer to the par value of a share (bill Schedule 5 Item 31 s 1445)."
170These provisions confirm the meaning that I would otherwise derive from the text of the Act, and clarify any obscurity arising from s 1427 being a statutory provision purporting to "repeal" provisions in the constitutions of all the companies in Australia.
171In Re Yanollee Pty Ltd (in liq) [2006] NSWSC 705; (2006) 24 ACLC 1087 Barrett J considered the effect of s 1427(1) of the Company Law Review Act. He came to the same conclusion as I have reached. He said, at [15]: | [
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] | null |
|
nsw_caselaw:54a636e73004de94513d96fd:19 | nsw_caselaw:54a636e73004de94513d96fd | She succeeded in that part of her case and thus produced certainty as to the state of the company's share capital and the way in which it is held (or, at least, such certainty as exists in the context of a pending appeal from Hamilton AJ's decision).
The attainment of that certainty may, in my view, be regarded as a legitimate preliminary to any decision whether or not to institute winding up proceedings in relation to the company.
I am not persuaded that Mrs Beck should, in the relevant sense, have put the question of winding up of LWC in issue in the 2007 proceedings. I therefore do not accept the defendants' submission that Anshun principles would have precluded the making of a winding up order in these proceedings. "
93Mr Jackson submits that in this course of reasoning in the primary judge posed the wrong question for himself. Mr Jackson submits that the issue was not whether Tami "should, in the relevant sense, have put the question of winding up of LWC in issue in the 2007 proceedings".
Rather, he submits, the question of the validity of the directors' appointment should, in the relevant sense, have been put in issue in the proceedings.
Mr Jackson submits that whether Ami had been validly appointed as a director was directly relevant to the allegations in the 2007 proceeding that Ami had "wrongfully caused the purported redemption" of the 'C' shares and that he had "neglected to rectify the register".
94The principles governing Anshun estoppel are not a matter of controversy in this case.
95In Henderson v Henderson (1843) 3 Hare 100 at 115; 67 ER 313 at 319 Sir James Wigram VC said:
"...
where a given matter becomes the subject of litigation in, and of adjudication by, a Court of competent jurisdiction, the Court requires the parties to that litigation to bring forward their whole case,
and will not (except under special circumstances) permit the same parties to open the same subject of litigation in respect of [a] matter which might have been brought forward as part of the subject in contest, but which was not brought forward, only because they have, from negligence, inadvertence, or even accident, omitted part of their case.
The plea of res judicata applies, except in special cases, not only to points upon which the Court was actually required by the parties to form an opinion and pronounce a judgment, but to every point which properly belonged to the subject of litigation, and which the parties, exercising reasonable diligence, might have brought forward at the time."
96In Port of Melbourne Authority v Anshun Pty Ltd at 598, Gibbs CJ, Mason and Aickin JJ approved that statement of principle.
At 602, their Honours rejected, as going too far, the statement of Lord Kilbrandon in Yat Tung Investment Co Ltd v Dao Heng Bank Ltd [1975] AC 581 at 590 that it was "an abuse of process to raise in subsequent proceedings matters which could and therefore should have been litigated in the earlier proceedings". It was wrong because in that context "could" did not entail "should".
Their Honours also, at that page, said that it was "not of great utility" to ask whether "the issue in question was so clearly part of the subject matter of the initial litigation and so clearly could have been raised that it would be an abuse of process to allow a new proceeding.
" The test that their Honours laid down, at 602, was that this type of estoppel would not arise unless the matter sought to be relied upon in the second action "was so relevant to the subject matter of the first action that it would have been unreasonable not to rely on it."
97As Allsop P pointed out in Champerslife Pty Ltd v Manojlovski [2010] NSWCA 33; (2010) 75 NSWLR 245 at [3], deciding whether the matter in question was so relevant that it can be said to have been unreasonable not to rely upon it in the first proceeding involves "a value judgment to be made referable to the proper conduct of modern ligation". | [
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|
nsw_caselaw:54a636e73004de94513d96fd:31 | nsw_caselaw:54a636e73004de94513d96fd | 154The primary judge held that validating the appointment of Helen as a director would open the way to a restoration of workable governance mechanisms to the Company, even though the court made no order to remove the invalidity of Ami's continuing in office. He described, at [178]-[180], how the restoration of workable governance would be achieved:
"... Helen Weinstock will be able to act under the combination of article 87 and article 69 to appoint an additional director to bring the number of directors in office up to the quorum of two (which is also the permitted minimum).
Indeed, she will no doubt consider herself duty-bound to do so in order that a functioning board may exist. Any director so appointed by Helen Weinstock will hold office free from the limitation on tenure stated in article 69.
Helen Weinstock and the new appointee will be able to exercise all the powers of the board of directors, including the power to manage the business of LWC and to exercise all the powers of the company that are not reserved to the company in general meeting (article 75).
Among the powers thus at the disposal of the board of directors will be the power to issue new shares (article 4), including shares in classes "E" to "N" which carry voting rights. I say nothing about whether it would or might be appropriate for that power to be exercised.
The point is that there exists (or, rather, can be brought into existence) a means of changing the present situation in which no member is entitled to vote at a general meeting of the company."
155Mr McHugh submits that the primary judge was mistaken in deciding that the board of directors would be able to issue voting shares.
156Clause 3 of the Memorandum of Association of the Company provided:
"The amount of share capital with which the Company proposes to be registered is twenty thousand dollars ($20,000.00) divided into twenty thousand (20,000) shares of One dollar ($1.00) each."
157Article 3(1) states the manner in which the capital of the Company is divided into classes, while Articles 3(2)-3(5) state the respective rights that attach to the various classes of 'A' to 'D' shares.
No special provision states the rights of the various classes of ordinary shares that are part of the authorised capital. Articles 3(6)-3(15) confer on the Company the power "to create and issue" further shares that rank pari passu with shares of the various classes of ordinary shares. Article 4 provides:
"The Shares of the Company for the time being unissued (whether forming part of the original capital or of any increase in capital) shall be under the control of the directors who may allot or otherwise dispose of the same to such persons on such terms and conditions and at such times as the directors think fit ..."
Article 43 confers on the Company the power, by ordinary resolution, to (inter alia):
"Increase the share capital by such sum to be divided into shares of such amount as the resolution shall prescribe."
Article 75 confers on the directors a general power to manage the business of the Company, except insofar as the articles or the Company in general meeting might regulate that power.
158That group of provisions was cast in language that presupposed principles developed in the nineteenth century, when it became possible to incorporate a company by a process of registration of documents by a government official. The artificial entity so created arose from at least seven (later two) people associating together to become members of the company.
The company had, as a result of being incorporated, the power to raise from its members a particular sum of money, the authorised capital of the company. Even before that sum of money was raised, the potential sum of money was itself notionally divided into smaller parts, called "shares", each of which represented an appropriate proportion of the total amount that the company was authorised to raise. | [
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|
nsw_caselaw:54a636e73004de94513d96fd:25 | nsw_caselaw:54a636e73004de94513d96fd | "No provision of the constitution was disobeyed. An attempt to take some course allowed by the constitution did not miscarry because of failure to take a step contemplated by the constitution [Leo] and [Hedy] made appointments under article 69.
The appointments took effect in accordance with that article and continued until the end point fixed by the article. There was no 'contravention' when, at that end point, the appointments expired." ([144])
124Mr McHugh sought to use the primary judge's refusal to validate Ami's appointment as a basis for distinguishing the present case from Australian Continental Resources. That case gave consideration to the application of s 366(3) Companies Ordinance 1962 (ACT), a predecessor of s 1322 Corporations Act. So far as relevant s 366(3) Companies Ordinance provided:
"Without affecting the generality of sub-sections (1) and (2) of this section or of any other provision of this Ordinance, where any omission, defect,
error or irregularity (including the absence of a quorum at any meeting of a company or of the directors or creditors of a company, or at a joint meeting of creditors and members of a company) has occurred in the management or administration of a company whereby-
(a) a breach of any of the provisions of this Ordinance has occurred;
(b) there has been default in the observance of the memorandum or articles of the company; or
(c) any proceedings at or in connexion with any meeting of the company or of the directors or creditors of the company or a joint meeting of creditors and members of the company or any assemblage purporting to be such a meeting, have been rendered ineffective, including the failure to make or lodge any declaration of solvency pursuant to section two hundred and fifty-seven of this Ordinance,
the Court
(d) may, either of its own motion or on the application of any interested person, make such order as it thinks fit to rectify, or cause to be rectified or to negative or modify, or cause to be modified,
the consequences in law of any such omission, defect, error or irregularity or to validate any act, matter or thing rendered or alleged to have been rendered invalid by or as a result of any such omission, defect, error or irregularity;
(e) shall, before making any such order, satisfy itself that such an order would not do injustice to the company or to any member or creditor thereof;
(f) where any such order is made, may give such ancillary or consequential directions as it thinks fit; and
(g) may determine what notice or summons is to be given to other persons of the intention to make any such application or of the intention to make such an order and whether and how it should be given or served and whether it should be advertised in any newspaper."
125There is a fundamental respect in which the wording of s 1322(4) Corporations Act differs from that of s 366(3) Companies Ordinance 1962.
The structure of the former s 366(3) was to first identify, in its chapeau and in paras (a), (b), (c) and (e) a set of circumstances in which the sub-section could operate, and then identify in paras (d), (f) and (g) various types of orders that the court could make in those circumstances.
The only preconditions for the operation of s 1322(4) are that there is an "application by any interested person", and that the requirements of s 1322(6) are met.
Once there is an "application by any interested person" the rest of s 1322(4) is concerned with nothing but identification of types of orders that can be made.
That difference in structure has the consequence that decisions under s 366(3) are of very limited help in deciding the scope of the power under s 1322(4)(a). However, I will go on to consider the consequences that Mr McHugh submits follow from Australian Continental Resources.
126In Australian Continental Resources, s 366(3) was invoked concerning the appointment of three directors, Messrs Cowper, Elliott and Ware. Mr Cowper's appointment was invalid because he did not hold the necessary qualification shares at the time of his purported appointment. | [
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] | null |
|
nsw_caselaw:54a636e73004de94513d96fd:20 | nsw_caselaw:54a636e73004de94513d96fd | 98Mr McHugh submitted, in reliance on Champerslife at [107], that the evidence upon which a court considers whether there is an Anshun estoppel is "restricted to the pleadings in both proceedings and the reasons for judgment in the earlier".
For the reason I gave in C G Maloney Pty Ltd v Noon [2011] NSWCA 397 at [63]-[68], I do not accept the accuracy of that proposition. However, as the arguments of both sides on this topic were put, the scope of the admissible evidence for determining whether there is an Anshun estoppel is not a matter of importance.
99The claim that Tami made in the 2007 proceedings concerning redemption of the 'C' shares was a narrow one involving no disputed issues of fact. It was whether the 'C' shares answered the statutory description of redeemable preference shares. The allegation that she made in para 57D of the Amended Statement of Claim in the 2007 proceedings needs to be read as a whole.
Read in that way, the allegation in 57D(f) is nothing more than an allegation that Ami purported to bring about a result (redemption of Hedy's 'C' shares) that it was legally impossible to achieve, in light of the rights that attached to the 'C' shares and the other issued shares in the Company.
100It well may be that one of the ways in which Tami could have challenged the validity of the redemption of Hedy's 'C' shares was by alleging that the corporate acts that purported to effect that redemption were all invalid because the Company had no properly appointed officers.
However, success on that ground would not have solved the problem of whether in principle the shares were capable of redemption. That question of principle is one that would need to be considered even if Ami and Helen could extricate the Company from the Sargasso Sea in which it had become becalmed.
The extra evidence and argument that would be needed to allege that the particular corporate act by which the redemption purported to be effected was invalid would (as the present proceedings show) be considerable.
Even now, the use to which Tami seeks to put her contention that the Company is without proper governance is to achieve the winding up of the Company, not to attack the validity of the redemption of the 'C' shares.
101In all these circumstances, I would not uphold the contention that the question of whether Ami was validly appointed as a director was so relevant to the subject matter of the 2007 proceedings that it was unreasonable for Tami not to rely on it.
The Validation Order - Generally
102The relevant portions of s 1322 Corporations Act are:
"(4) Subject to the following provisions of this section but without limiting the generality of any other provision of this Act, the Court may, on application by any interested person, make all or any of the following orders, either unconditionally or subject to such conditions as the Court imposes:
(a) an order declaring that any act, matter or thing purporting to have been done, or any proceeding purporting to have been instituted or taken, under this Act or in relation to a corporation is not invalid by reason of any contravention of a provision of this Act or a provision of the constitution of a corporation;
...
and may make such consequential or ancillary orders as the Court thinks fit.
...
(6) The Court must not make an order under this section unless it is satisfied:
(a) in the case of an order referred to in paragraph (4)(a):
(i) that the act, matter or thing, or the proceeding, referred to in that paragraph is essentially of a procedural nature;
(ii) that the person or persons concerned in or party to the contravention or failure acted honestly; or
(iii) that it is just and equitable that the order be made; and
...
(c) in every case--that no substantial injustice has been or is likely to be caused to any person."
103It is common ground (and in any event, in light of the "or" at the end of s 1322(6)(a)(ii), clearly correct) that only one of the paragraphs in 1322(6)(a)(i), (ii) and (iii) need be satisfied as a precondition to the making of an order. | [
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|
nsw_caselaw:54a636e73004de94513d96fd:33 | nsw_caselaw:54a636e73004de94513d96fd | 163The CLR Act should be interpreted as a whole. As well as containing s 1427(1), it also made provision for a new s 254C of the Corporations Act, which stated: "shares of a company have no par value". However, that did not mean that the notion of an amount paid on shares disappeared from the legislation. Section 169(3) required a company that had a share capital to record in its register:
"If the company has a share capital, the register must also show:
(a) the date on which every allotment of shares takes place; and
(b) the number of shares in each allotment; and
(c) the shares held by each member; and
(d) the class of shares; and
(e) the share numbers (if any), or share certificate numbers (if any), of the shares; and
(ea) the amount paid on the shares; and
(eb) whether or not the shares are fully paid; and
(f) the amount unpaid on the shares (if any)."
164Some exceptions are created by s 169(4) and (5):
"(4) The register does not have to show the amount unpaid on the shares (see paragraph (1)(f)) if:
(a) all of the company's shares were issued before 1 July 1998; and
(b) the register continues to show the par values of the shares as they were immediately before 1 July 1998.
(5) The register does not have to show the amount unpaid on the shares (see paragraph (1)(f)) if:
(a) all of the company's shares were issued before 1 July 1998; and
(b) the company is not a listed company."
165Those exceptions do not detract from there still being an "amount paid" on shares, and a notion of shares being "fully paid". They demonstrate that the notions of "allotment" and "issuing" of shares have not been made redundant.
Section 124 of the Corporations Act, introduced by the CLR Act, provides that a company's powers include power to "issue ... shares" and "grant options over unissued shares".
166The CLR Act must be construed in a way that gives effect to its purpose, as shown in the language of the statute.
There is a distinct oddity in the language of s 1427(1) of the CLR Act in that it says that it "repeals" provisions in documents that are in many respects contracts between private persons, and that are not themselves created by legislation (though they are given part of their legal effectiveness by legislation).
The "repeal" that s 1427 effects is a wholesale repeal in what must be thousands of documents that would inevitably not be in a common form, and whose precise terms the legislators could not be taken to know.
That makes one think that the "repeal" is not so much a deleting of precise words, but rather a requirement that the provisions of the constitutions referred to be treated as inefficacious in certain ways.
So understood, the section has the effect that any provision in the constitution of a company that has the effect in substance of stating (in whatever words) the amount of the capital of the company, or has the effect in substance of dividing the capital into shares that are of a fixed amount, is no longer efficacious.
That is not the same as saying that a provision that says that the capital of a company is divided into shares is inefficacious. It is the twin notions of a company having an authorised capital, and that is divided into shares that each have a fractional part of the authorised capital attributed to them as a "par value" that are being removed from the law.
167It is legitimate, under s 15AB(1) Acts Interpretation Act to use extrinsic material:
"(a) to confirm that the meaning of the provision is the ordinary meaning conveyed by the text of the provision taking into account its context in the Act and the purpose or object underlying the Act; or
(b) to determine the meaning of the provision when:
(i) the provision is ambiguous or obscure; or
(ii) the ordinary meaning conveyed by the text of the provision taking into account its context in the Act and the purpose or object underlying the Act leads to a result that is manifestly absurd or is unreasonable."
168The Explanatory Memorandum to the Company Law Review Bill 1997 stated: | [
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|
nsw_caselaw:54a636e73004de94513d96fd:15 | nsw_caselaw:54a636e73004de94513d96fd | 73Blackburn J held that Mr Macarthur-Stanham had power by himself, under an article not materially different to Article 87 in the present case, to increase the number of directors, and that s 119 was not limited to acts of directors affecting persons outside the company. Blackburn J continued, at 413-4:
"Counsel also relied on the principle of Morris v Kanssen [1946] AC 451; [1946] 1 All ER 586 and the dicta of Kitto J in Grant v John Grant & Sons Pty Ltd (1950) 82 CLR 1, at 52 and 53; the distinction between the defective exercise of a power and the non-exercise or non-existence of the power.
But the principle derived by Kitto J from Morris v Kanssen cannot apply to Mr Macarthur-Stanham and what he did at the meeting on 3 April.
He had been appointed in the first place - it must be presumed, validly; and the defect arose from his later disqualification under art 71(d).
In my opinion, therefore, the purported appointment of Messrs Elliott and Ware by Mr Macarthur-Stanham on 3 April 1975 acting as a director at what purported to be a directors' meeting, was an act validated by s 119; strictly speaking, it was an act which, when s 119 is applied to it, is not invalidated by Mr Macarthur-Stanham's lack of qualification shares."
Their appointment was, however, invalid for another reason, in that they themselves did not hold the necessary qualification shares. Blackburn J made an order under s 366(3) Companies Ordinance 1962 (ACT) to cure the invalidity arising from that source. I consider his reasons for so doing at [124]-[129] below.
74The written submissions signed by Mr Jackson's instructing solicitor stated that Blackburn J:
"...concluded that the effect of s 119 of the Companies Ordinance was to validate the appointment of Messrs Elliott and Ware by Mr Macarthur-Stanham in circumstances where Mr Macarthur-Stanham had not been qualified for appointment as a director."
75That statement has the potential to mislead. Mr Macarthur-Stanham had been validly appointed as a director, but had ceased to be a director by virtue of the article that required him to continue to hold qualification shares.
That difference is important for understanding the reasoning of Blackburn J in the passage I have quoted at [73] above. As well, understanding that passage requires a discussion of the cases on which Blackburn J relied.
76Morris v Kanssen [1946] AC 459 concerned a company that had an article in identical terms to the Article 92 upon which Mr Jackson relies. There was also at the time a statutory provision identical to s 119 Companies Ordinance 1962. Lord Simonds (with whom Viscount Simon, Lord Thankerton, Lord Porter and Lord Uthwatt agreed), said at 471:
"There is, as it appears to me, a vital distinction between (a) an appointment in which there is a defect or, in other words, a defective appointment, and (b) no appointment at all.
In the first case it is implied that some act is done which purports to be an appointment but is by reason of some defect inadequate for the purpose; in the second case there is not a defect, there is no act at all. The section does not say that the acts of a person acting as director shall be valid notwithstanding that it is afterwards discovered that he was not appointed a director.
Even if it did, it might well be contended that at least a purported appointment was postulated. But it does not do so, and it would, I think, be doing violence to plain language to construe the section as covering a case in which there was been no genuine attempt to appoint at all.
These observations apply equally where the term of office of a director has expired, but he nevertheless continues to act as a director, and where the office has been from the outset usurped without the colour of authority." | [
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] | null |
|
nsw_caselaw:54a636e73004de94513d96fd:13 | nsw_caselaw:54a636e73004de94513d96fd | The reference to a person holding office 'only until' the meeting does not appear until the second part of article 69; and the words 'so retires' in article 67 - placing emphasis on 'so', in the sense of 'thus' or 'in this way' - obviously cannot refer forward to article 69 as well as back to article 66.
The clear conclusion, as a matter of construction, is that, since the second part of article 67 (beginning 'and in default') refers only to the case where an office vacated by retirement 'at' the meeting is not filled by the meeting itself, the default mechanism cannot and does not apply to a position on the board that was held 'only until' the meeting by a person appointed under article 69.
It follows that, since the positions occupied by Mrs Beck and A D Weinstock from 29 April 1973 were of that kind, the default mechanism in the 'default' part of article 67 could not operate in relation to either of them at the 31 December 1973 annual general meeting, with the result that neither of them was a director beyond the point at which that meeting commenced."
The Argument Against the Primary Judge's Reasoning
63Mr Jackson QC submits that "retirement" can apply to ceasing to hold office through an action or event that is not voluntary (as happens when there is a compulsory retiring age for the office).
He submits that as a matter of language there is no reason why a director appointed to fill a casual vacancy, and who ceases to hold office pursuant to Article 69, should not be regarded as a "retiring director" for the purposes of Article 66, and thus, as being eligible for a deemed re-election under Article 67.
He submits that the articles in the present case should be construed on the basis that it was contemplated that no voting shares would be issued prior to the death of Leo.
He refers to the remarks of Handley AJA in Weinstock v Beck at [106] ([26] above). He submits that, when it was contemplated no voting shares would be issued, it was necessary to have a mechanism to maintain continuity of the board without a requirement that the company in general meeting perform some positive act, and that Article 66 provided that mechanism.
He submits it should be construed so that all directors, whenever and however appointed, were to retire from office at the annual general meeting, and then all be deemed re-elected pursuant to Article 67. He submits that that construction would enable the board to be composed in a manner determined by the directors.
64I do not accept that argument. First, the articles in the present case are not relevantly distinguishable from those in Eyre v Milton Pty Ltd as a matter of language.
Though Mr Jackson submitted at one stage that in Eyre v Milton Pty Ltd "there does not appear to have been an article like Article 66 in the present case", article 85 in Eyre v Milton Pty Ltd included a provision that said "a retiring director shall be eligible for re-election at the meeting at which he retires and shall act as a director throughout that meeting."
65Second, a difficulty with the construction that Mr Jackson propounds is that if his construction of Article 66 were correct it would be unnecessary, and perhaps contradictory, for Article 69 to state "any director so appointed shall hold office only until the next following Annual General Meeting and shall then be eligible for re-election".
Rather, the general provision in Article 66 should be read as being subject to the more specific provision in Article 69. So construed, Article 66 requires the retirement of each person who at the time of an AGM is a director. Because directors elected to fulfil a casual vacancy had ceased to hold office immediately before the AGM, Article 66 does not apply to them.
66Third, there is a textual problem with reaching the conclusion that it was contemplated that no voting shares would be issued before the death of Leo. It is that Article 3(2)(e) expressly gives Leo the right to convert the 'A' preference shares into voting shares. | [
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] | null |
|
nsw_caselaw:54a636e73004de94513d96fd:48 | nsw_caselaw:54a636e73004de94513d96fd | The directors may also be paid all travelling, hotel and other expenses properly incurred by them in attending and returning from meetings of the directors or any committee of the directors or general meetings of the Company or in connection with the business of the Company.
Article 73:
The office of director shall become vacant if the director:-
(a) ceases to be a director by virtue of the Act;
(b) becomes bankrupt or makes any arrangement or composition with his creditors generally;
(c) becomes prohibited from being a director by reason of any order made under the Act;
(d) becomes of unsound mind or a person whose person or estate is liable to be dealt with in any way under the law relating to mental health;
(e) resigns his office by notice in writing to the Company;
(f) for more than six months is absent without permission of the directors from meetings of the directors held during that period.
Article 75:
The business of the Company shall be managed by the directors, who may pay all expenses incurred in promoting and registering the Company and may exercise all such powers of the Company as are not, by the Act or by these Articles,
required to be exercised by the Company in general meeting, subject nevertheless, to any of these articles, to the provisions of the Act and to such regulations being not inconsistent with the aforesaid Articles or provisions as may be prescribed by the Company in general meeting;
but no regulation made by the Company in general meeting shall invalidate any prior act of the directors which would have been valid if that regulation had not been made.
Article 82:
The directors may meet together for the despatch of business adjourn and otherwise regulate their meetings as they think fit. A director may at any time and the secretary shall on the requisition of a director summon a meeting of the directors.
Article 86:
The quorum necessary for the transaction of the business of the directors may be fixed by the directors, and unless so fixed shall be two.
Article 87:
The continuing directors may act notwithstanding any vacancy in their body, but if and so long as their number is reduced below the number fixed by or pursuant to the Articles of the Company as the necessary quorum of directors,
the continuing directors or director may act for the purpose of increasing the number of directors to that number or of summoning a general meeting of the Company, but for no other purpose.
Article 115:
If the Company is wound up the liquidator may, with the sanction of a special resolution of the Company,
divide amongst the members in kind the whole or any part of the assets of the Company (whether they consist of property of the same kind or not) and may for that purpose set such value as he deems fair upon any property to be divided as aforesaid and may determine how the division shall be carried out as between members or different classes of members.
The liquidator may, with the like sanction, vest the whole or any part of any such assets in trustees upon such trust for the benefit of the contributories as the liquidator, with the like sanction, thinks fit but so that no member shall be compelled to accept any shares or other securities whereon there is any liability.
215YOUNG JA: I have read in draft the reasons of both Campbell JA and those of Sackville AJA. I agree with both that the conclusions reached by Campbell JA on the first three issues are correct for the reasons his Honour has given.
216My brothers differ on the ambit of the operation of s 1322(4)(a) of the Corporations Act 2001 (Cth).
217The question arises over the alleged appointment of Helen Weinstock (Helen) as a director of the first respondent ("the Company"). She was appointed by a de facto director of the Company. | [
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|
nsw_caselaw:54a636e73004de94513d96fd:24 | nsw_caselaw:54a636e73004de94513d96fd | · LNQ had not removed Peter and appointed Sidney as a director of LNQ by passing resolutions in conformity with s 249B, although the soi-disant directors, Sidney and Mr Bowman, apparently presumed that there was an effective removal of Peter and appointment of Sidney upon or before the giving of the notice by Vesudi on 25 February 2009.
In my opinion these reasons for the invalidity of the appointment by Valofo of the appellants as its administrators fall within the expression 'contravention of the provision of the Act', the provision of the Act being s 249B."
119Mr McHugh submits that, in various ways, the validation order made in the present case goes further than validation orders made in previous decided cases.
For example, he submits that in Jordan v Avram Mr Avram actually approved of the appointment of the two Jordan directors, and had power to appoint them. In both North Sydney Brick & Tile v Darvall and Re Centennial Coal Co, the company had power to pass the necessary resolutions, but did not do so.
In Sheahan v Londish it would have been possible for each of LNQ and Valofo, successively, to pass valid resolutions under s 249B to put Mr Londish in office, but they omitted to carry out simple acts that were within their power. By contrast, he submits, in the present case Ami had no power at all to appoint Helen as a director.
120Mr McHugh's observations concerning those cases are right, but do not dictate the outcome of the present case. When one is applying a statutory power, one construes the power, and applies it to the facts of the case at hand.
Previous cases that have applied the section can illustrate its proper scope, but only insofar as they decide that certain types of order are within the scope of the statutory power or identify limits to the scope of the power are they the sort of precedents that should be applied directly.
As will appear, the matters to which Mr McHugh points are in my view accidents of the facts of those particular cases, rather than matters that are definitive of the scope of the power under s 1322(4)(a).
121In support of his submission that there has been no "contravention of ...
a provision of the constitution of a corporation", Mr McHugh argues that where a power is exercisable only by a person holding a particular office, and that power is purportedly exercised by a person who does not hold that office and whose appointment to that office cannot be validated, there is no "contravention of the Act or constitution".
He submits that such a situation is neither an infringement of, nor the failure to take advantage of a provision of, the Act or constitution (cf Sheahan v Londish at [161]-[162] and [234]-[236].
) He submits that the section should be construed to permit the court to "validate" an act of a stranger to the Company only if the appointment of that stranger to the relevant office is itself capable of being validated.
122In that connection, Mr McHugh points out that one of the six matters concerning which the primary judge refused to grant validation was "the expiry of the terms of office of ... [Ami] as a consequence of [his] having been appointed 'only until' the 31 December 1973 annual general meeting" ([135](c)).
The primary judge recognised that it was necessary to identify the "provision of the constitution of" the Company "by reason of" the "contravention" of which the matter in question is (or, perhaps, maybe) "invalid". He said that it was necessary for that process of identification to be gone through:
"since the order under s 1322(4)(a) is one declaring a matter to be 'not invalid by reason of' a 'contravention', so that it is the invalidating effect of the 'contravention' that is displaced or reversed by the order." ([142])
123The primary judge was unable to identify a "contravention" in the circumstances in which Ami ceased to hold office: | [
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|
nsw_caselaw:54a636e73004de94513d96fd:27 | nsw_caselaw:54a636e73004de94513d96fd | Owners of 'Shin Kobe Maru' v Empire Shipping Co Inc (1994) 181 CLR 404 at 421; David Grant & Co Pty Ltd v Westpac Banking Corporation (1995) 184 CLR 265 at 275-276 per Gummow J; PMT Partners Pty Ltd (in liq) v Australian National Parks and Wildlife Service (1995) 184 CLR 301 at 313, per Brennan CJ, Gaudron and McHugh JJ;
Oshlack v Richmond River Council (1998) 193 CLR 72 at 81 per Gaudron and Gummow JJ; Australasian Memory v Brien [2000] HCA 30; (2000) 200 CLR 270 at [17]; Mansfield v Director of Public Prosecutions for Western Australia [2006] HCA 38; (2006) 226 CLR 486 at 492 at [10]
132Even at the level of the previous case law, a significant obstacle to the success of the argument that the court lacked power to make the validating order is the decision in Nece Pty Ltd v Ritek Incorporation (1997) 24 ACSR 38.
It arose from a dispute within a joint-venture company. The company's shares were evenly held by the two joint venturers, and each joint-venturer had appointed one director.
In circumstances where relations between the joint-venturers had broken down, the managing director purported to appoint solicitors to act for the company.
In a challenge to the retainer of the company's solicitors, Lehane J held that the managing director did not have implied authority by virtue of his position to appoint solicitors to carry out the particular non-routine task for which the managing director had purported to appoint them. Lehane J refused to validate the appointment by an order under s 1322(4). He said, at 45:
"It is correct, I think, to describe the acts, taken without authority (but capable of authorisation if the appropriate procedures under the articles were followed) as 'invalid' for the purposes of the section: compare North Sydney Brick & Tile Co Ltd v Darvall (1989) 17 NSWLR 327 at 341 ; 15 ACLR 706. ....
I accept that, as Clarke JA expressed it in North Sydney Brick & Tile at NSWLR 341:
... [the section] is of a remedial character and should be accorded, therefore, a liberal interpretation. In particular it has been held that the scope and operation of the section should not be subverted or restricted solely because of the effect which its exercise might occasion to third persons: Omega Estates Pty Ltd v Ganke (1962) 80 WN (NSW) 1218 at 1225; [1963] NSWR 1416 at 1427.'"
133He summarised the relevant principle at 46:
"It is true that cases such as North Sydney Brick & Tile and Omega Estates proceed on the basis that if something is done which has not been properly authorised because, for example,
appropriate resolutions have not been passed or because there is in office no validly elected board of directors, the doing of it without authority may be regarded as a contravention, for these purposes, of the articles of association."
134However, he went on to hold, at 46, that there had been no relevant contravention of the constitution of the company (and had earlier held, at 45, that there was no question of a contravention of the Act):
"The problem in this case, however, is that there is not merely a 'contravention'; there is, it appears to be common ground, deadlock. The reason there is no authority, and no ratification, is that it is not given because one of the parties - particularly, one the directors - whose affirmative vote is needed in order that it should be given is unwilling to give that affirmative vote.
It could hardly be said, where lack of authority resulted from a positive decision of the competent authority of a company - ordinarily the board of directors - to refuse it, that an act done in purported exercise of the authority thus refused was invalid by reason of a contravention of the articles.
That must equally be true, I think, if authority is sought by way of a proposal to the board but refused. The situation can be no different, in my view, where in the circumstances it is plain that authority, if sought, would be refused."
135In the present case the primary judge at [151] accepted the correctness of the principle that Lehane J stated, and that I have set out at [133] above. He said, at [152]: | [
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] | null |
|
nsw_caselaw:54a636e73004de94513d96fd:46 | nsw_caselaw:54a636e73004de94513d96fd | being of the Company on trust for such holder's personal representatives shall be deemed payment to such holder's personal representatives and such payment to the said auditor shall be a full and sufficient discharge to the Company for such payment and shall relieve the Company and its directors from all liability to see to the application of the moneys so paid.
(e) The said 'D' Redeemable Preference Shares shall confer on the holders thereof the right to receive such dividends as may be declared thereon pursuant to Article 101 hereof and subject to the provisions of sub-clause (3) of that Article shall rank as regards such dividends pari passu with the Ordinary Shares in the Company. Such dividends (if any) shall be non-cumulative.
(f) The said 'D' Redeemable Preference Shares shall not carry the right to any further participation in surplus profits or assets.
(6) The Company shall be at liberty from time to time to create and issue further shares ranking in all respects pari passu with the said 1,997 Class 'E' Ordinary Shares.
(7) The Company shall be at liberty from time to time to create and issue further shares ranking in all respects pari passu with the said 1,997 Class 'F' Ordinary Shares.
(8) The Company shall be at liberty from time to time to create and issue further shares ranking in all respects pari passu with the said 1,997 Class 'G' Ordinary Shares.
(9) The Company shall be at liberty from time to time to create and issue further shares ranking in all respects pari passu with the said 1,997 Class 'H' Ordinary Shares.
(10) The Company shall be at liberty from time to time to create and issue further shares ranking in all respects pari passu with the said 1,997 Class 'I' Ordinary Shares.
(11) The Company shall be at liberty from time to time to create and issue further shares ranking in all respects pari passu with the said 1,997 Class 'J' Ordinary Shares.
(12) The Company shall be at liberty from time to time to create and issue further shares ranking in all respects pari passu with the said 1,997 Class 'K' Ordinary Shares.
(13) The Company shall be at liberty from time to time to create and issue further shares ranking in all respects pari passu with the said 1,997 Class 'L' Ordinary Shares.
(14) The Company shall be at liberty from time to time to create and issue further shares ranking in all respects pari passu with the said 1,997 Class 'M' Ordinary Shares.
(15) The Company shall be at liberty from time to time to create and issue further shares ranking in all respects pari passu with the said 1,997 Class 'N' Ordinary Shares.
Article 4:
The shares of the Company for the time being unissued (whether forming part of the original capital or of any increase in capital)
shall be under the control of the directors who may allot or otherwise dispose of the same to such persons on such terms and conditions and at such times as the directors think fit without regard to any implied rights of the holders of any of the
issued shares for the time being to participate in such allotment or disposition and with full power to give to any person the call of any shares either at par or at a premium during such time and for such consideration as the directors think fit.
Article 43
The Company may from time to time by ordinary resolution -
(a) increase the share capital by such sum to be divided into shares of such amount as the resolution shall prescribe;
(b) consolidate and divide all or any of its share capital into shares of larger amount than its existing shares;
(c) subdivide its shares or any of them into shares of smaller amount than is fixed by the Memorandum; so however that in the subdivision the proportion between the amount paid and the amount (if any) unpaid on each reduced share shall be the same as it was in the case of the share from which the reduced share is derived; | [
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] | null |
|
nsw_caselaw:54a636e73004de94513d96fd:40 | nsw_caselaw:54a636e73004de94513d96fd | This case reinforces the submission that section 1322(4) is not available here to cure any problems with the meeting as directors meetings because the relevant meetings here were only purported shareholders meetings. None of the meeting[s] were purported directors meetings - they were meetings of Company members and only Company members.
21. Accordingly, no question of 'irregularity' [s 1322(2)] or 'contravention' [s 1322(6)(a)(ii)] arises. Rather, what has occurred is a question of lack of power of the general meeting to appoint directors in circumstance where the members had no entitlement to vote.
22. In any case, even if the Court was minded to grant the relief sought such relief would be futile. This is because Tami and Ami did not properly 'retire' within the meaning of Article 66. The resolutions, if valid, would accordingly have no operative effect.
23. Even if section 1322 was applied, its application must cease by no later than the AGM held on 30 December 1990. There was no resolution for re-election passed at that meeting. Under the terms of the previous resolutions (if operative as directors resolutions) office was only held to the next AGM [Article 69].
Accordingly, Tami and Ami ceased to be directors no later than at this meeting. There was no 'thing' or 'proceeding' at this meeting that, if validated, would have the effect of changing this.
24. At the next AGM at which a resolution about directors was passed it was resolved that 'the retiring directors who retire in accordance with the Articles of Association, be re-elected directors...'.
Since Tami and Ami had ceased to be directors by no later than the AGM of 30 December 1990, this resolution (even if effective as a directors resolution) did no[t] appoint them as casual or additional directors.
25. During the lifetimes of the only continuing directors - Leo and Hedy - the only resolutions passed at AGMs about directors were in similar terms and did not re-appoint Tami or Ami."
198It is apparent that those paragraphs are dealing with a submission that an order should be made under s 1322(4) validating the resolution of 29 June 1973, and subsequent purported resolutions (or perhaps also deemed resolutions) to appoint Tami or Ami as directors. They are not dealing with any suggestion that the Purported Appointment of Helen be validated.
199Because of the lateness with which the written submission in reply had been produced, counsel for the defendants were permitted to address orally concerning it. Junior counsel for the defendants said:
"The only other point, your Honour, that I would say anything about is the section 1322 point. Apart from relying on the written submissions, I just draw attention again to something in the transcript that our learned friends said yesterday and that is at page 50.
At line 29 our learned friends say: 'In a sense, one of the difficulties...to the various resolutions.
' My learned friend characterises those conclusions as all being the thing that was required to be done and it wasn't done, but, of course, as the plaintiff accepts and as the plaintiff must accept, it depends largely on the way your Honour characterises the defaults that the plaintiff has pointed to and it is for that reason that the 1322 application is made.
I say no more about it than that, your Honour."
The passage of the transcript to which he referred is the passage I have set out at [194].
200Thus, consistently with the affidavit of 10 December 2010, the basis on which the defendants in the court below put their claim for a s 1322 order in submissions did not extend to the basis that the judge ultimately upheld.
Even though at one point counsel for the plaintiff in the court below wondered aloud how a s 1322 order could be made concerning the Purported Appointment, the final address of junior counsel for the defendants did not attempt to embrace that as an issue. In all these circumstances it could not be said that the issue had been litigated in the court below. | [
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|
nsw_caselaw:54a636e73004de94513d96fd:7 | nsw_caselaw:54a636e73004de94513d96fd | 38However, the minute book does not contain anything that purports to be a resolution of a general meeting that related in any way to rotation of directors. In any event, because of the absence of voting shares, no resolution relating to the rotation of directors could have been passed at any general meeting. Thus, Article 66 continued to require each director to retire at every AGM.
39Minutes for AGMs in 1983 and some (but not all) subsequent years were in evidence. The primary judge held that those meetings were not relevant to the questions before him. That aspect of his decision is not disputed.
40The minute book shows that from April 1975 the usual participants in a meeting of directors were Leo and Ami, but that sometimes Hedy and Tami were also present. Tami resigned as a director on 8 January 1982, and is not shown as being present at directors' meetings after that date.
The Purported Appointment on 30 July 2003
41Leo died on 29 July 2003.
42It was common ground on the pleadings that Hedy was diagnosed with Alzheimer's disease, that by at least 29 July 2003 she had experienced a total loss of capacity, and that in consequence her office as director of the Company had become vacant by no later than 29 July 2003. As I have noted, she died in July 2004.
43The minute book contains a document that the heading declares to be a "meeting of director" of the Company held on 30 July 2003. Ami is recorded as being the chairman, and as being the director who was present. The minute records:
BUSINESS: The company was notified of the death of Leo Arie Weinstock (Director) on 29th July 2003
Hedy Jadwiga Weinstock (Director/Secretary) who has advanced Alzheimer's disease was declared incapable of performing the duties of Director/Secretary of the company according to clause 73(d) of the Articles of Association of the company where a director
"becomes of unsound mind or a person whose person or estate is liable to be dealt with in anyway under the law relating to mental health"
APPOINTMENT OF DIRECTOR: It was RESOLVED in accordance with clause 87 of the Articles of Association of the company which states;
"...if and so long as their number is reduced below the number fixed by or pursuant to the Articles of the Company as quorum of directors, the continuing directors or director may act for the purpose of increasing the number of directors to that number or of summoning a general meeting of the company, but for no other purpose."
that Amiram David Weinstock being the sole remaining director of the company appoint Helen Weinstock as an additional director.
Helen Weinstock has consented to be a director."
Issue 1 - Was Ami a Director on 30 July 2003?
44The issues raised by the cross-appeal are logically prior to the other issues, and hence I shall deal with them first.
The Primary Judge's Reasoning
45The primary judge held that the meeting on 29 June 1973 ([33] above) was an effective appointment of Tami and Ami as directors, in the terms of the resolution that the minutes record as having been passed.
He held that, notwithstanding that the non-existence of voting shares had the consequence that there could not be a resolution of a general meeting, and that the resolution purported to be a resolution of a general meeting, it took effect as an appointment under Article 69.
He held that the appointment was effective because the two people present on 29 June 1973 were in fact the only directors of the Company; they were purporting to transact company business; they evinced an intention to resolve then and there to appoint Tami and Ami as additional directors until the next AGM; and they actually had power under Article 69 to make such an appointment.
These steps in the primary judge's reasoning are not in dispute on the appeal.
46The next step in the argument was a detailed consideration of what counted as an "annual general meeting" within the meaning of the articles, as they were applicable to the Company from time to time. | [
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|
nsw_caselaw:54a636e73004de94513d96fd:37 | nsw_caselaw:54a636e73004de94513d96fd | "The matters giving rise to the basis for the relief sought by the Defendants in the Interlocutory Process are addressed in paragraphs 9 to 22 of the Points of Claim and paragraphs 7 to 18 of the Points of Defence."
185As mentioned earlier, 10 December 2010 was the day on which the interlocutory process was filed. Tami would be entitled to rely on this clear statement of the basis on which orders under s 1322 were sought.
There was nothing in the identified paragraphs of the Points of Claim and the Points of Defence that flagged that the point on which the Respondent succeeded in the court below would be relied upon. She was entitled to proceed on the basis that no such point would be taken, notwithstanding that it was within the general words of the interlocutory process.
186The hearing took place on 24 and 25 February 2011. In accordance with the usual procedure, each side prepared and served, in advance of the hearing, an outline of submissions.
187The written submissions of Tami's counsel (who did not appear for her in this Court) were dated 9 February 2011. They were to the effect that the Company was in a state of corporate paralysis because there were no validly appointed directors, and it was impossible for a resolution to be passed at a general meeting.
Even worse, according to the submissions, Ami and Helen were continuing to act as though they were directors, and there was no mechanism for their removal. For those reasons, winding up was sought. Nothing was said in them about s 1322.
188The written submissions filed for Ami and Helen (also, purportedly, the Company) were dated 18 February 2011. The submission was made ([6]) that Tami and Ami were validly appointed as directors in 1973, and that the subsequent appointment of Helen was also valid.
189One of the issues that the defendants identified in their written submissions was ([18](a)(iii)):
"if, for any reason, the appointment of Ami and Helen, or the re-election of Ami as directors of LWC was invalid, should that appointment be cured by way of relief under s 1322 of the Act?"
190The defendants submitted, at [24]:
"On the case put forward by both parties, the validity of Helen's appointment depends upon the validity of Ami's appointment. That is, if Ami was a current and validly appointed director of LWC at the time he passed the resolution to appoint Helen as a director, there can be no doubt that such appointment was effective."
The submissions went on to argue that Ami had been validly appointed as a director on 29 June 1973. They then, in the alternative, at [35]-[37] argued for an order under s 1322(4)(a) declaring that the resolution of 29 June 1973 is not invalid.
191Next, at [38]-[55] the written submissions argued that Ami had been validly reelected as a director at the AGMs held in 1973 and thereafter. In the alternative, at [56]-[57] they sought an order under s 1322(4)(a) "declaring that Tami and Ami were re-elected as directors at the AGMs".
192The submissions then turned to the appointment of Helen as a director. I reproduce the totality of the submissions on that topic:
"58. Ami purported to appoint his wife, Helen, as a director of LWC on 30 June 2003 in his capacity as a director of LWC in accordance with Article 69.
There is no dispute between the parties that as at that date, neither Leo or Hedy remained in office as director (by reason of Leo's death the prior day and Hedy's mental incapacity). Accordingly, the appointment of Helen as a director was valid if Ami was a director on that day.
59. For the reasons discussed above, the Defendants submit that Ami was a director of LWC on 30 June 2003 and consequently the resolution to appoint Helen as a director made on 30 June 2003 was valid and effective."
Thus, the written submissions said nothing about seeking relief under s 1322 to validate Helen's appointment. | [
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|
nsw_caselaw:54a636e73004de94513d96fd:9 | nsw_caselaw:54a636e73004de94513d96fd | each reference to 'the Act' in the articles included a reference to replacing or superseding legislation so that the articles' express and imported references to the annual general meeting provisions of the Companies Act 1961 came to include a reference to the substituted provisions on that subject in s 240(1) of the Companies (New South Wales) Code .
79 The possibility that the reference to 'the Act' in article 45 might be read in that way makes it necessary to refer again to the part of article 1 set out at paragraph [73] above.
80 The Companies Act 1961, as in force on 30 April 1971, obviously did not contain any provision that might cause references to it in a company's articles to include references to legislation replacing or superseding it.
The Interpretation Act 1897 (NSW) then in force dealt, in s 25(1), with the case where an Act was 'repealed and re-enacted' (with 're-enacted' including 're-made'). Section 25(1) provided that a reference to that Act in 'an Act or an instrument made under an Act' included a reference to the Act 'as amended or re-enacted'.
81 This provision of the Interpretation Act 1897 in force on 30 April 1971 did not, via the words of article 1 quoted at paragraph [73] above,
cause the reference to the Companies Act 1961 in the article 1 definition of 'the Act' (and in the imported definition of 'annual general meeting') to become a reference instead to the provisions applying in this State from 1 July 1982 as the Companies (New South Wales) Code.
There are two reasons for this. First, the process by which the Code provisions came to be operative did not entail the repeal and re-enactment of the Companies Act 1961.
As stated at paragraph [77] above, the Code provisions were made by the legislature of New South Wales to operate from 1 July 1982 'to the exclusion of' those of the Companies Act 1961, which Act remained unrepealed for a further quarter of a century: see Statute Law (Miscellaneous Provisions) Act 2008 (NSW), s 4 and the first item in part 1 of schedule 4.
Second, the articles of LWC are not 'an instrument made under an Act'.
As is made clear by s 16 of the Companies Act 1961, persons desiring the incorporation of a company having articles of association from inception were required to lodge those articles as a prerequisite to obtaining incorporation, while s 29(1) made it clear that the articles so lodged were 'registered with the memorandum'.
There is thus no concept of a company's articles somehow proceeding from or being produced pursuant to the Companies Act so as to be 'an instrument made under an Act'.
82 On this analysis, therefore, the position is as follows:
(1) The Companies Act 1961 ceased, on 1 July 1982, to be the source of any requirement that [the Company] hold annual general meetings.
(2) The provisions of the Companies (New South Wales) Code with respect to annual general meetings applied of their own force to [the Company] from and after 1 July 1982.
(3) Neither the reference in article 45 to the holding of an annual general meeting 'in accordance with the provisions of the Act' nor the definition of 'annual general meeting' imported into the articles from the Companies Act 1961 was altered, as of 1 July 1982, so as to refer instead to an annual general meeting held in conformity with the Companies (New South Wales) Code.
83 It follows that annual general meetings of [the Company] held after 1 July 1982 in obedience to the requirements of the Companies (New South Wales) Code - and later the Corporations Law of New South Wales - were not 'annual general meetings' within the articles' definition imported from the Companies Act 1961 and were accordingly not meetings referred to in articles 66,
67 and 69 and elsewhere in the articles as 'annual general meetings'. | [
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|
nsw_caselaw:54a636e73004de94513d96fd:30 | nsw_caselaw:54a636e73004de94513d96fd | 147Mr McHugh also submitted, though without independent elaboration, that Ami's purported appointment of Helen was not an act that "purported to have been done in relation to the corporation". I do not accept that that is so.
148The very notion of an act "purporting" to be done is that it is not (or might not be) really done, but that it has the pretence or appearance of being done. Fairly clearly, Ami's attempt to appoint Helen was an act of appointment that purported to be done.
His making of the resolution, and his formal recording of it as a company minute looked like steps in the administration of the company. On the face of it, the minute of the resolution looked like a minute of the sort of resolution that a continuing sole director would have been entitled to make.
149Further, when the Purported Appointment was an act by someone who acted as though he was a director of the company, and purported to be an appointment of another director of the Company, it purported to be done "in relation to" the Company.
It is a commonplace of statutory construction that "in relation to" can express any sort of relationship between two subject matters: Law Society of New South Wales v Bruce (1996) 40 NSWLR 77 per Giles CJ Comm D and cases there cited.
Though there might sometimes be contextual matters that lead one to read the generality of that expression down, I can find no such contextual matters in the present case.
150As well, even though Ami did not validly hold office as a director at the time of the Purported Appointment, he was no stranger to the affairs of the Company. He had ceased to hold office on 31 December 1973, but by the time of the Purported Appointment he had been acting as a director over the entire time from his initial appointment on 29 June 1973, ie, a period of over thirty years.
During that time, there had been no objection to his acting as though he were a director. It is not suggested that he did not honestly believe that he had the power that he purported to exercise.
Indeed, after the Purported Appointment there was no objection for some years to Ami continuing to act as a director, nor to Helen acting as though she were entitled to the office to which Ami had purported to appoint her.
151Similarly to this case, in NRMA v Gould the candidates were not intermeddling strangers to the affairs of the company. As Young J found at 291-292, two of them were directors of companies which had been longstanding members and the third was a member of a trade union which was a member and had also been a member personally in the past. As his Honour found at 293:
"... each of the three defendants mistakenly thought that they were entitled to stand for the Board of Directors of the company. Each, when it was pointed out to them that they were ineligible, took immediate steps to cure the problem and two of them cured the problem within ten minutes of the deadline. The third regularised the position two working days later."
152Though there does not seem to have been an issue in NRMA v Gould about whether the nominations were acts that "purported to have been done in relation to the corporation", those facts would assist in being satisfied that the nominations had that characteristic.
153Mr Jackson pointed out that Ami was within the extended definition of "director" in s 9 of the Corporations Act by virtue of being a person who is not validly appointed as a director, but who acts in the position of a director. While that is true, I have difficulty in seeing how it enters into the construction of s 1322(4).
However, as I have held, the fact that Ami had been a de facto director for decades is relevant to concluding that the Purported Appointment was an "act ... purporting to have been ... taken ... in relation to a corporation". For these reasons, I conclude that the primary judge was right in holding that the order he made was the type that fell within the wording of s 1322(4)(a).
Issue 5 - The Validation Order - Power to Issue Voting Shares | [
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|
nsw_caselaw:54a636e73004de94513d96fd:38 | nsw_caselaw:54a636e73004de94513d96fd | 193At the hearing, the oral submissions of counsel who then appeared for the defendants were completed on 25 February. The defendants' counsel said nothing at all about s 1322 up to the moment when he said: "They are our submissions". There then transpired:
"HIS HONOUR: In reply, Mr [counsel for plaintiffs]?
[COUNSEL FOR PLAINTIFF] Yes, your Honour. I'm just unsure, in light of what has been put orally, whether there is still an application under section 1322.
[COUNSEL FOR DEFENDANT] We rely on our written submissions so far as that is concerned."
194Counsel for the plaintiff then began his address in reply. In his address in reply counsel for the plaintiff made submissions relating to s 1322 that extended over about three pages of the transcript (Black 48-51).
Those submissions dealt with case law concerning s 1322, without any detailed reference to the facts of the instant case, or how s 1322 was to be deployed in the instant case. Perhaps the only exception to that is when he said:
"In a sense, one of the difficulties in debating section 1322, your Honour has a variety of possible conclusions that might be reached in relation to the various resolutions.
But if what your Honour does conclude is that there was a purported meeting of the members, and the members didn't have power to appoint, then we would say one can't use sections like section 1322 to overcome that fundamental deficiency, namely, the body not having power to appoint purporting so to act.
It's not a mere procedural irregularity and it's incapable of being cured, we would submit, under section 1322."
However, that relates to the 29 June 1973 meeting ([33] above), that the judge ultimately held was an effective appointment of Ami and Tami as directors, without any need for a validating order.
195On the second day of the hearing, counsel for the plaintiff continued his address in reply. He spoke by reference to a newly prepared set of written submissions in reply. As he explained, those submissions replicated:
"... in summary form, submissions we put yesterday about section 1322 and can I just ask your Honour to go to paragraphs 13 to 15 in the reply submissions which really attempt to summarise the thrust of what we were putting yesterday.
Can I just say this before going to those paragraphs that, when one looks at the interlocutory process, it is a little difficult to work out precisely what is asserted to be the thing and, in relation to that thing, what is really asserted to be the relevant contravention."
196Counsel for the plaintiff then went through various of the paragraphs of the Points of Claim in relation to which validation was sought. He said:
"Paragraphs 20 and 21 of the points of claim are also identified and those paragraphs relate to the purported resolution of Ami Weinstock as a director appointing his wife as an additional director or other director on 30 July 2003, where the complaint about that is that he wasn't a director.
So, we assume the thing sought to be validated is a resolution of Ami. I guess the contravention is the fact that he did something that he couldn't do because he wasn't a director. We don't understand how that could possibly be a section 1322 application either.
With that kind of introductory statement about our current confusion about precisely how the application is really being advanced, can I just point out that paragraphs 13 through 15 were sought to describe, in fairly general terms, what the problems are with attempted resort to this section."
Counsel for the plaintiff then went through various of the alleged contraventions of the Act or constitution that were dealt with in paras 22-25 of the written submissions. However, no oral submission was made about the possible application of s 1322 to Ami's purported resolution of 30 July 2003.
197Mr Jackson drew our attention to a portion of the written submissions in reply that Tami's counsel had made available on 25 February 2011. The portions that Mr Jackson referred to are: | [
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|
nsw_caselaw:54a636e73004de94513d96fd:12 | nsw_caselaw:54a636e73004de94513d96fd | 57Australian Hydrocarbons NL v Green concerned a company that had four directors immediately prior to a particular annual general meeting. One of them had been elected at a previous annual general meeting, while the other three were appointed by the board. Article 98 required a person "not being a retiring director" to give a certain period of notice to be eligible for election as a director (77-78).
Another article enabled a director to be appointed fill a casual vacancy or as an addition to the board, and required that "any director so appointed shall hold office only until the next following annual general meeting of the company and then shall be eligible for re-election". The three directors who had been appointed by the board did not give the requisite period of notice.
At 78 Hodgson J (as his Honour then was) followed Eyre v Milton Pty Ltd and accepted that the three directors in question were not "retiring directors" within the meaning of article 98, and thus their failure to give the requisite notice resulted in them being ineligible for election.
58In New South Wales Rugby League Ltd v Australian Rugby Football League Ltd Powell JA (Meagher JA agreeing) said at [76], 373 that a provision in articles of association that certain directors should "hold office until the Annual General Meeting ..." resulted in a director losing office "either just before, or immediately upon, the commencement of the annual general meeting".
59Tomlinson v The Broken Hill Proprietary Co Ltd concerned a set of articles; article 105 of which required a person "not being a retiring Director" to give certain advance notice if that person was to be eligible for election as a director.
Two directors in question, who had not given any such notice, had been appointed during the previous year by the directors under article 88. It provided that any director so appointed "shall hold office only until the next following Annual General Meeting".
Southwell J, at 5, referred to Eyre v Milton Pty Ltd as constituting "strong authority that the second and third defendants ceased to be directors at the commencement of the Annual General Meeting".
However he distinguished Eyre on the basis that article 101 exempted from a requirement for retirement in rotation three categories of directors, one of which was a director "appointed and vacating office under the provisions of article 88". Article 102 went on to say:
"The Company at any annual general meeting at which any directors retire in manner aforesaid may fill up all or any of the vacated offices by electing a like number of qualified persons to be Directors."
60Southwell J held, at 6:
"It is clear that article 101 acknowledges the difference between a director appointed under article 88 who vacates office, a director ceasing to hold office under article 99 and a director retiring under article 103, but when one looks at the next following article,
and where the reference is made to the words, 'At which any directors retire in manner aforesaid', it seems to me that the words, 'in manner aforesaid' must refer to the three methods by which a director may cease to be a director either by vacating office or by ceasing to hold office or retiring.
Accordingly, it seems to me to follow that the word, 'retire' in article 102 encompasses those three means by which a person may cease to be a director."
61Southwell J held that that construction of "retire" in article 102 was also applicable in article 105.
62After referring to the passage I have just quoted from Tomlinson, the primary judge continued, at [101]-[103]:
"There is no room for any similar approach in this case. The words 'so retires' in article 67 can only refer to retirement under the immediately preceding article 66, which is retirement 'at' the meeting itself, that is, after it has begun. | [
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|
nsw_caselaw:54a636e73004de94513d96fd:22 | nsw_caselaw:54a636e73004de94513d96fd | 111Mr McHugh's argument proceeded by reference to various of the cases that have considered s 1322(4) and its statutory predecessors. I will now turn to those cases.
112In North Sydney Brick & Tile Co Ltd v Darvall (1989) 17 NSWLR 327 the Court of Appeal held that the company concerned had power to declare a dividend by a distribution in specie of certain assets held by the company (338).
The only question concerned the validity of the resolution that had declared it. The Act and articles required that two different resolutions be passed to authorise the payment of such a dividend but the Company passed only one of the necessary resolutions. Clarke JA said, at 341 that:
"... the failure to include the second resolution, which resulted from the directors' honest acceptance of erroneous legal advice, constituted a failure to comply with those provisions of the Code and the articles which required that a dividend payable from the profits of the company be declared before a distribution could be carried out."
113He held that "the failure to make provision for the declaration of a dividend in the resolution put to the meeting should be regarded as a relevant failure under s 539(4)".
114Jordan v Avram concerned a company established as a joint venture vehicle by two families, the Jordans and the Avrams. A contract pursuant to which the joint-venture vehicle was established provided for each family to appoint two directors. The articles of association required there to be at least two directors. The situation came about where there was only one director, Mr Arthur Avram.
One of the Jordan family wrote to the auditor and accountant of the company, notifying him of the two members of the Jordan family whom he wished to have appointed as directors. As the sole continuing director Arthur Avram would have had a power under the articles of association to appoint another director to bring the number up to the minimum of two, but he did not exercise it.
Rather, he told the accountant that he had no objection to the two Jordan men being appointed, but suggested that their mother "sign the necessary forms". Their mother had previously been a director, but had resigned. One of the Jordan men, who held her power of attorney, signed a form that recorded a purported appointment of the two Jordan men as directors. The form was eventually lodged with ASIC.
There was nothing that purported to be any sort of resolution of the company that appointed the two Jordan men. A meeting of the two nominated Jordan men and Arthur Avram that purported to be a meeting of directors was held shortly afterwards, and passed resolutions that were acted upon. Only some weeks later did Arthur Avram question the validity of appointment of the Jordan men.
115Gillard J made an order validating the appointment of the Jordan men as directors. At 156-157 he gave a careful analysis of the structure of s 1322, and concluded at 157:
"In my opinion s 1322(4)(a) is not confined to procedural irregularities. It covers irregularities, errors or mistakes of a general nature and is expressed in very wide language. It clearly gives power to declare an act which is not in accordance with the articles of association, not invalid.
In this regard the change in the wording of the section means that the principles espoused in Omega Estates Pty Ltd v Ganke [1963] NSWR 1416 especially at 1423 that the court could not override the articles of association are no longer good law.
In my opinion the scheme of the section makes this quite clear. There are different approaches to what might be described as procedural irregularities and other irregularities.
In my view the act under consideration, that is, the purported appointment, is clearly capable of falling within the wide words of s 1322(4)(a) and if thought appropriate the court could declare the appointment not invalid. I am satisfied the court has the jurisdiction, in the present circumstances."
116Re Centennial Coal Co Ltd [2006] NSWSC 62; (2006) 56 ACSR 698; (2006) 226 ALR 341 concerned an off-market takeover bid. | [
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|
nsw_caselaw:54a636e73004de94513d96fd:51 | nsw_caselaw:54a636e73004de94513d96fd | The balance of authority favours the view that an irregularity can include a deliberate act of non-compliance with the articles or the Corporations Act: Nenna v Australian Securities and Investments Commission [2011] FCA 1193; 284 ALR 386, at 397 [54], 401 [76]-[82], per Middleton J.
The Present Case
233While s 1322(4)(a) must be given a liberal interpretation, it is necessary for an applicant (in this case Ami) to bring himself within the language of the provision. In particular, an applicant must show that the act or proceeding sought to be validated was invalid by reason of a contravention of the Act or of the constitution of the company.
Even on a generous interpretation of the word "contravention", I do not think that it can be said that Ami's purported appointment on 30 July 2003 of Helen as a director of the Company was an
"act ... purporting to have been done ... in relation to a corporation [that was] invalid by reason of any contravention of a provision"
of the Corporations Act or of the constitution of the Company.
234Ami had ceased to be a director on 31 December 1973, 30 years before the purported appointment. He continued to act as a director of the Company after that date, but at no subsequent time was he a lawfully appointed director. This was not because Ami had been the subject of a purported but invalid appointment.
It was because his term as a director had expired immediately before the Annual General Meeting of 31 December 1973 and he had never been reappointed. The resolution passed at the meeting held on that date (at [34] above) simply did not apply to him.
235Ami purported to exercise a power which the Articles (Art 69) limited to a lawfully appointed director. Ami had never been a director of the Company since his term as a director expired in 1973. At no time during that period did the Company or the directors purport to appoint him as a director.
In 2003, when Ami purported to exercise the power to appoint Helen as a director, there were no validly appointed directors of the Corporation and none of the members of the Corporation had any right or power to vote at a general meeting (see the primary judgment at [28], [103], [106], [113], [114]).
Thus there was no mechanism available to the Company, whether in general meeting or otherwise, to appoint Ami as a director.
236It does not assist the Company that "contravention" in s 1322(4)(a) has been construed to extend to a failure to take advantage of a provision in the articles of a corporation. There is no provision in the Articles of the Company of which Ami could have taken advantage in order to appoint Helen as a director.
Ami's act was ineffective (a better description in my view than "invalid") because he was not, and could not be appointed as, a director of the Company. In my opinion, it is stretching language to breaking point to suggest that Ami's act was ineffective (or invalid) because he contravened or failed to take advantage of a provision in the Articles or the Act.
237The primary Judge thought that the purported appointment of Helen was a "contravention" because an act by a de facto director was equivalent to the act of an invalidly appointed board of directors. In my opinion, this analysis assumes that any act committed by an invalidly appointed board of directors will always involve a "contravention" of the constitution of the corporation or of the Act.
I do not think that that is necessarily the case. Whether there is a "contravention", even in the widest sense, will depend on the reasons why no validly appointed board of directors is in place and the nature of the act purportedly done by the de facto directors.
238The primary Judge also appears to have assumed that any unauthorised action by a de facto director can be said to be invalid by reason of a contravention of a provision of the constitution or of the Act. Again, I do not think that this is necessarily correct. | [
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|
nsw_caselaw:54a636e73004de94513d96fd:29 | nsw_caselaw:54a636e73004de94513d96fd | or to authorise, by reference to the circumstances of the individual case, some departure from the course that the law would otherwise require to be followed concerning the conduct of the affairs of the company.
Without being exhaustive, other examples are found in s 249G (power of court to call a meeting of members of the company), s 266(4) (power of court to extend time for lodgement of charge), s 411 (power of court to authorise schemes of arrangement), s 447A (power of the court to modify manner of operation of Part 5.
3A), and s 461(1)(d)(e)(f)(g) and (k) (various discretionary grounds for ordering winding up). Further, some provisions of the Act have as their purpose avoiding the destructiveness involved in winding up a business to the extent it is still viable. Section 435A says so explicitly, and it is fairly clear that that is one of the purposes of s 249G and s 411.
142Mr McHugh's submission is also contrary to NRMA Ltd v Gould (1995) 18 ACSR 290 at 292-293. In NRMA v Gould, Young J (as his Honour them was) recognised: "Normally the word 'contravention' indicates an act or omission which is blameworthy and may lead to civil or criminal consequences". However, he noted that s 1322(4)(c) of the Corporations Law enabled the Court to make:
"an order relieving a person in whole or part from any civil liability in respect of a contravention or failure of a kind referred to in paragraph (a)" (emphasis added).
143He accepted that reading "contravention" in s 1322(4)(a) in a "very wide sense", "would indeed be in the spirit of the decisions that have been given under the section and its predecessor since Ganke's case and indeed consistent with the philosophy of the Corporations Law set out in s 109H".
Section 109H, that his Honour there referred to, provided that in interpreting a provision of the Law a construction that would promote the purpose or object underlying the Law (whether that purpose or object was expressly stated in the Law or not) was to be preferred to a construction that would not promote that purpose or object.
144Young J held that s 1322(4)(a) enabled him to make an order that validated an election that a company proposed to hold, notwithstanding that three of the candidates were, on the proper construction of the articles, ineligible to stand for election as directors.
They were ineligible because the articles required that a candidate be a member of the company at the time of nomination, and the candidates in question had become members of the company only after the time for nominations had closed.
145Section 1322(4)(c) of the Corporations Law is identical with the present s 1322(4)(c) of the Corporations Act. Though the Corporations Act does not now contain a s 109H, s 5C Corporations Act makes the provisions of the Acts Interpretation Act 1901 (Cth) applicable to the interpretation of the Corporations Act.
Section 15AA Acts Interpretation Act does not differ materially from the former s 109H of the Corporations Law. Thus the law has not materially changed since NRMA v Gould was decided.
146The decision in NRMA v Gould was given on 1 September 1995. The nominations for the election in question had closed on 25 August 1995. As the opening sentence of the judgment makes clear, the decision was given before the election was held.
This is of some importance for understanding the significance of the order that Young J made. It is not as though he validated the result of an election in the course of which there had been an irregularity by reason of some ineligible candidates standing.
Rather, he validated the nomination of the candidates, notwithstanding that under the articles of Association those nominations were nullities. That is exactly the sort of order that, on Mr McHugh's submission, cannot be made.
For the reasons I have earlier given, Young J was right in holding the making of that order was within power. Further, we have not had our attention drawn to any criticism of the decision in the more than 16 years since it was made. | [
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] | null |
|
nsw_caselaw:54a636e73004de94513d96fd:5 | nsw_caselaw:54a636e73004de94513d96fd | However, the minute book of the Company contains no resolution in 1992 relating to any allotment of shares to Hedy. The primary judge did not decide, and nor is it necessary that this Court decides, precisely how many 'C' shares were allotted in total to Hedy.
18Two 'D' shares were ostensibly issued on 20 April 1975 to LW Furniture (Consolidated) Pty Ltd. Ami controls that company. The Judge expressed some doubt about whether those shares had been validly allotted, but did not decide whether they had been validly allotted. It is not necessary for us to enter into that question.
19No shares have ever been issued by the Company apart from those that I have mentioned.
20The rights attaching to the five 'A' shares were set out in Article 3(2). The holders of those shares had no right to vote at any general meeting, but were entitled to notice of, and to attend, a general meeting.
They had the right to a fixed cumulative preferential dividend of 5% per annum on the capital paid up. Leo had the right, during his lifetime, to elect to convert the 'A' shares into shares that conferred the right to vote. However, he never exercised that right.
21Both the 'C' shares and the 'D' shares had no right to vote at a general meeting, but the holder of any such shares was entitled to notice of, and to attend, general meetings. Both the 'C' shares and the 'D' shares were liable to be redeemed at par on or before 30 June 2016, at the option of the Company. As well, each of them was to be redeemed upon the death of the holder.
22There was a power to declare dividends on the 'C' and 'D' shares.
23By reason of these provisions, for the whole of the almost 40 years that had elapsed between the incorporation of the Company and the date of the decision appealed from, the Company had no shareholders with the right to vote at a general meeting.
24It is appropriate to mention here that, after the death of Leo the Company took steps to redeem the eight 'C' shares that it accepted Hedy had held. Tami took proceedings to challenge the validity of the redemption.
She did so, no doubt, because the redemption might have the effect of lessening her interest in the Company. Under Leo's will Tami received a one third interest in his shares in the Company, equivalent to one and two-thirds 'A' shares. Under Hedy's will Tami received half of Hedy's shares in the Company, ie four 'C' shares.
The primary judge held that on a winding up of the Company at a time when no voting shares had been issued the assets of the Company would be returned to shareholders in the proportions in which they held shares.
If that is correct, and if the 'D' shares had been validly issued, then on a winding up at a time when Hedy's shares were unredeemed, Tami would receive six and two-thirds seventeenths of the net value of the Company, ie approximately 39.
2%. If a winding up were to occur after Hedy's shares had been successfully redeemed, Tami would receive two and two-thirds ninths of the net value of the company, ie approximately 29.6%.
25At first instance, Hamilton AJ held that the shares were not validly issued as redeemable preference shares, and hence their redemption was not valid: Beck v Weinstock [2010] NSWSC 1068; (2010) 241 FLR 235. That decision was reversed on appeal to this Court: Weinstock v Beck [2011] NSWCA 228; (2011) 252 FLR 462.
This Court declared that the redeemable shares had been validly redeemed. On 10 February 2012 the High Court of Australia granted Special Leave to Appeal against that decision, but the appeal to the High Court has not yet been argued.
26In the course of his reasons in Weinstock v Beck, Handley AJA (with whom Giles JA agreed) gave a clue which might explain the unusual corporate structure of the Company. Handley AJA said, at [106]-[107]:
"The case concerns a Robertson scheme to reduce death and estate duties payable on the death of the founder of a company. Under the scheme the founder owned shares which give him (or her) control of the company for life. | [
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] | null |
|
nsw_caselaw:54a636e73004de94513d96fd:18 | nsw_caselaw:54a636e73004de94513d96fd | (c) no mechanism presently exists for directors to be appointed to the Company;
(d) the current members of the Company have no entitlement to vote at general meeting; and
(e) the power of removal of directors at an AGM cannot be exercised."
91In their Points of Defence in the present proceeding, Ami, Helen and (purportedly) the Company, pleaded:
"... the plaintiff is precluded from contending that the Company should be wound up on any of the bases set out in paragraph 36(a) and (b) of the Points of Claim by reason of the principle stated in Port of Melbourne Authority v Anshun Pty Limited (1981) 147 CLR 589.
Particulars of Anshun estoppel
(a) By an amended statement of claim filed 2 October 2008 in the 2007 proceedings, the plaintiff sought orders in relation to, among other things, the value of shares issued by the Company: paragraphs 4 and 9 of the relief sought.
(b) The Company was the fifth defendant to the 2007 proceedings. The second and third defendants were, respectively, the first and second defendants to the 2007 proceedings.
(c) In paragraphs 3A, 3C, 3D, 4 and 9 of the relief sought in the 2007 proceedings, the plaintiff sought orders which related to the value of shares in the Company.
(d) In paragraphs 21A-21E and 57A-57C of the amended statement of claim in the earlier proceedings, the plaintiff pleaded facts relating to the value of the shares issued by the Company, including that all shares issued by the Company were entitled to 'participate in any surplus on a notional winding up of' the Company: paragraph 21E.
(e) At the time the plaintiff commenced the 2007 proceedings, she was aware of all of the matters now relied upon in relation to the contentions in paragraphs 36(a) to (d) of the Points of Claim in these proceedings.
(f) Those contentions, together with all of the facts relied upon by the plaintiff in support of those contentions, would have been relevant to the determination of the relief sought in the 2007 proceedings.
(g) In the circumstances, it was unreasonable of the plaintiff not to raise the issues identified in paragraphs 36(a) to (d) of the Points of Claim in the 2007 proceedings and the plaintiff is estopped from asserting them in these proceedings."
92The primary judge did not uphold the defence based on an Anshun estoppel. His reasons, at [212]-[215] were:
"... the 2007 proceedings seem to have raised only ... issues concerning the purported redemption of shares held by Mrs Weinstock and the question whether they were truly redeemable preference shares.
The only claims for relief concerning LWC were claims for a declaration that the shares in question were not preference shares and were accordingly not able to be redeemed by the company, a declaration that the purported redemption of the shares was void and of no effect, an order rectifying the register of members of LWC by reinstating the supposedly redeemed shares and an order for 'compensation'.
All these claims were based on the characteristics of the shares themselves.
The principle associated with Port of Melbourne Authority v Anshun Pty Ltd [1981] HCA 45; (1981) 147 CLR 589 is, in essence, that there cannot be raised in later litigation matters that should have been put in issue in earlier proceedings between the same parties.
The test is whether the matter sought to be litigated subsequently is 'so relevant' to the matters litigated previously that it was 'unreasonable' not to raise it in the earlier proceeding: Champerslife Pty Ltd v Manojlovski [2010] NSWCA 33; (2010) 75 NSWLR 245 at [4] per Allsop P, at [52] per Giles JA.
I am not satisfied that the question whether LWC should be wound up was so relevant to the matters in issue with respect to that company in the 2007 proceeding that it was unreasonable for Mrs Beck not to have raised it there.
Her objective regarding LWC in the 2007 case was to establish that the relevant shares had not been validly redeemed and that the register should be rectified so as to reflect their continuing existence. | [
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] | null |
|
nsw_caselaw:54a636e73004de94513d96fd:1 | nsw_caselaw:54a636e73004de94513d96fd | - where primary judge granted relief in relation to purported appointment of additional director by de facto director - whether purported act contravening constitution by person never validly appointed to office is a "contravention" that can be cured by s 1322(4)
(ii) - remedial provisions to be construed broadly - held (per Young JA and Sackville AJA) "contravention" does not mean every invalid act done in relation to the corporate constitution,
despite wide meaning - additional director's appointment not capable of being validated under s 1322
ESTOPPEL - issue estoppel - Anshun estoppel - appellants did not challenge, in previous proceedings,
the validity of the appointment of the remaining director - where validity of appointment of director was not obvious or complete argument in previous proceedings - where argument would have required substantial
additional resources to make - where previous litigation not necessarily sufficiently related to present proceeding to give rise to Anshun estoppel - not unreasonable to not rely on argument against validity of appointment
APPEAL AND NEW TRIAL - denial of natural justice - defendants in court below did not extend their submissions on Corporations Act 2001 s 1322 issue to appointment of additional director - appellant lost opportunity not merely to make submissions,
but to lead evidence on the topic and make submissions on that evidence - s 1322 finding essential to underlying relief claimed by appellant - held (per Campbell JA dissenting) matter to be remitted to consider whether s 1322 order should be made
COMPANIES - management and administration - directors and other officers - powers under articles - directors empowered to allot unissued voting shares - voting shares comprised of par value shares - consideration of Company Law Review
Act 1988 s 1427 repealing par value share provisions - Company Law Review Act to be interpreted as a whole - "repeal" of provision may only require that certain parts of the provision are inoperative - held (per Campbell JA dissenting)
validly appointed director would have power to issue voting shares
Legislation Cited: Acts Interpretation Act 1901 (Cth)
Companies (New South Wales) Code
Companies Act 1961
Companies Ordinance 1962 (ACT)
Company Law Review Act 1998 (Cth)
Company Law Review Bill 1997
Corporations Act 2001 (Cth)
Corporations Law
Suitors Fund Act 1951
Cases Cited: Albert Gardens (Manly) Pty Limited v Mercantile Credits Limited (1973) 131 CLR 60
Australasian Memory v Brien [2000] HCA 30; (2000) 200 CLR 270
Australia Hydrocarbons NL v Green (1985) 10 ACLR 72
Beck v LW Furniture Consolidated (Aust) Pty Limited [2011] NSWSC 235
Beck v Weinstock [2010] NSWSC 1068; (2010) 241 FLR 235
C G Maloney Pty Ltd v Noon [2011] NSWCA 397
Champerslife Pty Ltd v Manojlovski [2010] NSWCA 33; (2010) 75 NSWLR 245
David Grant & Co Pty Ltd v Westpac Banking Corporation (1995) 184 CLR 265
Dicker v Angerstein (1876) 3 Ch D 600
Elite Protective Personnel Pty Ltd v Salmon (No 2) [2007] NSWCA 373
Eyre v Milton Proprietary Limited [1936] 1 Ch 244
FAI General Insurance Co Ltd v Southern Cross Exploration NL (1988) 165 CLR 268
Federal Commissioner of Taxation v St Helens Farm (ACT) Pty Ltd (1981) 146 CLR 336
Grant v John Grant & Sons Pty Ltd (1950) 82 CLR 1
Henderson v Henderson (1843) 3 Hare 100; 67 ER 313
James v Surf Road Nominees Pty Ltd (No 2) [2005] NSWCA 296
Jordan v Avram (1997) 141 FLR 275 | [
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|
nsw_caselaw:54a636e73004de94513d96fd:17 | nsw_caselaw:54a636e73004de94513d96fd | 83In 2007, Tami and a company with which she was connected brought proceedings in the Equity Division of the Supreme Court of New South Wales. The defendants in those proceedings included Ami, Helen and the Company. The Amended Statement of Claim in those proceedings raised a multitude of allegations of disparate types.
The claims for relief included a claim for a declaration that the eight 'C' shares in the Company that Hedy held were not preference shares, and hence were not able to be redeemed. It also sought a declaration that the purported redemption of such shares was void and of no effect. In the Amended Statement of Claim the Company was referred to as "LWC".
84The pleading that founded claims for relief concerning the 'C' shares was:
"57D. Further and in the alternative:
(a) At the date of her death Hedy still held 8 C Redeemable Preference Shares in LWC;
(b) The rights privileges and conditions of such shares to the extent that they were express were set out in clause 30.4 of the Constitution of LWC;
(c) Those rights privileges and conditions conferred no preference of any kind over other shares in LWC;
(d) In the premises such shares were not preference shares within the meaning of section 9 of the Corporations Act and were, accordingly, unable to be redeemed;
(e) The share register of LWC is liable to be rectified so as to reverse the purported redemption of Hedy's LWC shares;
(f) Ami wrongfully caused the purported redemption to occur and has refused or neglected to take any steps to rectify the register of LWC or to cause the true value of the LWC shares to be paid to the Hedy estate."
85Ami's defence to that pleading admitted paragraph 57D(a), and denied the rest of the allegations in 57D.
86All the claims made in the 2007 proceeding were settled, except for the claim relating to whether the 'C' shares were redeemable, and had been redeemed. It is that claim that was decided by Hamilton AJ, by this Court, and is awaiting its ultimate determination in the High Court: [24] above.
87As Hamilton AJ recorded in his judgment at [6] the argument raised three questions:
"(1) Whether the 8 'C' Class Shares held by Hedy in LWC were redeemable preference shares within the meaning of the Corporations Act 2001 (Cth) ('the CA').
(2) Whether there was sufficient evidence of a resolution to redeem those shares.
(3) Whether the redemption should have been at fair market value and whether their fair market value was no greater than the $8 that was paid on their redemption."
88As Hamilton AJ decided question (1) by holding that the shares were not redeemable preference shares, there was no need for him to decide the second and third questions. However, he expressed his view on the second question at [33]:
"As to the question of the sufficiency of a resolution to support the redemption, I am of the view that there was evidence of a sufficient resolution. It is correct, as submitted for the plaintiffs, that there was not in evidence the resolution or a minute of the meeting at which it was passed.
However, there was a clear statement in a letter written at the time by a director of the company to the effect that such a resolution had been passed by the directors. In the absence of any contrary evidence I regard that as sufficient evidence of the requisite resolution. It may be that the plaintiffs could rely as well, if they needed to, on s 1274B of the CA."
89Only the first of the questions identified by Hamilton AJ was considered in the Court of Appeal, and the outcome in the Court of Appeal turned on the answer to that question.
90In [36] of her Points of Claim in the present proceeding Tami identified the basis upon which she claimed that it was just and equitable for the Company to be wound up:
"(a) since about early 1996, or alternatively, 29 July 2003, the Company has had no directors;
(b) since 29 July 2003, Ami and Helen have purported to act as directors, transact business and conduct the day to day affairs of the Company despite not being directors; | [
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|
nsw_caselaw:54a636e73004de94513d96fd:52 | nsw_caselaw:54a636e73004de94513d96fd | Whether acts performed by a de facto director are invalid for that reason must depend on the reasons why the de facto director was not a lawfully appointed director and the nature of the acts he or she has purported to perform on behalf of the corporation.
239It is one thing to apply s 1322(4)(a) of the Corporations Act to the purported acts of an invalidly appointed director and another to apply the provision to the purported acts of someone who has never been validly appointed as a director and cannot be so appointed.
If, for example, the appointment of a person as director was invalid because the meeting which resolved to make the appointment was not properly convened, a fresh appointment could be made at a duly convened meeting and the acts of the de facto director ratified.
But where a person has never been appointed a director (at least after his or her original term expired) and cannot be validly appointed, the purported act of that person, even if performed when he or she was a de facto director, cannot in my view be described as invalid by reason of a contravention of the articles or of the Corporations Act.
Nor can it be said that the de facto director's purported acts are invalid by reason of a failure to take advantage of a provision of the constitution of the corporation or of the Corporations Act.
240I should add that I do not disagree with the proposition stated by Campbell JA (at [141]), that the language of s 1322(4)(a) should be given its full width. The problem, in my view, is that the full width is still not wide enough.
There are other mechanisms under the Corporations Act for dealing with a corporation that has become paralysed, particularly where the members of the corporation are at loggerheads.
The Authorities
241In none of the cases to which we were referred was an order made in circumstances similar to the present case. I accept, as Campbell JA observes (at [120]) that this does not necessarily preclude the application of s 1322(4)(a) to this case. But the fact that all previous decisions applying s 1322(4)(a) are distinguishable adds force to the conclusion I have reached.
242As Campbell JA has dealt at length with the authorities construing s 1322(4)(a) of the Corporations Act or its predecessors, I do not propose to examine them in detail. However, I shall make some brief observations about some of the cases referred to in argument.
243In Omega Estates Pty Ltd v Ganke (1962) 80 WN (NSW) 1218, as a consequence of non-compliance with the articles of a company, there were doubts as to the validity of the appointment of the directors. There was no suggestion that the directors could not be validly appointed or that the irregularities could not be cured.
Moreover, as Campbell JA has pointed out (at [125]), the case concerned a differently worded provision (s 366 of the Companies Act 1961) which, in any event, was held not to apply in the circumstances of the case.
244In Re Australian Continental Resources Ltd (1975) 1 ACLR 405, the Court was concerned with the ACT equivalent of s 366 of the Companies Act 1961. The directors of a company, in contravention of the articles, purported to appoint as directors persons who were ineligible because they did not hold the prescribed minimum number of shares.
Although some directors who purported to make the appointments were themselves ineligible for appointment, at all times there was at least one director capable of validly appointing directors. Nor was there any impediment to the putative directors acquiring the minimum number of shares and thus being eligible for appointment or re-appointment.
245In Jordan v Avram, Gillard J applied s 1322(4)(a) to validate the purported appointment of two directors of a corporation. The purported appointment had been made by two non-directors, whose own company held 50 per cent of the shares in the corporation. | [
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|
nsw_caselaw:54a636e73004de94513d96fd:28 | nsw_caselaw:54a636e73004de94513d96fd | "The absence of the formal status of sole extent director that would have enabled [Ami] to act as he purported to act on 30 July 2003 is of the same quality as nonexistence of validly elected board of directors and therefore within the relevant concept of 'contravention'."
136Mr McHugh submits that the principle stated by Lehane J was obiter dicta. It is unnecessary to express a view about whether that proposition is correct, because when Lehane J was sitting as a first instance judge, and this court is an appellate court, what matters for us is the persuasiveness of his exposition of the law, not whether it was part of the ratio of the particular case.
137Mr McHugh also submits that, in any event, the principle stated by Lehane J is wrong. I would be very slow indeed in coming to the conclusion that anything that Lehane J said was wrong. In the present case Lehane J was, as usual, right.
138The Macquarie Dictionary recognises that the ordinary meaning of "contravene" includes "to come or be in conflict with; go or act counter to; oppose". The etymological root of the word is "contravenire", meaning, "to oppose".
The ordinary meaning of "any contravention of a provision of this Act or a provision of the constitution of a corporation" extends to an action that is opposed to, or not in accordance with, a provision of the Act or a provision of the constitution of the corporation.
139There is nothing in the text of s 1322 that suggests that in the context of that particular section one should not accord "contravention" in s 1322(4) its full meaning. The provisions of s 1322 that precede 1322(4) are concerned with the validation of procedural irregularities. The language shows that the scope of s 1322(4)(a) is wider than that.
Of the preconditions to the operation of s 1322(4)(a), s 1322(6)(a)(i), allows as one possibility "that the act, matter or thing, or the preceding referred to in that paragraph is essentially of a procedural nature", but s 1322(6)(a)(ii) and (iii) go on to identify other circumstances in which an order under s 1322(4)(a) can be made.
In particular, there is nothing in the wording of s 1322(4) that restricts the court's power under s 1322(4)(a) to being used only in cases where all the steps that have resulted in the invalidity that is in question could themselves be validated.
All that is required for there to be a "contravention" of the constitution is that something have happened that is different to what the constitution of the corporation requires. For Ami to appoint Helen as director, when he had no power to do so, is a contravention in this sense.
140Nor is there anything in the purpose of s 1322 that suggest that one should restrict the usual meaning of "contravention".
There are a multitude of ways, impossible to specify in advance, in which the administration of the company might come to transgress legal boundaries, or be different to what the Act or the constitution of the company required, or where the operation of the company in accordance with what would ordinarily be the applicable legal requirements has become either impossible, or commercially undesirable.
One of the manifest purposes of s 1322(4)(a) is to permit the court to have a wide discretion, exercised (as s 1322(6)(c) shows) by reference to the justice of the individual case, to excuse a transgression or a departure from the proper course of administration, and to take steps to ensure that the transgression or departure does not thereafter impede the proper administration of the company.
The wording of s 1322(4)(a) is wide enough to empower the court to rescue a company from a situation in which its administration has become paralysed.
141There is nothing in the purpose of the Act, considered as a whole, to show that the language should not be given its full width.
Section 1322 is by no means the only section in the Corporations Act that confers a wide discretionary power on the court to deal with departures from the legal requirements for the operation of companies, | [
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|
nsw_caselaw:54a636e73004de94513d9714:1 | nsw_caselaw:54a636e73004de94513d9714 | Publishing and Broadcasting Ltd (now known as Consolidated Media Holdings Ltd) (First Respondent)
Consolidated Press Holdings Ltd (Second Respondent)
Robbdoc Pty Ltd (Third Respondent)
Toranaga Pty Ltd (Fourth Respondent)
Cavalane Holdings Pty Ltd (Fifth Respondent)
News Ltd (Sixth Respondent)
Leteno Pty Ltd (Seventh Respondent)
James Douglas Packer (Eighth Respondent)
Peter William Yates (Ninth Respondent)
Lachlan Keith Murdoch (Tenth Respondent)
Peter John Macourt (Eleventh Respondent)
Representation: Counsel:
J Karkar QC, I Jackman SC and A D'Arcy (Applicants)
J Elliott SC, S Nixon (First, Second, Third, Fourth, Fifth and Eighth Respondents)
N Hutley SC, JRJ Lockhart SC, SA Lawrance (Sixth, Seventh, Tenth and Eleventh Respondents)
N Young QC, J Williams (Ninth Respondent)
Solicitors:
Lipman Karas (Applicants)
Minter Ellison (First, Second, Third, Fourth, Fifth and Eighth Respondents)
Allens Arthur Robinson (Sixth, Seventh, Tenth and Eleventh Respondents)
Atanaskovic Hartnell (Ninth Respondent)
File Number(s): 2007/255083
Decision under appeal Jurisdiction: 9111
Citation: Weston v Publishing and Broadcasting Ltd [2011] NSWSC 433
Date of Decision: 2011-05-13 00:00:00
Before: Ward J
File Number(s): 2007/255083
Judgment
1CAMPBELL JA: I agree with Sackville AJA.
2YOUNG JA: I agree with Sackville AJA.
3SACKVILLE AJA: This application for leave to appeal was argued as on an appeal. The critical issue is whether the primary Judge (Ward J) erred in discharging the last two of six orders made by the Supreme Court successively extending the time for service of the statement of claim filed by the present applicant ("the SPL").
The statement of claim was filed by the SPL, the Special Purpose Liquidator of One.Tel Ltd (in liq) ("One.Tel"), on 25 May 2007. It was served on the present respondents on 23 August 2010, shortly before the expiry of the last of the extended periods for service.
4The orders for extension of time for service of the statement of claim were made pursuant to Uniform Civil Procedure Rules ("UCPR"), r 1.12, which confers power on the Court, by order, to extend any time fixed by the rules, or by any judgment or order of the Court.
The orders extending time were necessary because an originating process in the Supreme Court is valid for service only for six months after the date on which it is filed: r 6.2(4)(a).
5The primary Judge made the orders discharging the last two of the orders extending time for service pursuant to UCPR r 12.11(1)(e). Rule 12.11 provides as follows:
"(1) In any proceedings, the Court may make any of the following orders on the application of a defendant:
...
(e) an order discharging any order extending the validity for service of the originating process.
...
(2) Such an order may not be made unless notice of motion to apply for the order is filed by the defendant within the time limited for the defendant to enter an appearance in the proceedings.
(3) Notice of motion under subrule (2):
(a) may be filed without entering an appearance;
...
(4) The making of an application for an order under subrule (1) does not constitute submission to the jurisdiction of the Court."
6The effect of her Honour's orders under r 12.11(1)(e) was to render the SPL's statement of claim stale and incapable of being served. Accordingly, her Honour dismissed the proceedings: Weston v Publishing and Broadcasting Ltd [2011] NSWSC 433, at [851]. | [
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] | What is the effect of an order made under Uniform Civil Procedure Rules ("UCPR"), r 12.11(1)(e), on the validity of a statement of claim? | [
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nsw_caselaw:54a636e73004de94513d9714:2 | nsw_caselaw:54a636e73004de94513d9714 | 7The SPL accepts that it is possible, theoretically at least, for him to institute fresh proceedings. Therefore the orders made by Ward J were interlocutory and leave to appeal is needed: Supreme Court Act 1970, s 101(2)(e).
BACKGROUND
8The proceedings arise out of the announcement and subsequent cancellation by One.Tel of a $132 million renounceable rights issue ("RRI"). The RRI was to be underwritten by Publishing and Broadcasting Ltd ("PBL") and News Ltd ("News") and was announced on 17 May 2001.
However, on 29 May 2001, the One.Tel board resolved not to proceed with the RRI and instead to appoint administrators to the company. One.Tel went into liquidation on 24 July 2001.
9On 23 December 2003, Windeyer J appointed the SPL (Mr Weston) as the Special Purpose Liquidator of One.Tel. His functions included considering and making recommendations to creditors of One.Tel as to whether any rights of action existed in relation to the cancellation of the RRI and whether proceedings should be instituted against any person.
10On 25 May 2007, just days before expiration of the six year limitation period, the SPL filed a statement of claim. The named defendants included:
* PBL and four associated companies;
* News and an associated company;
* James Packer ("Mr Packer"), a director and Executive Chairman of PBL and a director of One.Tel;
* Peter Yates ("Mr Yates"), a director and Chief Executive Officer of PBL and a director of One.Tel;
* Lachlan Murdoch ("Mr Murdoch"), a director of News and a director of One.Tel; and
* Peter Macourt ("Mr Macourt"), a director and Chief Operating Officer of News and a director of One.Tel.
(I refer to the named defendants above collectively as "the respondents". I refer to PBL, its associated companies and Mr Packer as "the PBL respondents". I refer to News, its associated company, Mr Murdoch and Mr Macourt as "the News respondents".) Other defendants were also named, but proceedings against them were subsequently discontinued.
11By reason of UCPR, r 6.2(4)(a), unless the time for service of the statement of claim was extended pursuant to r 1.12, it had to be served by 25 November 2007.
In fact, as I have noted, the time for service of the statement of claim was extended by the Supreme Court on the SPL's application on six occasions, the last extension expiring on 25 August 2010. When the statement of claim was finally served on the respondents on 23 August 2010, three years and three months had elapsed from the date of filing.
12The following table sets out the date of each extension of time granted by the Court and the period of extension granted and also refers to the judgments given or orders made on each occasion:
Date of Order Extending Time for Service Period of Extension Granted Decision Designation of Order
15 November 2007 From 25 November 2007 until 25 May 2008 Weston v Publishing and Broadcasting Ltd [2007] NSWSC 1318 (Barrett J) "First Extension"
12 May 2008 From 25 May 2008 until 25 November 2008 Orders made; no published judgment (Hammerschlag J) "Second Extension"
23 October 2008 From 25 November 2008 until 25 May 2009 Orders made; no published judgment (Barrett J) "Third Extension"
24 April 2009 From 25 May 2009 to 25 November 2009 Weston v Publishing and Broadcasting Ltd [2009] NSWSC 321 (Barrett J) "Fourth Extension"
16 November 2009 From 25 November 2009 until 25 May 2010 Weston v Publishing and Broadcasting Ltd [2009] NSWSC 1235 (Barrett J) "Fifth Extension"
20 May 2010 From 25 May 2010 until 25 August 2010 Weston v Publishing and Broadcasting Ltd [2010] NSWSC 499 (Barrett J) "Sixth Extension" | [
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] | What is the effect of the Supreme Court Act 1970, s 101(2)(e) on the orders made by Ward J in the matter of Weston in Capacity as Special Purpose Liquidator of One.Tel Ltd (in liquidation) v Publishing and Broadcasting Ltd? | [
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nsw_caselaw:54a636e73004de94513d9714:38 | nsw_caselaw:54a636e73004de94513d9714 | 192Mr Elliott SC, who appeared with Mr Nixon for the PBL respondents, initially submitted that any contribution claims by the PBL respondents had become statute barred and thus the Fifth and Six Extensions have caused them irremediable prejudice.
In oral submissions, however, Mr Elliott modified that submission and contended only that there was a "real question" as to whether any potential contribution claims had become statute barred.
193The issues raised by the submissions are not simple. In the circumstances, I do not think it is either necessary or appropriate to attempt to resolve them.
Proper Exercise of Discretion
194Because the primary Judge, did not, in my view, commit any error that would justify setting aside her decision to discharge the Fifth and Sixth Extensions, it is not necessary to consider whether, if error had been established, this Court would exercise the discretion conferred by UCPR, r 12.
11(1)(e) to reach the same result. I think it appropriate to record, however, that if this Court was required to re-exercise the discretion conferred by the sub-rule, I would have made orders discharging the Fifth and Sixth Extensions.
195In my opinion, the key elements in this case are the following:
By early April 2008, the SPL had received a final opinion from counsel and was ready to serve the statement of claim, subject only to funding and the leave of the Court.
By that stage, the SPL had carried out extensive investigations (at a cost, on his estimate, of over $5 million) and formed the judgment that proceedings should be brought against the respondents. The SPL formed this judgment without considering it necessary to await the outcome of the proceedings in ASIC v Rich.
* As a matter of commercial reality, the SPL had an offer of litigation funding in October 2008 that would have covered his costs and fees and provided an indemnity of $12 million against adverse costs orders. The SPL's decision not to accept that offer and to prolong negotiations arose from his desire to gain protection against remote risks.
That decision paid little regard to the importance of litigation being pursued with reasonable speed and diligence.
Even if it was reasonable in the interests of the SPL not to undertake litigation without a complete protection against any possible personal liability for costs, what is reasonable in the interests of the liquidator is not necessarily the same as what is reasonable in the conduct of litigation.
The SPL made a deliberate decision to pursue funding through Plan A, rather than Plan B or any similar proposal, no later than September 2009 and probably earlier that year.
In consequence, as the primary Judge found (at [419]), effective control of the time at which the originating process would be served had largely been abdicated to litigation funders. It was they who insisted on waiting for the delivery of judgment in ASIC v Rich.
Having regard to the serious nature of the allegations made in the statement of claim and the SPL's determination to maintain confidentiality in the pleading until it was served, the delay between filing and service of the statement of claim (as the primary Judge found) occasioned prejudice to the respondents.
While this prejudice would have to be weighed against that caused to the SPL by the discharge of the orders for the Fifth and Sixth Extensions, it is a significant factor in the exercise of the Court's discretion.
At all material times, the SPL was aware that the respondents could apply to the Court to discharge the orders made on its ex parte application extending the time for service of the statement of claim. Any such application by the respondents could (and did) rely on evidence and submissions not put to the Judges who granted the extensions of time for service. | [
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] | What factors did the Court consider when exercising its discretion in relation to the discharge of the Fifth and Sixth Extensions in Weston in Capacity as Special Purpose Liquidator of One.Tel Ltd (in liquidation) v Publishing and Broadcasting Ltd [2012] NSWCA 79? | [
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nsw_caselaw:54a636e73004de94513d9714:15 | nsw_caselaw:54a636e73004de94513d9714 | Her Honour found that the so-called "free cash" that might have been available for the funding of the litigation varied over time, but about $7.5 million to $8 million of "free cash" was to be included in the funding package, since One.Tel itself was to be a syndicate member and a provider of capital for the litigation fund (at [368]).
82The primary Judge concluded that although the period of delay had increased by the time of the Third Extension, the balance still lay in favour of the extension of time. The SPL had taken active steps to put in place funding in order to enable the proceedings to be commenced on a basis favourable to creditors (this funding proposal was referred to as "Plan A").
However, her Honour observed that the SPL's view was influenced by the fact that litigation funding at that stage appeared likely to eventuate reasonably promptly (at [371]).
Fourth Extension
83The SPL had given affidavit evidence in support of the application for the Fourth Extension in which he said that he had taken further steps to secure litigation funding from the proposed syndicate, including $12 million in respect of any adverse costs order, subject to additional insurance to cover a "catastrophic" cost outcome (at [375]).
The SPL had referred to a letter of 17 April 2009 from Calunius, stating that its continued investment in the proposed funding arrangements reflected its confidence that the claim was financially viable and would be successfully funded and insured.
However, the SPL had also said in his affidavit that it was "extremely unlikely" that the funding arrangements could be concluded by 25 May 2009 (the expiry of the Third Extension) (at [377]).
84The SPL had accepted in his evidence before the primary Judge that
* he did not think that it was in the interests of creditors to await the decision in ASIC v Rich, but waiting for the decision was necessary because it seemed to be a condition of funding (at [380]);
* he was not prepared to take any risks until the funding agreement was in place, even though he was aware that the events in question had taken place about eight years previously and that, by this time, there was a "high probability" that he would obtain funding for the litigation (at [382]); and
* the sole reason he was not prepared to serve the statement of claim in April 2009 was that funding was not "locked in" and he acknowledged that there might have been enough funds, in the form of "free cash" of about $7.5 million, to commence running the proceedings (at [383]).
*
85The primary Judge stated her conclusion in relation to the Fourth Extension as follows (at [395]):
"By this stage it seems to me that the balance is clearly shifting against an extension. The sole reason for the delay is the SPL's decision to achieve funding on terms satisfactory to him (even though that may have been at a higher than necessary level) (and the need to await ASIC v Rich is simply a function of the requirements of such funding).
The SPL had expressed confidence in its being concluded by September 2009, he had advice expressing confidence in the claim and he was ready, but for funding, to serve it.
Moreover, while I do not go so far as to say that the level of funding is excessive, there was clearly a point at which the SPL could have taken the view that the proceedings could commence (as the Committee back in 2007 had urged be done) with the funding for the immediate tasks,
with consideration to further negotiations in relation to what was on SPL's own estimates, a catastrophic funding scenario.
With some hesitation, nonetheless, I have concluded that this order for extension should not be discharged." (Emphasis added.)
Fifth Extension
86The primary Judge recorded (at [398]) the SPL's affidavit evidence on the application for the Fifth Extension that the proposed indemnity shortfall insurers wished to see the judgment in ASIC v Rich before committing themselves to the additional insurance coverage. | [
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] | What was the primary Judge's conclusion in relation to the Fourth Extension in Weston in Capacity as Special Purpose Liquidator of One.Tel Ltd (in liquidation) v Publishing and Broadcasting Ltd [2012] NSWCA 79? | [
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nsw_caselaw:54a636e73004de94513d9714:20 | nsw_caselaw:54a636e73004de94513d9714 | 98The primary Judge restated findings she had previously made concerning the extent to which the respondents had acquiesced in any delay, the preservation of evidence by the respondents and the position of cross-claims. Her Honour concluded (at [456]), subject to any discretionary considerations, that the orders for the Fifth and Sixth Extensions should be discharged.
99The primary Judge proceeded to consider and reject submissions advanced on behalf of the SPL that, as a matter of discretion, the orders for extension of time should not be discharged.
100Accordingly, her Honour ordered (at [852]) that:
"1. Pursuant to rule 12.11(1)(e) of the Uniform Civil Procedure Rules 2005 (NSW), I discharge the orders made on 16 November 2009 and 20 May 2010 extending the time for service of the Statement of Claim in these proceedings.
2. I dismiss [the SPL's] application for leave to amend the Statement of Claim.
3. I dismiss the proceedings."
CHALLENGES TO FINDINGS
The Challenge to the Litigation Funding Findings
101The SPL's written submissions identified a large number of what were said to be factual errors by the primary Judge. Mr Karkar was invited at the outset of his oral submissions to concentrate on the most cogent points.
He responded by giving prominence to the SPL's challenge to the primary Judge's finding (at [413]) that the SPL, at the time of the Fifth Extension on 16 November 2009 was aware that:
"he could in all probability have secured litigation funding (even for the catastrophic costs scenario), albeit at a higher cost, by proceeding with Plan B."
As part of this challenge, Mr Karkar also criticised related findings made by the primary Judge at [417], [424] and [444], which are reproduced at [90], [96] above.
102The SPL's written submissions challenged these findings on a number of bases:
(1)The SPL pursued Plan A in preference to Plan B because he believed it in the interests of One.Tel's creditors to do so. At any hearing to approve entry into a funding agreement, the Court would not have sought to second-guess the SPL's commercial judgment.
In essence, the primary Judge had substituted her commercial judgment for that of the SPL, preferring a more expensive alternative funding option.
(2)The SPL's decision to pursue Plan A was conditional on the Court's approval. The SPL had stated (through his counsel) to Barrett J, when seeking the Fifth Extension, that if the requirements of justice demanded service prior to the delivery of judgment in ASIC v Rich, he was prepared to implement Plan B.
In his judgment granting the Fifth Extension, Barrett J observed (at [6]) that the delay in delivery of the judgment in ASIC v Rich had delayed securing litigation funding.
Nonetheless, his Honour thought that it was "understandable" that a potential funder and the SPL would wish to await the judgment because of the "overlap" on the issues of fact. The primary Judge had simply taken a different view to that of Barrett J.
(3)The primary Judge had mistakenly assumed that if the SPL had pursued Plan B from September 2009 (when it was first proposed) he could have secured litigation funding. Her Honour's finding overlooked the conditions to which Plan A was subject and which would have been equally applicable to Plan B.
These included the requirements that Calunius finalise a syndicate of capital investors, complete satisfactory due diligence and obtain court approval for One.Tel's participation in the funding arrangements. Having regard to the uncertainties, the primary Judge was wrong to conclude that there was a high probability that the SPL could have quickly secured funding through Plan B.
(4)The primary Judge was wrong to find (at [424]) that the SPL's decision to pursue Plan B had the inevitable effect of delaying commencement of the proceedings. Even if the SPL had pursued Plan B, it still would have been necessary to secure the Fifth Extension, since the Fourth Extension expired on 25 November 2009 and Plan B only emerged on 30 September 2009. | [
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|
nsw_caselaw:54a636e73004de94513d9714:4 | nsw_caselaw:54a636e73004de94513d9714 | (3)The discretion is to be exercised in the context of, and by reference to, the statute by which it is conferred: Buzzle, at [28]. Consequently, in New South Wales, ss 56-59 of the Civil Procedure Act 2005 ("CP Act") require a judge exercising the discretion to have regard to whether the relevant party has:
(a)diligently pursued the object of disposing of the proceedings in a timely way;
(b)used, or could reasonably have used, available opportunities under the rules or otherwise, to avoid delay; and
(c)reasonably implemented the practice and procedure of the court with the object of eliminating any lapse of time between the commencement of the proceedings and their final determination: Buzzle, at [36].
(4)The court must take into account the policy considerations underlying the relevant limitations statute.
Thus, defendants or potential defendants should be made aware of claims against them within a reasonable time and liquidators who do not commence proceedings until just before expiry of the limitation period should be especially diligent in pursuing prompt service: Buzzle, at [37]-[39]; cited with approval in Kirk, at 410 [98]-[99].
(5)It is for the court and not one of the litigants to determine whether there should effectively be a stay of proceedings. Accordingly, it is generally:
"inappropriate to allow an extension of time for the service of a ... statement of claim where a significant cause of the delay has been the willingness of the plaintiff to do nothing about service while awaiting a decision from a litigation funder as to whether or not to provide the necessary funds.
Were that to be regarded as a good reason to extend time, the Court would be allowing plaintiffs to arrogate to non-parties the right to decide the period by which the time for service of a writ should be extended. That would be fundamentally in conflict with the Court's duty to exercise, alone, the discretion conferred upon it."
Buzzle, at [82] cited with approval in Kirk, at 411 [101].
(6)Ordinarily, it is not a good reason for delay that a plaintiff wishes to hold up proceedings while some other case is tried: Buzzle, at [90]. However, this is not an inflexible rule: Kirk, at 411 [102].
(7)If a defendant knows that claims have been made against him or her and understands the nature of the claims that have been made, that may mitigate the prejudice the defendant might otherwise suffer by reason of a delay in service: Kirk, at 415 [123].
21In Buzzle, Ipp JA referred (at [32]) with approval to IMB Group Pty Ltd (in liq) v Australian Competition and Consumer Commission [2006] QCA 407; [2007] 1 Qd R 148 ("IMB"). In IMB, Keane JA (with whom McMurdo P and Cullinane J agreed), observed (at 160 [54]) that no case had held that the Queensland rules or their equivalents authorise renewal of a claim in favour of a party who:
"chooses not to serve a claim where the facts of the case sufficient to enable the claim to be pleaded are known to the plaintiff."
This observation was made having regard to the requirement in the Queensland rules that a party impliedly undertakes to the Court and to the other parties to proceed in an expeditious way.
In Buzzle, Ipp JA pointed out that (at [35]) the provisions of the CP Act are "akin to (and, in some aspects, go further than) the Queensland ... rules". In Kirk, Tobias JA distinguished IMB on the facts, but cast no doubt on the applicability of the reasoning in that case in New South Wales.
GENERAL OBSERVATIONS
22Before addressing the SPL's contentions, some general observations should be made about the circumstances of this litigation and of the SPL's successful applications to extend the time for service of the statement of claim.
1. Allegations in the Statement of Claim
23The statement of claim filed on 25 May 2007 made very serious allegations against the respondents. Among many other claims, the pleading alleged that: | [
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|
nsw_caselaw:54a636e73004de94513d9714:12 | nsw_caselaw:54a636e73004de94513d9714 | 67The primary Judge found (at [245]) that the potential cross-claims identified by the respondents could not simply be dismissed as "speculative".
Nonetheless, her Honour did not think that the risk of prejudice to the respondents was great because she was not satisfied that any direct cross-claim against professional advisers was statute barred (at [253]), although she accepted (at [252]) that there was a risk that other potential cross-defendants might be able to rely on a limitations defence.
Her Honour concluded that no prejudice had been established in relation to contribution claims, since the time limit for bringing those had not yet expired (at [258]).
68Her Honour recognised (at [266]-[267]) that there were circumstances in which presumptive prejudice could be negated or not given much weight, for example because there had been an opportunity to take statements from relevant witnesses and all relevant documents had been preserved.
Her Honour also acknowledged (at [268]) that the majority of key witnesses had already given evidence on oath, both in public examinations conducted by ASIC and in ASIC v Rich. Furthermore, the SPL had sought to conduct public examinations as early as April 2004, but had been delayed in his endeavours because of resistance from the respondents (at [269]). Nonetheless, in her Honour's view:
"this does not meet the difficulty that there seem to be a large number of potential witnesses to the relevant events who have not been the subject of any examinations or given evidence of their recollections to date,
and however assiduous some or all of them may have been in recording their recollection of events, inevitably their evidence will have less immediacy (and hence be more prone to be unreliable) than it would have been closer to the events in question."
69The primary Judge accepted that the prejudice to the SPL also had to be weighed in the balance (at [271]). That prejudice included the loss of claims that would now be statute-barred and the loss of a significant investment in the investigation of potential claims.
Her Honour also accepted that ss 56-59 of the CP Act did not require delay to be given primacy over the need to reduce costs and to ensure that proper consideration is given to the issues in a case. Even so (at [277]):
"it is a relevant factor in the balancing exercise to be carried out that there has been considerable delay in the prosecution of the proceedings (and that such delay, coupled with the delay in the commencement of the proceedings in the first place, is likely to have a prejudicial effect on the conduct of the proceedings by the [respondents])."
70The primary Judge stated her conclusions as to prejudice, as follows (at [270]):
"I accept that the [respondents] have not pointed to particular witnesses who are no longer available to give evidence or whose memories have been adversely affected by illness or the like; nor have they pointed (beyond reference to the matters noted in Austin J's judgment [in Asic v Rich]) to loss of documentary material.
I also accept that there has been an opportunity for them to preserve or record their recollection of events (and there is every indication that they have done so through the retainer of legal advisers) and, further, that the events of May 2001 have been tested in a public context over the period since 2001 with a variety of people.
I do not, however, accept that this means that the likelihood of prejudice has been negated and I do not consider that this is matter which should be accorded little weight (particularly having regard to the context in which delay must be considered in the light of the statutory mandate contained in ss 56-59 of the Civil Procedure Act)." | [
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] | null |
|
nsw_caselaw:54a636e73004de94513d9714:19 | nsw_caselaw:54a636e73004de94513d9714 | [It] was not suggested by the [respondents] at any time after the first extension application (in November 2007) that more time was needed to complete investigations before proceeding with the claims against the [respondents]
or that the SPL considered it would be necessary to undertake any further investigations following the decision in ASIC v Rich (other than the final extension when there was to be a review of the pleading in light of the judgment of Austin J),
nor was there any need expressed to await the outcome of the decision in ASIC v Rich until this was imposed as a condition of commitment to the highest level of funding sought by the SPL (a matter for the SPL's benefit as much, if not more so, than for the creditors).
..
...
443. The SPL had concluded his investigations in May 2008; had received detailed final opinions of counsel in April 2008; and was in a position to approach funders with a proposed funding litigation package between February and September 2008 ...
[T]here was no suggestion by the SPL at this time (or even later) that a judgment in ASIC v Rich was necessary for the SPL to make a decision on whether to prosecute a claim against some if not all of the [respondents] (the only suggestion being that the proceeding might not be prosecuted against all [respondents] and might not be prosecuted in respect of all claims) ...
444. The SPL had by September 2009 been in a position where there was a high probability that litigation funding could be quickly concluded (albeit not [on] as favourable terms as that contemplated by Plan A) to cover the full extent of his estimated costs exposure (be that a realistic or unrealistic estimate) but chose not to pursue that option.
The SPL seems to have taken what might be said to be the calculated risk (instead of proceeding to take steps to finalise litigation funding in late 2009 at a higher cost but so as to minimise further delay in the prosecuting of the company's claims) of waiting to see if more cost-effective funding could be procured after the judgment in ASIC v Rich was handed down.
This was so even though he must have known this would mean further delay (and all at a time when there was sufficient cash available in the liquidation to have permitted the commencement of the proceedings and the SPL's concern seems to be to put himself in a position to meet an adverse costs order predicated on an indemnity basis that would not arise,
in the ordinary course, absent unreasonable conduct of the litigation on his part).
445. By the time of the last extension application (and in my view also at the time of the November 2009 application) ...
the SPL was, in effect, seeking to arrogate to himself (with a view to the requirements or anticipated requirements of litigation funders) the power to determine when proceedings should be served;
not least by having chosen not to take steps to facilitate the earlier completion of funding, such that by the time various of the applications for extension were made (in particular the penultimate application) the die was cast and his Honour was presented, in effect,
with a fait accompli - that it was not by then possible to secure funding within the limited time available before the extension applied or, in the case of the last extension, the change in legal representatives had delayed completion of the pleading amendments.
97The primary Judge then returned to the question of prejudice. She accepted (at [449]) that the respondents would suffer prejudice if the proceedings were permitted to continue,
"being the prejudice inherent in having serious allegations made and pursued long after the events to which they relate."
Her Honour also accepted (at [450]) that there was likely to be prejudice to the individual directors by reason of the significant delay in bringing claims going directly to the their probity, honesty and fitness for their main occupation. | [
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|
nsw_caselaw:54a636e73004de94513d9714:35 | nsw_caselaw:54a636e73004de94513d9714 | OTHER ISSUES
The Challenge on the Grounds of Unreasonableness
174The SPL challenged the primary Judge's decision to discharge the Fifth and Sixth Extensions on the ground that the decision was plainly unreasonable or unjust. It followed, so Mr Karkar argued, that the orders could be set aside notwithstanding that the primary Judge's decision involved the exercise of a discretionary power.
175The principal argument advised in support of this ground was that two different judicial officers (Barrett J and the primary Judge) had reached "diametrically different conclusions with the dramatic consequences for [the SPL]". For reasons I have already given (at [38],[39]), this submission rests on a misconception and must be rejected.
176Mr Karkar also submitted that the result was unreasonable or unjust because the SPL had relied on the orders made to extend the time for service and any delay in effecting service had not caused significant prejudice to the respondents.
To the extent the SPL relied on the orders extending the time for service, that reliance had to be qualified by his knowledge that it was open to the respondents to apply to discharge the orders and to put forward evidence and arguments that had not been before the Judges who had granted the orders for extension.
As I have explained, the question of prejudice, both to the respondents and to the SPL was carefully considered by the primary Judge. For reasons I have already given, her Honour's conclusions in relation to prejudice cannot be characterised as unreasonable.
177This challenge also fails.
Filing of Appearances
178The SPL submitted that, as the respondents had entered appearances in the proceedings before filing their notices of motion seeking to discharge the orders extending time for service of the statement of claim, they had waived any irregularity in the service of the statement of claim.
In oral argument, however, Mr Karkar accepted that this submission was inconsistent with the holding in Kirk (at [219]), that the filing of the notice of appearance is not a bar to a defendant seeking to discharge an order extending the time for service of initiating process. Mr Karkar did not submit that this Court should reconsider the holding in Kirk.
Sixth Extension
179The SPL submitted that the primary Judge had made two errors in discharging the Sixth Extension.
180The first error was said to be that her Honour had incorrectly taken into account the SPL's alleged failure to disclose to Barrett J, on the ex parte application for the Sixth Extension, that it was intended to amend the statement of claim to introduce an array of new and serious allegations.
Mr Karkar acknowledged that it was unclear whether her Honour had taken this matter into account. However, if she did, she had overlooked the SPL's evidence that, at the time of the Sixth Extension, he was unaware of the nature of the proposed amendments. In any event, so it was argued, any proposals to amend the statement of claim were irrelevant to the issues before the primary Judge.
181The SPL's second argument was that her Honour made factual errors in finding (at [439]) that the sole reason for the delay in service as at May 2010 was the litigation funders' desire to retain fresh orders to conduct a wholesale review of the pleadings.
182The short answer to the first submission is that a fair reading of the primary judgment indicates that her Honour took into account the SPL's alleged non-disclosure only in relation to the News' respondent's application, pursuant to UCPR, r 36.
16(2)(b), to set aside the orders extending time. The application, which was rejected by the primary Judge (at [483]), was based on the SPL's alleged non-disclosures. No issue arises on the present appeal in relation to her Honour's conclusion on the News' respondents' application. | [
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|
nsw_caselaw:54a636e73004de94513d9714:21 | nsw_caselaw:54a636e73004de94513d9714 | In any event, the SPL had estimated in his affidavit seeking the Fifth Extension that Plan A would take 11-15 weeks to complete after delivery of judgment in ASIC v Rich. Since judgment was delivered on 18 November 2009, Plan A (on the SPL's estimate) could have been implemented by the end of February 2010, only six weeks later than the most optimistic estimate for Plan B.
The Evidence Relating to Litigation Funding
103In order to address these submissions, it is necessary to summarise the evidence directly bearing on her Honour's findings. The account which follows concentrates on events occurring in and after October 2008.
104On 22 October 2008, the SPL and Calunius entered into a Due Diligence Agreement. This provided that for a period of eight weeks Calunius would carry out due diligence with a view to organising a syndicate to fund the proceedings on the terms of an annexed draft Funding Agreement.
105As I have already recounted (at [63] above), the draft Funding Agreement contemplated that the proposed syndicate would provide funding for the SPL's costs (including his own fees) incurred in connection with the litigation. The syndicate was to indemnify the SPL and One.Tel against any adverse costs order, up to a limit of $12 million.
The syndicate was also to procure Indemnity Shortfall Insurance to cover any adverse costs orders over and above $12 million, to a limit of $40 million (that is, to provide cover of an additional $28 million). The limit of $40 million represented the SPL's estimate of the maximum adverse costs order in the proceedings.
106In his evidence before the primary Judge, the SPL appeared to accept that, although the proposed funding arrangement was subject to due diligence, as a practical matter he had an offer capable of acceptance:
"Q. So, if we were to stop there, you had, effectively, in hand an offer that you could have accepted for the funding of your legal costs, for your non-legal expenses, plus an indemnity of $12 million dollars for adverse costs orders as of October 2008, is that correct?
A. Yes.
...
Q. And there was no difficulty about any of those elements in your discussions with Calunius?
A. That's correct.
Q. And there never was?
A. At various times in 2008 - I don't recall the exact timing, Mr Young, but the global financial crisis was an issue and my recollection is there were some swapping and changing elements of the parties, the external parties, that were going to form part of the syndicate. Beyond that, I think that's correct.
Q. No change to the terms; only discussion about substituting particular syndicate members with other syndicate members?
A. I believe so."
107On 22 October 2008, at the same time as the Third Extension was granted, the Court made an order that the SPL was justified in entering into the Due Diligence Agreement without the prior approval of the COI or One.Tel's creditors.
108The due diligence period was extended by agreement on several occasions. However, the reason for the extensions was the SPL's insistence on obtaining the Indemnity Shortfall Insurance to the level ($40 million) that he considered to be desirable.
As the SPL accepted in his evidence before the primary Judge, had he not insisted on coverage to this level, litigation funding could have been arranged in or shortly after October 2008.
109To this point, there had been nothing to indicate that the progress of the funding arrangements was dependent on delivery of the judgment in ASIC v Rich or the opportunity to scrutinise the judgment.
The first indication that the ASIC v Rich judgment might be relevant to funding came in a letter from Mr Wells of Calunius to the SPL on 17 April 2009, some six months after execution of the Due Diligence Agreement.
Mr Wells attributed slow progress to dislocation in financial markets and to the withdrawal of a "cornerstone investor" in March 2009. However, he informed the SPL that Calunius had identified a potential replacement and that he was "confident that sufficient funding capital will be available". | [
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|
nsw_caselaw:54a636e73004de94513d9714:31 | nsw_caselaw:54a636e73004de94513d9714 | (3)The primary Judge was required to take into account that prejudice from delay in service may be mitigated if a defendant has notice of the nature of the claim before service of the originating process.
As in Kirk, the respondents were aware of the nature of the claims against them. It was therefore irrelevant that they did not have notice of the precise claims pleaded in the statement of claim and her Honour erred in taking that fact into account.
(4)The primary Judge was incorrect to find that the risk of prejudice increased with every successive extension. Since by 2005 some of the respondents had no memory of key events (so it was argued), there could be no additional prejudice by reason of delay beyond that date.
Furthermore, the primary Judge had failed to find that the risk of prejudice had been negated by the steps taken by the respondents to preserve documentation soon after the relevant events had occurred.
(5)The primary Judge erred in finding (at [428]) "presumptive prejudice" on the basis of "the inevitable deterioration in the quality of evidence" and the oppression of having the spectre of serious obligations pursued so long after the relevant events.
Reasoning
The Need to Identify Error
156The SPL's submissions, particularly on the question of prejudice, did not always pay sufficient attention to the discretionary nature of her Honour's decision and the role of this Court on an appeal from such a decision: cf Supreme Court Act 1970, s 75A(5).
As I have noted, the SPL does not suggest that the primary Judge misstated the relevant principles, either generally or in relation to prejudice.
With one or two exceptions, the SPL does not challenge the findings of primary fact relevant to questions of prejudice to the respondents and to the SPL, respectively. Rather, the SPL says that the primary Judge's conclusions on prejudice failed to take relevant considerations into account or took irrelevant considerations into account.
157In the absence of an error of principle or a successful challenge to findings of primary fact, an appellate court on appeal from a discretionary decision will not set aside the decision merely because it is arguable that a different interpretation might be placed on the primary facts. It is necessary to remember that error must be demonstrated.
It is also necessary to remember that the trial Judge, particularly in a complex case, has advantages over an appellate court when matters of judgment or impression are concerned: Branir v Owston Nominees Pty Ltd (No 2) [2001] FCA 1833; 117 FCR 424, at 435 [24], 437 [29], per Allsop J (with whom Drummond and Mansfield JJ agreed).
As Allsop J said in Branir (at 437 [28]), albeit in a slightly different context:
"if a choice arises between conclusions equally open and finely balanced and where there is, or can be, no preponderance of view, the conclusion of error is not necessarily arrived at merely because of a preference of view of the appeal court for some fact or facts contrary to the view reached by the trial judge."
158The point can be illustrated by the third argument identified at [155(3)] above. Mr Karkar relied on the primary Judge's observation (at [541]) that the pleaded causes of action "broadly follow[ed] the areas of investigation highlighted by the SPL" and were therefore "unlikely to have come as a surprise" to the respondents when they were served with the statement of claim.
This was said to satisfy the "test" in Buzzle (at [43]) and Kirk (at 434 [222(d)]), namely that it is relevant to consider whether notice was given to the defendants, prior to service, of the nature of the claim.
159The precise finding made by the primary Judge (at [314]) was that the respondents were on notice of the "likely subject matter of the claims that might be made against them", at least in respect of the principal causes of action. | [
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] | null |
|
nsw_caselaw:54a636e73004de94513d9714:28 | nsw_caselaw:54a636e73004de94513d9714 | It was also the SPL's failure to do anything other than adhere to Plan A, even after it became apparent in April 2009 that the implementation of Plan A depended on the timing of the judgment in ASIC v Rich.
On her Honour's findings (at [425]), the SPL's failure to pursue Plan B or something similar, either after 30 September 2009 or earlier, "had made it impossible to progress the proceedings diligently".
The Challenge to Findings Relating to ASIC v Rich
Submissions
142The SPL submitted that the primary Judge had misconstrued the evidence as to the respondents' attitude to the SPL awaiting the outcome of ASIC v Rich before serving the statement of claim.
Mr Karkar contended that her Honour had mistakenly found (at [102]) that when the PBL respondents (and Mr Yates) had sought to be heard on the application for the First Extension, they had contended that there should be no such extension.
In fact, the PBL respondents had not opposed the extension, but had merely indicated that they wished to be heard. According to Mr Karkar, this misinterpretation of the evidence was crucial to the finding that there was no reasonable basis for the SPL's belief that the respondents were content to await the judgment in ASIC v Rich.
143Furthermore, there was evidence that the respondents shared the SPL's belief that ASIC v Rich was central to the SPL's potential claims. The respondents or their representatives had repeatedly expressed the view or acknowledged that a decision in ASIC v Rich would provide considerable assistance to the SPL by shedding light on the causes of action the SPL intended to pass.
144The SPL further submitted that "objectively assessed" the evidence demonstrated that there were good reasons for awaiting the outcome of ASIC v Rich before serving the statement of claim. The allegations in the statement of claim were the subject of evidence and submissions in ASIC v Rich.
It was not to the point whether the SPL believed that the pending decision was relevant at the time the extensions were granted. The objective significance of the decision in ASIC v Rich was demonstrated by the fact that some of the judgments granting extensions or dealing with other interlocutory matters, had recognised the overlap between the SPL's claims and the issues in ASIC v Rich.
Reasoning
The Evidence Relating to the Respondents' Attitude to ASIC v Rich
145The SPL's "Statement of Factual Findings Challenged" did not include the primary Judge's finding (at [103]) that there was nothing to indicate that the respondents were willing to await the outcome of ASIC v Rich after the time at which the proceedings were filed.
Nor did the statement refer to the finding (at [327]) that the respondents had not acquiesced in the delay in service of the statement of claim. However, the SPL's written submissions appear to challenge those findings.
146Since the SPL relied on the respondents' conduct in the period leading up to the filing of the statement of claim, it is necessary to recount the most important events relevant to the SPL's challenge:
(1)The SPL was appointed on 23 December 2003, by order of Windeyer J, for the specific purpose of investigating the RRI and making recommendations as to any potential causes of action with a limitation period of less than three years (at [5]). One such cause of action related to s 588FF(3) of the Corporations Act (uncommercial transactions), which has a limitation period of three years (at [6]).
(2)Windeyer J directed that the SPL should assume that One.Tel had been insolvent by reason of the cancellation of the RRI. His Honour thought it was not in the interests of creditors to spend money on the insolvency question, when it would be resolved in ASIC v Rich: Onefone Australia Pty Ltd v One.
Tel Ltd (in liq) [2003] NSWC 1228, at [19]. (As the primary Judge found in the present case (at [32]), the insolvency question was not resolved by the judgment in ASIC v Rich.)
(3)In March 2004, the SPL obtained orders for the examination of a number of officers of PBL and News (at [39]). | [
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|
nsw_caselaw:54a636e73004de94513d9714:37 | nsw_caselaw:54a636e73004de94513d9714 | 187I am inclined to doubt that a desire to secure litigation funding can never justify delay in serving initiating process. Otherwise, I think that there is a good deal of force in the arguments advanced by Mr Young.
In particular, in the circumstances of this case, it is difficult to understand the justification for the SPL delaying service of the statement of claim until he procured a costs indemnity of $40 million. This figure was arrived at by means of little more than a highly dubious "back of the envelope" calculation.
It was at odds with the more careful assessment provided by the SPL's solicitors in September 2007. At that time, they estimated the SPL's cost exposure, if he decided to pursue claims against the News and PBL respondents, to be within the range of $6 million to $8 million.
While the solicitors correctly recognized the inherent difficulties of accurately estimating the cost of large scale litigation, their estimate provides little or no support for the SPL's insistence on a very much larger costs indemnity being in place before the statement of claim could be served.
188The SPL's position is even more difficult to justify when, on his own account, he could have had funding arrangements in place in or shortly after October 2008. Those arrangements would have covered his legal costs and fees and indemnified him up to a limit of $12 million against adverse cost orders.
Moreover, the evidence establishes that the SPL expected to have additional resources at his disposal in the form of $8 million to $9 million "free cash". It is true that One.
Tel itself was to be a member of the funding syndicate, a role that would have consumed the free cash of about $7.5 million available to the SPL through the GPL. But the additional funds the SPL expected to receive could have provided further security against any adverse cost orders in the proceedings.
The conclusion seems inevitable that the SPL's insistence on an indemnity of $40 million reflected his determination to eliminate even the remotest chance that he would be personally exposed to any liability to pay costs in the proceedings.
189The significance of the free cash and the expectation of further funds is that the choices facing the SPL were not as stark as Mr Karkar suggested in argument.
He submitted that the only practicable choices open to the SPL, other than delaying service of the statement of claim, were to proceed with the proceedings and hope that litigation funding would eventuate, or to serve the statement of claim and immediately seek a stay of the proceedings.
The first of these two choices he characterised as "imprudent and irresponsible". The second, so he contended, created a dilemma for the respondents. If they successfully opposed a stay, the SPL would not have been able to pursue the proceedings because he had insufficient funds.
190Even disregarding the opportunities available to the SPL to obtain litigation funding in 2008, he had sufficient resources not only to serve the statement of claim, but also to conduct the proceedings using the available free cash.
While the free cash was unlikely to be sufficient to enable the proceedings to be conducted to their conclusion, the further funds expected to become available to the SPL may well have permitted that course.
If the respondents sought security for costs, the further progress of the proceedings might have depended on the availability of litigation funding (although not in the amounts the SPL sought). But the service of the statement of claim and pursuit of the proceedings in these circumstances could hardly be described as "imprudent and irresponsible".
191I do not think it is necessary to determine whether these matters would provide an independent basis for upholding the orders made by the primary Judge. It is enough to say that they lend powerful support to the conclusions her Honour reached.
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|
nsw_caselaw:54a636e73004de94513d9714:18 | nsw_caselaw:54a636e73004de94513d9714 | This review, according to the SPL, required an extension of three months (at [434]). In her Honour's view (at [432]), the change of solicitors must have contributed to a "not insubstantial further delay".
92The primary Judge observed (at [434]) that the SPL's representatives did not inform Barrett J, when he heard the application for the Sixth Extension that:
"it was proposed that consideration be given to the introduction of a vast array of new and very serious allegations (the mere deletion of defendants and the need for further particularisation giving no indication of what was in store in terms of the pleading amendments).
(It may, of course, be that there was no intention at that stage to plead matters such as conspiracy or fraud. However, it does not seem to me that his Honour was alerted to the scope of the exercise then being proposed to be undertaken - of substantially rewriting the claims the subject of the proceedings albeit by reference to some or more of the same set of facts.)"
93Her Honour criticised (at [435]) the SPL's decision to engage new solicitors:
"[The SPL] said that he had deliberately refrained from incurring substantial expenses in relation to the amendments until the funding was in place so that this could be done at the expense of the funder.
The affidavit referred to the engagement of new solicitors, which [the SPL] said in the witness box had been contemplated for some time and discussed as a possibility as early as late 2007 because of the need for litigation funding and his perception that litigation funders generally liked to have significant input into the lawyers to be retained ...
Without any disrespect to the lawyers in question,
the seeking of an extension for that purpose (when considerable sums and time had already been expended on and by the lawyers who had acted on the matter for some years in preparing the proceedings and who presumably would have been in a position to review the ASIC v Rich judgment and attend to any pleading amendments in a much shorter space of time),
whether in order to satisfy the wishes of litigation funders or not, seems to me to be contrary to the objective of the just, quick and cheap resolution of matters in dispute (and the time so involved was certainly contrary to the expectation that White J had had when amending the SPL's powers to allow for the review of the ASIC v Rich material in 2006).
(To the extent that it was at the behest of the litigation funders, and I have nothing other than the suggestion from [the SPL] himself to indicate whether that was the case, this again suggests a willingness of the SPL to abdicate at least some of the decision-making to the litigation funder(s).)"
94Her Honour observed (at [437]) that the delay since the relevant events was now nine years. Three years had elapsed since the filing of the statement of claim (at [431]).
Even without evidence of actual prejudice, there had to be real concern about the prejudice such a delay was likely to cause the respondents (at [437]). Her Honour recognised (at [438]) that it was also necessary to take into account prejudice to the SPL in the form of the loss of a potential claim of considerable value.
95Nonetheless, in her Honour's view (at [439]), the
"significant factor that ...
weighs against an extension as at May 2010,
is that the sole reason for the delay at that stage seems to have been the litigation funders' desire to retain different lawyers and to conduct not simply a process of amending the claim to deal with amendments based on the material emerging in ASIC v Rich (materials which had already been reviewed by the SPL's previous lawyers) but a wholesale review and expansion of the pleadings.
The SPL had nine months to serve a statement that had been drafted already to serve back in 2007." (Emphasis added.)
Mr Karkar accepted during oral argument in this Court that he could not point to any error in this paragraph of the judgment.
Discharge Orders
96The primary Judge summarised the position as follows:
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|
nsw_caselaw:54a636e73004de94513d9714:24 | nsw_caselaw:54a636e73004de94513d9714 | "[The SPL] has had regard to the interests of creditors in not implementing Plan B to this point because of the additional effective cost to the creditors of having a larger 'equity' pool claiming on any fund generated. However, if the requirements of justice are for service sooner than ASIC v Rich, [the SPL] must implement Plan B for funding."
122In the SPL's cross-examination at the hearing before the primary Judge of the respondents' discharge application, he gave the following evidence:
"Q. The position was this, wasn't it, that at this time, April of 2009, you didn't take the view that it was in the interests of creditors to await for the decision of ASIC v Rich but rather you were concerned because that seemed to be a condition of the funding?
A. That's correct.
Q. Your position then was, as I think you said it was before, that you weren't prepared to go ahead without funding?
A. That's correct.
...
Q. ... The only impediment as you saw it was the obtaining of funding, the making of certain minor amendments and the obtaining of leave of the court?
A. Yes.
Q. In paragraph 23 and following of this affidavit [of 20 April 2009] you set out what you describe in the affidavit as free cash available in the liquidation of One.Tel. See that?
A. Yes, I do.
Q. That amount was 7.5 million to 8 million with an estimate from Mr Sherman [the General Purpose Liquidator] that another 8 to 9 million would come in, is that right?
A. Yes, I believe the 8 to 9 million was expected to come in at some future date.
Q. So when Mr Sherman was referring to 'free cash', as you understood it what he was referring to was cash that would be available to prosecute the One.Tel litigation?
A. Yes, that's correct.
Q. And that was 7.5 to 8 million immediately and the balance, 8 to 9 million, becoming available in the next 12 months?
A. That was the expected timeframe of Mr Sherman.
Q. That, I want to suggest to you, was ample funds to commence these proceedings?
A. No, it was not.
...
Q. You weren't prepared to use the free cash available to commence the proceedings without obtaining external funding?
A. The funds themselves were the 7.5 to 8 million that was available at that time was, as I recall, proposed to be included in the funding, but it was not enough in terms of the cash required and the cover needed for adverse costs, the second layer of adverse costs.
Q. You believed, at that stage - that is, in April 2009 - you'd be able to get funding, didn't you?
A. Yes, I did.
Q. And you certainly had enough money to commence the proceedings?
A. No, I did not.
Q. You had $7.5 million, didn't you?
A. Yes, I did.
Q. And that would have been enough to commence the proceedings, correct?
A. Whilst it may have been enough to commence proceedings per se, it was not enough to see out the proceedings and provide the necessary cover for potential adverse costs if the case was lost.
Q. And you weren't prepared to take any risks until you had a Funding Agreement in place?
A. That's correct.
Q. Even though you knew, by 2009, that the incidents which had occurred and which gave rise to the proceedings took place some eight years or thereabouts earlier?
A. That's correct.
Q. And even though your advice was that there was a high probability that you would obtain funding?
A. Yes.
Q. And that is what you say in paragraph 44 of your affidavit of [20 April 2009]. And, once again, would you agree with me that the sole reason that you weren't prepared to serve and sought an extension - this is in April 2009 - was that you did not have funding locked in?
A. That's correct."
123On a date not disclosed in the evidence, but before 14 May 2010, the SPL entered into a Funding Agreement with litigation funders. The SPL's report to creditors dated 5 August 2010, which was before the Court on the SPL's Sixth Extension application, recorded that the SPL had obtained court orders on 14 May 2010 preserving the confidentiality of the Funding Agreement. | [
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|
nsw_caselaw:54a636e73004de94513d9714:34 | nsw_caselaw:54a636e73004de94513d9714 | 170Contrary to the SPL's submissions to this Court, the evidence given by Mr Packer and Mr Murdoch in ASIC v Rich does not establish that, from the time the statement of claim was filed if not earlier, neither had any recollection of the events relevant to the SPL's pleaded claims.
This case is not like Maile v Rafiq [2005] NSWCA 410 (to which Mr Karkar referred), where there was a single, narrow factual question to be resolved and it was clear that the parties' memories had not faded in any relevant way: see at [90], per Tobias JA (with whom Brownie AJA agreed).
The pleaded case against the respondents raises a large number of factual issues, many of which are different from to the issues addressed in ASIC v Rich. Even if attention is confined to the evidence that could be given by Mr Packer and Mr Murdoch in the proceedings, it was open to her Honour to conclude that the risk of prejudice to the respondents increased as time passed.
171In any event, as her Honour found (at [269]), there were many potential witnesses in the proceedings instituted by the SPL who had not previously given evidence as to their recollection of the relevant events and who had not otherwise had their memories refreshed.
For example, not all of the 27 people who attended the crucial board meeting on 29 May 2001, which was referred to in the statement of claim, had recorded their version of what transpired at the meeting. Her Honour considered (at [269]) that even if witnesses had had an opportunity to record their recollections, their evidence would:
"have less immediacy (and hence be more prone to be unreliable) than it would have been closer to the events in question".
172In my view, it was well open to the primary Judge to find (at [270]) that, even taking into account the opportunity for some witnesses to record their recollection of events, the likelihood of prejudice had not been negated.
Her Honour was entitled to take into account not only the number of potential witnesses in the proceedings, but also that it was not until service of the statement of claim that the respondents learned of the precise allegations against them. That situation came about, as I have already noted, because the SPL insisted on maintaining confidentiality of the statement of claim until it was served.
Presumed Prejudice
173What I have said on the question of incremental prejudice largely answers the SPL's complaints about her Honour's findings as to presumed or inherent prejudice. I add the following observations:
* The primary Judge's assessment (at [449]-[450]) of the prejudice to the respondents in having allegations of serious dishonesty determined years after the filing of initiating process is supported by the observations of Tadgell and Ormiston JJ (with whom Brooking J agreed) in Bishopsgate Insurance Australia Ltd (in liq) v Deloitte Haskins & Sells [1999] 3 VR 863, at 887 [60].
While it is true, as the SPL contended, that he would have to prove the allegations of serious misconduct to the so-called Briginshaw standard, this does not detract from the conclusion that the respondents would suffer prejudice by reason of the delay in serving the statement of claim.
* I do not think it is correct to say (as the SPL submitted) that the respondents "took all conceivable steps to preserve the position" by recording their evidence shortly after the relevant events had occurred.
While the respondents clearly did take steps to record evidence and receive legal advice, they took measures to preserve the position without the benefit of knowing the precise allegations to be made against them. In addition, as I have noted, not all potential witnesses had their memories refreshed or their evidence recorded.
* Nor do I think it correct that the primary Judge failed to appreciate that the relevant delay was the time between filing of the statement of claim and service on the respondents. Her Honour was conscious of the need to focus on the prejudicial consequences of the delay in service for that period (see for example, at [289], [291], [431]). | [
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] | null |
|
nsw_caselaw:54a636e73004de94513d9714:9 | nsw_caselaw:54a636e73004de94513d9714 | Not surprisingly, a very large volume of documentary evidence was tendered at the trial before Austin J. Oral evidence was given by Messrs Packer, Murdoch and Yates (among others). All three were extensively cross-examined by Mr Rich's counsel.
46The SPL contended in the present proceedings that there was a substantial overlap between the issues in ASIC v Rich and those raised by the statement of claim in this case. In particular, it was said that the vital question of One.
Tel's solvency as at 29 May 2001, when the RRI was cancelled and One.Tel's board resolved to appoint administrators, was expected to be determined by the judgment in ASIC v Rich.
47The primary Judge pointed out (at [55]) that the question of whether ASIC v Rich would resolve the issue of One.Tel's solvency was addressed by White J, in a judgment given on 26 April 2006 on an application by the SPL to vary the terms of his appointment as Special Purpose Liquidator of One.
Tel. In that judgment (Onefone Australia Pty Ltd v One.Tel Ltd (in liq) [2006] NSWSC 349), White J recorded (at [16]) that at the trial in ASIC v Rich, which had not then concluded, Austin J had rejected a substantial body of expert evidence tendered by ASIC in relation to solvency.
White J also said (at [17]) that in his view it was not clear that the precise questions of solvency relevant to the cancellation of the RRI would necessarily be determined by the judgment in ASIC v Rich. As events transpired, the judgment in ASIC v Rich did not resolve the questions of solvency raised for determination in the proceedings against the respondents.
48The primary Judge in this case noted (at [323]) that senior counsel for the SPL had accepted that there was no agreement in place as at November 2007, or at any time thereafter, pursuant to which the respondents consented to the extension of time for the institution and hence later service of the proceedings until six months after delivery of the judgment in ASIC v Rich.
A request made by the SPL's legal representatives to the respondents' solicitors in April 2008 to confirm that they had instructions to accept service, was inconsistent with any arrangement that service should be deferred until delivery of the judgment in ASIC v Rich (at [117]).
49Furthermore, it could not be said that the respondents had acquiesced in a delay of the proceedings until delivery of judgment in ASIC v Rich. The SPL could not reasonably have formed the view (from November 2007) that the PBL respondents and Mr Yates, if not the News respondents, acquiesced in any further delay, since they had sought leave to oppose the First Extension (at [325]).
Nor had they encouraged the SPL to believe (as he claimed he did) that the respondents acquiesced in delays in serving the statement of claim (at [327]).
6. Legal Advice and Investigation
50In May 2007, the SPL received senior counsel's advice that the claim then propounded had reasonable prospects of success. The SPL decided to defer service of process to permit senior counsel to review the pleadings (at [108]). At that stage, the SPL had not completed his investigations and had also formed the view that there were insufficient funds available to run the proceedings (at [109]).
51Following filing of the statement of claim, the SPL (in accordance with the wishes of the Committee of Inspection ("COI")) requested another senior counsel to review the pleadings. In addition, he took steps to procure funding for the litigation (at [111]).
52By March 2008, the SPL had formed the view that it was likely that the proceedings against the respondents would be actively pursued (at [116]). On 11 April 2008, the SPL received detailed final opinions from counsel which were incorporated into packages sent to a number of potential litigation funders (at [340]).
At this stage, the SPL had formed the view that the proceedings should be pursued, but considered that he did not yet have the requisite funding to do so (at [341]). By May 2008, the SPL had concluded his investigations into the merits of the claims against the respondents. | [
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|
nsw_caselaw:54a636e73004de94513d9714:33 | nsw_caselaw:54a636e73004de94513d9714 | Tel board on 17 May 2001, a few days before the relevant events) could have appreciated from reading the SPL's reports that the SPL's statement of claim would make specific allegations of serious wrongdoing against each of them.
Incremental Prejudice
167The primary Judge referred at considerable length to the principal authorities dealing with the significance of delay in the institution or conduct of civil proceedings. As I have noted, it has not been suggested that her Honour misstated the relevant principles.
These include the observations made by McHugh J as to the prejudicial effect of delay in Brisbane South Regional Health Authority v Taylor [1996] HCA 25; 186 CLR 541, at 551-553:
"The enactment of time limitations has been driven by the general perception that '[w]here there is delay the whole quality of justice deteriorates'. Sometimes the deterioration in quality is palpable, as in the case where a crucial witness is dead or an important document has been destroyed.
But sometimes, perhaps more often than we realise, the deterioration in quality is not recognisable, even by the parties. Prejudice may exist without the parties or anybody else realising that it exists ... The longer the delay in commencing proceedings, the more likely it is that the case will be decided on less evidence than was available to the parties at the time that the cause of action arose.
...
The effect of delay on the quality of justice is no doubt one of the most important influences motivating a legislature to enact limitation periods for commencing actions. But it is not the only one. Courts and commentators have perceived four broad rationales to the enactment of limitation periods. First, as time goes by, relevant evidence is likely to be lost.
Second, it is oppressive, even 'cruel', to a defendant to allow an action to be brought long after the circumstances which gave rise to it have passed.
Third, people should be able to arrange their affairs and utilise their resources on the basis that claims can no longer be made against them. ...The final rationale for limitation periods is that the public interest requires that disputes be settled as quickly as possible."
See also Jackamarra v Krakouer [1998] HCA 27; 195 CLR 516, at 526 [29], per Gummow and Hayne JJ.
168McHugh J in Brisbane South was speaking of the approach to be taken by a court to an application to extend the limitation period pursuant to statutory authority to do so. But his Honour's observations also inform the approach to be taken to an application to extend time for service of initiating process and to an application to discharge orders extending time.
In resolving such applications, the lapse of time to be considered is the period commencing from the filing of the initiating process, rather than the period commencing on the date the cause of action arose: Tolcher v Gordon [2005] NSWCA 135; 53 ACSR 442, at 448 [33], 460-461 [90]-[96], per Tobias JA (with whom Ipp JA agreed).
In the present case the primary Judge correctly recognised that prejudice had to be assessed by reference to the delay in service, calculated from the date of filing the statement of claim.
169Mr Karkar did not dispute that the principles stated by McHugh J were applicable to the present case.
However, he relied on evidence given by Mr Murdoch and Mr Packer in ASIC v Rich to attack the primary Judge's finding that the delay of three years and three months in serving the statement of claim caused prejudice to the respondents. Mr Karkar pointed to evidence by Mr Murdoch that he did not recall much about One.
Tel outside of board meetings and that his memory of board meetings was "hazy". Mr Karkar also pointed out that Mr Packer, when asked whether he had tried to forget about the events that had occurred in the six months before One.
Tel went into administration, replied that "in a general sense [the suggestion was] relatively fair". Mr Packer also repeatedly said in his evidence that he could not recall matters that the cross-examiner put to him. | [
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|
nsw_caselaw:54a636e73004de94513d9714:27 | nsw_caselaw:54a636e73004de94513d9714 | 135Once the SPL's challenge to factual findings are rejected, the SPL's contention that the primary Judge took into account an irrelevant consideration, namely the SPL's failure to pursue Plan B, must also be rejected. I deal briefly with the arguments relied on by the SPL.
136First, as I have already observed, the evidence and submissions before the primary Judge were different from those which were before Barrett J on the application for the Fifth and Sixth Extensions.
The fact that Barrett J, in his judgment in relation to the Fifth Extension, said it was understandable that a litigation funder (in fact, a litigation insurer) would wish to see the judgment in ASIC v Rich, does not mean either that the primary Judge was "second-guessing" the SPL's commercial judgment or that she reached conclusions inconsistent with those of Barrett J on the same material.
137In the absence of a contradictor, Barrett J proceeded on the basis that the continued unavailability of the ASIC v Rich judgment caused the litigation funding process to be delayed (at [6]). This, however, was not her Honour's finding.
She found that the SPL had an alternative source of funding to pursue, which did not depend on the ASIC v Rich judgment, but that the SPL chose not to pursue the alternative because it was too expensive.
That alternative source (Plan B) had been formulated by 30 September 2009, but on her Honour's findings could have been pursued by the SPL from an earlier time. In particular, Plan B (or some similar plan) could have been investigated from April 2009 when the SPL knew that one of the potential insurers wanted to see the ASIC v Rich judgment before committing itself to Plan A.
138The primary Judge was not concerned to analyse whether Plan A or Plan B was superior. She took into account that the SPL's deliberate decision not to investigate alternatives reflected his opinion as to the best interests of creditors, but her Honour found that he failed to give weight to the interests of justice in ensuring that the proceedings were commenced within a reasonable period.
139The SPL's submissions to Barrett J stated that "if the requirements of justice are for service sooner than ASIC v Rich, the liquidator must implement Plan B for funding".
Barrett J did not refer to this observation in his judgment and it is not entirely clear what it was intended to convey. The SPL may have been indicating that if the Fifth Extension was refused, he would have to serve the statement of claim immediately and rely on Plan B for funding.
Another possibility is that the SPL was indicating that he would have pursued Plan B vigorously, but still would not have served the statement of claim until Plan B bore fruit (which in fact did not happen until March 2012).
In any event, as I have noted, the SPL was well aware that the extension did not preclude the respondents subsequently seeking to discharge the order and that, if they did so, the application would be based on the evidence and arguments then advanced by the parties.
140The primary Judge clearly appreciated the preconditions to which Plan A and Plan B were subject as at November 2009. Contrary to the SPL's submissions, her Honour did not find that Plan B could have been finalised by November 2009, thus avoiding the need for the Fifth Extension.
Her Honour's major findings were that the SPL could and should have pursued Plan B (or some similar alternative to Plan A) earlier than he did. She recognised (at [425]) that it could not be known whether funding could have been finalised by November 2009. But that was because the SPL had not pursued the alternative courses available to him.
141The SPL correctly says that the time required to implement Plan B (11-15 weeks), if calculated from 30 September 2009 (when Plan B was formulated), took matters beyond 25 November 2009 (the date the Fourth Extension expired). But it was not just the SPL's failure to pursue Plan B after 30 September 2009 that her Honour took into account. | [
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|
nsw_caselaw:54a636e73004de94513d9714:13 | nsw_caselaw:54a636e73004de94513d9714 | The Extensions of Time for Service
71The primary Judge next considered the circumstances in which each of the six extensions of time was granted by the Court. She noted (at [281]) that the reasons given for the delay in service fell broadly into three categories:
"(i) to enable the completion of the SPL's investigations (this being relevant only in relation to the first extension of time);
(ii) to enable the SPL to secure funding (in satisfactory terms to the SPL) for the proceedings (that being, from late October 2008/early 2009 until at least September 2009, depended upon the outcome in and litigation funders' review of ASIC v Rich) (relevant to the second to fifth extensions); and
(iii) to permit a final review of the judgment in ASIC v Rich, handover of the matter to new solicitors and to allow for the preparation of the proposed amendments to the statement of claim having regard to the evidence, submissions and reasons for judgment in ASIC v Rich (the final extension)."
The First Extension
72In relation to the First Extension, the primary Judge pointed out that the relevant period of delay was from the date of filing of the statement of claim and not from the accrual of the cause of action pleaded (at [289]).
Her Honour did not think that a six months delay weighed heavily in the balance against an extension, particularly because the SPL's decision to commence proceedings shortly prior to the expiry of the limitation period could not be characterised as dilatory conduct (at [291], [292]).
73The SPL had given two main reasons for seeking the First Extension (at [294]). These were that further investigations were required before he would be in a position to make a final recommendation to creditors as to whether to serve the statement of claim on any of the named defendants and, secondly, that he had to be satisfied that there were sufficient resources available to fund the proceedings.
The primary Judge noted (at [304]) that the SPL had accepted at the time that there was no need, from his point of view, to wait for the judgment in ASIC v Rich before serving the statement of claim and that this was not a reason for seeking the extension.
74The primary Judge then addressed the extent of the respondents' knowledge of the allegations against them and made findings as to the SPL's conscious decision not to provide the respondents with a copy of the statement of claim prior to service (see at [25], [26] above).
75Despite her Honour's findings that the respondents had not acquiesced in any delay (at [49] above) she concluded (at [332]) that:
"the prejudice occasioned by a short six month extension is outweighed by the reason for which the extension was required [that is,
the need to complete investigations where there had been no suggestion that the SPL had been dilatory in that regard] and the circumstances in which the matter had reached this point, particularly in light of the significant prejudice to [the SPL] if an extension were not to be granted.
"
Second Extension
76The primary Judge summarised (at [338]) the reasons given by the SPL for seeking the Second Extension as follows:
"'to enable [him] to have sufficient time to obtain satisfactory litigation funding' ... and thereafter to take the following steps:
(a) make final recommendations to the Committee of Inspection and seek the Committee's views on the proposed funding agreement;
(b) make an application to the Court to vary powers to enter into a funding agreement;
(c) complete the proposed amendments to the Statement of Claim in these proceedings;
(d) seek leave to make those amendments; and
(e) serve the Statement of Claim." (Emphasis in original.)
77As I have noted (at [53] above), the application for the Second Extension had nothing to do with the pending judgment in ASIC v Rich or the need for further investigations. The SPL's reasons related to the need to secure litigation funding and Court approval for the funding agreement (at [347]). | [
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] | null |
|
nsw_caselaw:54a636e73004de94513d9714:8 | nsw_caselaw:54a636e73004de94513d9714 | 39With great respect to Mr Karkar, that submission rests on a misconception. Quite apart from the fact that there was material before the primary Judge that was not before Barrrett J, there is no relevant inconsistency between the Fifth and Sixth Extensions and the primary Judge's decision to discharge the orders granting those extensions.
The extensions of time were granted on ex parte applications by the SPL, in circumstances where it was made clear that the respondents would have an opportunity in due course to apply to discharge the orders.
When the respondents made such an application, they advanced submissions and relied on materials that were not (and, in certain respects, could not have been) put to Barrett J. This is precisely what his Honour envisaged would happen.
40This is not to say that the procedure established by the rules is ideal. Far from it. In Rich v Long [2008] NSWSC 487, also a case arising out of the liquidation of One.Tel, Young CJ in Eq identified (at [24]) "two great weaknesses" in what he characterised as the "English Procedure" for hearing ex parte applications for extensions of time to serve originating process:
"First, the court does not have the benefit of competing arguments from the proposed defendants. Secondly, if the extension were refused before the original time limit ran out, the plaintiffs could just serve the initiating process. If the extension is granted and later the defendants successfully move to set the extension aside, the plaintiffs may be without remedy."
His Honour considered (at [25]) that the "English Procedure", despite its drawbacks, was too firmly entrenched to be altered.
41In view of the criticisms made by Young CJ in Eq and the arguments advanced in the present case, there is much to be said for amending the UCPR to confer a discretion on the court to allow the unserved party to be heard in opposition to an application for an extension of time for service.
Among other advantages, this might minimise delay and unnecessary expense, at least in the long run. It is also likely to avoid the risks to the perceived institutional integrity of the court that can flow from decisions that may be seen (particularly by those unversed in the nuances of ex parte applications) as difficult to reconcile.
42Whatever the merits of amending the UCPR, the SPL was always aware that the respondents would have an opportunity, after they had been served with the statement of claim, to apply to discharge the orders extending the time for service.
The SPL also knew that any such application would be determined at a contested hearing at which all parties would be entitled to be heard. The respondents would therefore be entitled at the hearing to adduce evidence and advance arguments that were not before the Judges who granted the various extensions.
5. ASIC v Rich
43The delay in finalising the proceedings in Australian Securities and Investments Commission v Rich ("ASIC v Rich") was relied on by the SPL, both before the primary Judge and on the appeal, as a good reason for obtaining extension of time for service of the statement of claim against the respondents.
In ASIC v Rich, the Australian Securities and Investments Commission ("ASIC") sought civil penalties against Mr Rich, a director of One.Tel.
44ASIC commenced the proceedings in the Supreme Court against Mr Rich on 12 December 2001. The trial began before Austin J on 6 September 2004 and continued for nearly three years, concluding on 21 August 2007.
Austin J did not hand down judgment until 18 November 2009, when his Honour dismissed the ASIC's claims against Mr Rich: ASIC v Rich [2009] NSWSC 1229; 236 FLR 1. The SPL obtained the Fifth Extension on 16 November 2009, two days before delivery of the judgment in ASIC v Rich.
45As the primary Judge in the present case found (at [51]), ASIC v Rich involved a detailed analysis of One.Tel's financial position during the period from January 2001 until the appointment of administrators, a period that overlapped with the announcement and cancellation of the RRI. | [
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|
nsw_caselaw:54a636e73004de94513d9714:6 | nsw_caselaw:54a636e73004de94513d9714 | 27Her Honour later found (at [325]) that the SPL, after weighing the advantages and disadvantages of the courses of action open to him, "chose to delay the service of the originating process and to keep it confidential". Her Honour inferred (at [325]) that:
"there was perceived to be a tactical advantage in keeping [the respondents] in the dark as to the claims it was then intended to bring against them".
28The primary Judge rejected (at [148]) a suggestion made by the SPL that the respondents should have asked the SPL for a copy of the statement of claim. The PBL respondents had unsuccessfully sought a copy from the Court and the SPL (via reports to creditors) had stated that the claim would be kept confidential. In these circumstances:
"no criticism can ... be made of the [respondents] in failing to ask the SPL for it ...[I]t was a matter for the SPL, if he wished to minimise the chance that extensions of time would be set aside, to make a copy available (on a confidential basis if thought necessary) to the [respondents] rather than waiting for them to ask for it."
3. Absence of Opportunity to be Heard
29All six applications for extension of time in which to serve the statement of claim were made ex parte and were determined in the absence of the respondents. The PBL respondents were aware in November 2007 that the SPL intended to seek an extension of time for service of the statement of claim without prior notification to the respondents.
30On 13 November 2007, the day after the application for the First Extension came before the Corporations List Duty Judge, the PBL respondents and Mr Yates filed a motion seeking leave to be heard in the proceedings, without becoming a party to them.
Although the motion referred specifically only to the SPL's application to seek a variation in his powers (a matter that was also before the List Judge), the supporting affidavit made it clear that the PBL respondents wished to have the extension application heard in open court and to ensure that none of the evidence was subject to a non-publication order.
31In argument on the motion, senior counsel for the PBL respondents said that his clients might or might not want to oppose the SPL's application for an extension of the time for service.
However, senior counsel also submitted that the PBL respondents had a self-evident interest in the matter and that they had suffered prima facie prejudice because of the lapse of time since the relevant events had occurred.
32Barrett J refused the application by the PBL respondents on 15 November 2007: Onefone Australia Pty Ltd v One.Tel Ltd [2007] NSWSC 1320.
His Honour recorded (at [6]) the PBL respondents' submission that as named defendants in the unserved proceedings, they had an obvious and direct interest in the question of whether the time for service should be extended. His Honour gave these reasons for rejecting the application:
"9. There is ... a strong indication in the rules of the court themselves that a person named as a defendant in unserved originating process is not intended to be heard on an application for extension of time for which the process remains valid for service ...
10. [Rule 12.11(1)(e)] recognises the obvious point that there will be cases in which filed but unserved process is never served. Unless and until a filed process is served, the defendant has not been drawn into the proceedings.
The rule works on the basis that the named defendant is a non-participant in the process by which the court decides whether the time for service should be extended and that a defendant's interest in that question,
if there is any, is something that is to be aired and dealt with after the event - that is, when the plaintiff has, by service, shown that it does in truth draw the defendant into the proceeding. | [
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] | null |
|
nsw_caselaw:54a636e73004de94513d9714:32 | nsw_caselaw:54a636e73004de94513d9714 | While the causes of action pleaded would not have come as a surprise to the respondents because they broadly followed the areas of investigation reported by the SPL to creditors (at [541]), the respondents did not have specific knowledge of the causes of action pleaded (at [314], [319]).
160The primary Judge weighed in the balance the extent of the respondents' knowledge of the claims made against them. She distinguished Kirk (at [193]-[196]), correctly in my view, on the ground that the defendants in that case learned nothing new at all when the statement of claim was served.
They had been fully aware of the issues in the case because they were fully aware of a test case that had raised precisely the same issues.
161Her Honour did not take into account an irrelevant consideration or apply an incorrect principle when determining that the respondents' knowledge of the case against them did not militate against discharging the Fifth and Sixth Extensions.
She merely gave less weight to the respondents' understanding of the case against them prior to service of the statement of claim than the SPL considers would have been appropriate. I see no appellable error in her Honour's approach.
Unavailability of Records
162The SPL's submission on this question seems to rest on a misinterpretation of the primary judgment. Her Honour did not find that the respondents had suffered prejudice by the loss of documents after the filing of the statement of claim.
The respondents put forward the loss of documents as a response to a submission by the SPL that the respondents had not suggested that they had lost any access to witnesses or documents needed to defend the SPL's claims.
The primary Judge merely observed (at [426]) that the length of time that had elapsed since the relevant events increased the risk of prejudice from further delays, given that not all financial records were available.
Her Honour had in mind that the recollections of witnesses on contested issues were more likely to become less reliable if contemporaneous documentation had been lost. This seems to me an unexceptionable proposition.
Fresh Equitable Proceedings
163The SPL's submission that the primary Judge failed to take into account the likelihood that equitable claims would be time barred is curious. As the PBL respondents pointed out, it was the SPL who argued before the primary Judge that, as a matter of discretion, her Honour should not discharge the orders for extension of the time for service because an order for discharge would be futile.
The futility was said (at [457]) to flow from the SPL's entitlement to bring fresh proceedings seeking equitable relief against the respondents. In support of this contention, the SPL argued (at [471]) that a claim for such relief would not be defeated by the lapse of time.
164The primary judge, in the passages criticised by the SPL on appeal, was simply responding to arguments made on behalf of the SPL himself. When her Honour said (at [478]) that the only real cost of dismissing the current proceedings would be that the SPL would incur fresh filing fees, her Honour was accepting, for the sake of argument, the submission that had been advanced on behalf of the SPL.
Her Honour did not make a finding that little prejudice had been occasioned to the SPL because it would be a straightforward matter to institute fresh proceedings.
On the contrary, her Honour repeatedly acknowledged that discharge of the orders for extension of time would prejudice the SPL because he would lose potential causes of action against the respondents and the creditors would lose their financial investment in the proceedings.
165This submission must be rejected.
The Respondents' Notice of the Claim
166I have already explained why the SPL has not shown that the primary Judge erred in the manner in which she dealt with the respondents' prior knowledge of the claims pleaded against them (at [158]-[161] above). I add only that it is difficult to see how Mr Yates and Mr Macourt (both of whom were appointed to the One. | [
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|
nsw_caselaw:54a636e73004de94513d9714:30 | nsw_caselaw:54a636e73004de94513d9714 | However, the documents on which Mr Karkar relied do not establish this proposition. For example, a letter of 22 September 2006 from PBL's solicitors to the solicitors for the SPL said that ASIC v Rich related "in a core way" to the financial position of One.
Tel in the first half of 2001. But this letter was written before the statement of claim was filed and, of course, before the SPL had sought any extension of time in which to serve the statement of claim. It was also written in the context of negotiations designed (from PBL's point of view) to forestall public examinations of Mr Packer and other officers.
150A letter written by News' solicitors to the SPL's solicitors on 24 January 2007, questioned whether the SPL could have formed a concluded view on the question of One.Tel's solvency as at 29 May 2001 without the benefit of the submissions made and the judgment to be handed down in ASIC v Rich.
However, this letter, also written before the statement of claim was filed, was an attempt to persuade the SPL to withdraw his application for the issue of examination summons.
151Correspondence which post-dated the First Extension did no more than record events that had occurred. For example, a letter dated 10 August 2009 from PBL's solicitors to the group's company secretary merely reported (inaccurately) that the time for service of the statement of claim had been extended until one month after delivery of judgment in ASIC v Rich.
152I accept that the primary Judge overstated somewhat the effect of the evidence when she found (at [102]) that the PBL respondents had not only sought to be heard in the SPL's application for the First Extension, but wished to oppose the application. But I do not think that the overstatement was a material error.
153Senior counsel representing the PBL respondents at the hearing before Barrett J on 15 November 2007, no doubt conscious of the limited information then available to him, stated that his clients might or might not wish to oppose the application for an extension of time.
But he also submitted to Barrett J that the PBL respondents had been "self-evidently" prejudiced by the lapse of time since the critical events of May 2001.
This was a clear indication that, if the PBL respondents were given the opportunity to be heard, they were likely to oppose the application for an extension of time to serve the statement of claim.
At the least, the application by the PBL respondents put the SPL on notice that, if they were permitted to make submissions, they might well oppose the application for the First Extension and, a fortiori, any subsequent applications for extensions of time.
154For these reasons I do not think that the SPL has demonstrated any error in her Honour's findings as to the respondents' attitude to awaiting the outcome of the proceedings in ASIC v Rich.
PREJUDICE
Submissions
155The SPL did not suggest that the primary Judge had misstated the principles relating to prejudice as a criterion to be taken into account on an application for the discharge of orders extending the time for service of a statement of claim.
However, the SPL contended that her Honour had erred in her assessment of prejudice to the respondents flowing from the delay in service and to the SPL that would flow from a discharge of the orders for the Fifth and Sixth extensions. The errors were said to be the following:
(1)The primary Judge, in finding that not all financial records were available, failed to take into account that the unavailability of the records predated the filing of the statement of claim. Thus any prejudice to the respondents was not caused by the delay in service of the statement of claim.
(2)Her Honour wrongly thought that prejudice to the SPL was ameliorated by the possibility that he could issue fresh equitable proceedings against the respondents. In taking this approach, her Honour failed to recognise that there was a risk that any equitable proceedings could be defeated because of a time bar or other defences available by reason of delay. | [
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|
nsw_caselaw:54a636e73004de94513d9714:11 | nsw_caselaw:54a636e73004de94513d9714 | not to plead a limitation defence) for a period up to six months after the ASIC v Rich judgment was handed down (in the context of their assertion that further public examinations at that stage were unnecessary and were likely to prove futile), I was taken to nothing that indicated that such a willingness continued after the time at which the proceedings were instituted.
104. [The SPL] was clearly on notice that there was no agreement in place for the extension at that stage - it had been pointed out very clearly by White J in his April 2006 reasons and there was no suggestion at that time that his Honour had incorrectly described the position.
Further, [the SPL] has had the benefit of legal advice throughout and must have been aware of the risk that any extension of time obtained by him (on an ex parte basis) could be subject to later challenge (indeed,
that possibility was expressly adverted to by Barrett J both in November 2007, in the context of the defendants' unsuccessful application for leave to be heard, and, most recently, on the final extension application in May 2010).
" (Emphasis in original.)
62Her Honour found (at [116]) that by March 2008, the SPL had formed the view that it was likely that only the News and PBL respondents (including Mr Yates) would be pursued in the proceedings. At about this time, the SPL prepared a litigation funding package, which included a draft statement of claim.
63In October 2008, the SPL entered into a Due Diligence Agreement in relation to litigation funding (at [118]). The Agreement contemplated the procurement by a syndicate (of which One.Tel was to be a member) of funding for the litigation. The proposed funding was to cover the SPL's legal costs in the proceedings and his own remuneration in connection with the litigation.
It was also to include an indemnity in respect of adverse cost orders, to a maximum of $12 million. It was further contemplated that Indemnity Shortfall Insurance would be obtained for an additional amount of $28 million, making a total of $40 million available to cover any adverse cost orders against the SPL. The due diligence period was eight weeks, although this was subsequently extended.
64In fact, completion of the litigation funding arrangements did not occur until after judgment had been handed down in ASIC v Rich in November 2009. Her Honour considered (at [120]) that the delay in completing the litigation was due to:
"the concern by [the SPL] that he not be personally exposed and that he had funding in place to meet the full estimated 'catastrophic' adverse costs event (of around $40m); his desire to achieve this on the basis he considered most cost-effective for creditors through the procuring of indemnity shortfall cover..."
65The primary Judge explained (at [121]) the basis on which the SPL reached the figure of $40 million as the extent of his possible exposure to adverse costs orders:
"[The basis of the calculation] was that the SPL might be liable for the whole of the costs of the PBL and News defendants (include in a separate and equal amount for the CPH defendants within the PBL group) on a solicitor/client basis ... [the sum of] $40m was comprised in effect of ...
the amount estimated to the SPL's (solicitor/client) costs (roughly $14m); assuming that there would be the same level of costs incurred by each of the three sets of defendants - PBL, CPH and News, and adding this multiple of three times the SPL's costs to the $14m for the SPL's own costs." (Emphasis in original.)
66The primary Judge considered at some length the authorities on delay and prejudice. Her Honour then dealt with the respondents' contention that they had suffered actual prejudice by reason of the SPL's delay in serving the statement of claim.
In particular, the respondents argued that they had lost the opportunity to pursue potential cross-claims and to claim contribution from joint tortfeasors. They maintained that cross-claims might be pursued against other directors of One.Tel and various professional advisers to the company. | [
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|
nsw_caselaw:54a636e73004de94513d9714:3 | nsw_caselaw:54a636e73004de94513d9714 | 13There were a number of applications before the primary Judge. Relevantly for present purposes, the respondents applied pursuant to UCPR, r 12.11(1)(e) for orders discharging the orders extending the validity for service of the statement of claim.
Her Honour characterised (at [11]) the issue before her as whether any one or more of the orders for extension of the time for service of the statement of claim should be discharged or set aside.
14As the primary Judge observed (at [50]), perhaps with a degree of understatement, the respondents' application was "vigorously contested". The PBL respondents, the News respondents and Mr Yates were each separately represented by senior and junior counsel, as was the SPL.
15The hearing took place over four days, from 15-18 February 2011. The SPL gave oral evidence and was cross-examined. Her Honour was also presented with a great deal of documentary evidence and extensive written and oral submissions from the parties.
16The primary Judge delivered judgment on 13 May 2011. Her Honour declined to discharge the orders granting the first four extensions. However, she discharged the Fifth and Sixth Extensions pursuant to r 12.11(1)(e). This had the consequence, as I have noted (at [6] above), that the proceedings instituted by the SPL were dismissed.
17The SPL does not submit that the primary Judge incorrectly stated the principles governing the exercise of the discretionary power conferred by r 12.11(1)(e).
Those principles were laid down by decisions of this Court in Arthur Anderson Corporate Finance Pty Ltd v Buzzle Operations Pty Ltd (in liq) [2009] NSWCA 104 ("Buzzle") and Agriculture and Rural Finance Pty Ltd v Kirk [2011] NSWCA 67; 82 ACSR 390 ("Kirk").
The SPL's contention is that her Honour's exercise of discretion miscarried because she made some errors of fact, took into account irrelevant matters and failed to take into account relevant matters. Thus, so the SPL argues, her decision should be set aside in conformity with the principles stated in House v The King [1936] HCA 40; 55 CLR 499, at 504-505.
18The respondents do not challenge her Honour's decision not to discharge the first four extensions. However, they submit that the SPL has not demonstrated any material error that would justify disturbing her Honour's discretionary decision to discharge the Fifth and Sixth Extensions.
In addition, they have each filed a notice of contention seeking to uphold the orders made by the primary Judge on grounds not relied on by her Honour.
19Most of the SPL's submissions were directed to the order discharging the Fifth Extension, presumably on the basis that if that order was set aside, so too would the order discharging the Sixth Extension. However, the SPL challenged some additional matters upon which the primary Judge was said to have relied to support the discharge of the Sixth Extension.
Mr Karkar QC, who appeared with Mr Jackman SC and Mr D'Arcy for the SPL, did not suggest that if the order discharging the Fifth Extension was upheld, there was any independent basis on which to challenge the order discharging the Sixth Extension.
PRINCIPLES
20The principles governing the exercise of the power conferred by UCPR, r 12.11(1)(e) can be summarised as follows:
(1)The principles relevant to an application to extend time for service under r 1.12 also apply to a motion pursuant to r 12.11(1)(e) to discharge orders for extension: Kirk, at 402 [58], per Tobias JA (with whom Macfarlan JA and Sackville AJA agreed).
(2)In exercising the discretion conferred by r 12.11(1)(e), the court should consider:
"the attempts that have been made at service, the length of the delay, the reasons for the delay, whether the delay was deliberate, whether notice was given to the defendant, the conduct of the parties generally and the hardship or prejudice caused to the plaintiff by [discharging the orders] or to the defendant [by refusing to discharge the order]."
Buzzle, at [43], per Ipp JA (with whom Tobias and McColl JJA agreed) cited with approval in Kirk, at [94]. | [
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|
nsw_caselaw:54a636e73004de94513d9714:36 | nsw_caselaw:54a636e73004de94513d9714 | 183As to the second argument, the SPL gave evidence to the primary Judge that the change of lawyers was at the insistence of the litigation funders. He also gave evidence that as from May 2008, the only thing holding up service of the statement of claim was the need to secure funding, except for some "fairly minor amendments".
It was well open to her Honour to conclude that the engagement of fresh lawyers further delayed service of the statement of claim. Even if some amendments were required at this late stage, the inference was readily available that that the lawyers who were already familiar with the proceedings would have been able to complete the task more speedily than new lawyers.
Notices of Contention
184The respondents filed notices of contention, seeking to affirm the primary Judges decision on grounds other than those on which her Honour relied. Three grounds, in substance, were common to each of the notices of contention, although framed in different language:
(1)The SPL's deliberate decision to await a binding commitment from a litigation funder, in the circumstances of this case, was not a good reason to allow an extension of time for service of the statement of claim.
(2)Even if the SPL's desire to obtain litigation funding was a good reason, it was unreasonable for the SPL to delay service, since by October 2008 he had an offer of funding, which he could have accepted at that time. The offer would have covered his own costs and fees in an unlimited amount and provided an indemnity of $12 million in respect of adverse cost orders.
(3)In any event, the SPL had sufficient funding to commence the proceedings and to serve the statement of claim. Any delay in service beyond that time and certainly beyond November 2009 was unreasonable.
185In addition, the PBL respondents advanced a fourth ground in their notice of contention. They contended that any contribution claims in respect of matters pleaded in the statement of claim against them had become statute barred. Accordingly, so they argued, they would suffer irremediable prejudice if the orders extending time were not discharged.
Litigation funding arrangements
186Mr Young QC, who appeared with Mr Williams for Mr Yates had carriage of the argument on the litigation funding aspects of the notices of contention. In summary, he made the following submissions:
(1)The SPL's desire to await a binding commitment from a litigation funder was not a good reason for successive extensions of time for service of the statement of claim and, of itself, was sufficient to warrant discharge of the Fifth and Sixth Extensions.
(2)The SPL acted unreasonably in insisting on insurance coverage or an indemnity in the sum of $40 million to cover possible adverse cost orders. The figure selected by the SPL lacked the rational foundation and was not supported by contemporaneous estimates provided to him.
(3)As a matter of commercial reality, the SPL had an offer capable of acceptance in October 2008. That offer would have covered all the SPL's legal costs in the litigation, his own fees and non legal expenses as well as an indemnity of up to $12 million against the possibility of adverse cost orders.
The SPL's unwillingness to accept the offer was unreasonable having regard to the dictates of ss 56-59 of the CP Act, which emphasised the importance of the timely in efficient conduct of litigation.
(4)In any event, consistently with the primary Judge's findings (at [414]), the SPL had ample funds to commence the proceedings no later than February 2009. At all relevant times, the SPL had over $7.5 million in "free cash" held by One.Tel's general purpose liquidator ("GPL").
From February 2009, the GPL expected to receive a further $8 million to $9 million in "free cash" from the Netherlands. According to Mr Young, these resources were ample to allow the SPL to serve the statement of claim and to conduct the proceedings pending the outcome of negotiations for litigation funding. | [
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|
nsw_caselaw:54a636e73004de94513d9714:14 | nsw_caselaw:54a636e73004de94513d9714 | In this respect, her Honour found (at [350]) that there were sufficient funds available to the SPL at this stage to commence the proceedings, although not to meet the likely costs of the proceedings in full or to meet any adverse costs orders against which the SPL (not surprisingly) wished to be protected.
In this respect, the legislation governing some of the claims the SPL wished to bring, such as the uncommercial transactions claims, required the SPL personally to be the plaintiff.
Consequently, any adverse costs order would be against him personally: Arena Management Pty Ltd (Receiver & Manager Appointed) v Campbell Street Theatre Ltd [2011] NSWCA 128; 281 ALR 304, at 308 [18], per Campbell JA (with whom McColl and Macfarlan JJA agreed).
Furthermore, at the time the SPL sought the Fifth Extension the UCPR had not been amended to take their present form, which allows costs orders to be made against litigation funders even if they have not provided an indemnity to the relevant party: Arena Management at 309 [24]-[25].
78Her Honour expressed her conclusions in relation to the Second Extension as follows:
"358. By May 2008, seven years had passed since the events in question.
At this and each successive occasion, it must logically be the case at the risk of prejudice (whether that be termed presumptive, inferred or otherwise) from the passage of time, and the harshness of the operation of the delay on the individual [respondents] will have increased (at least in the absence of some further steps taken to preserve the position).
Similarly, the prejudice to [the SPL] by the potential loss of the claim and a loss of the (by now) increased financial investment in the proposed proceedings remained.
359. On balance, I consider that, weighing the above factors, the order for extension on this occasion should not be set aside."
Third Extension
79The primary Judge noted (at [360]) that a final opinion had been received from counsel in April 2008 and that at that stage the SPL was ready to serve the statement of claim, subject to funding and the leave of the Court.
Her Honour observed that the SPL had accepted in his evidence that by this stage he had been able to form a view as to whether the claim should be brought, independently of the pending decision in ASIC v Rich.
80Her Honour recorded (at [363]) that the SPL, in his affidavit, had given details of a proposed funding agreement with Calunius Capital LLP ("Calunius"), an offshore litigation funder. The SPL had said that a further extension of time for service was necessary because the due diligence period for Calunius would expire eight weeks after Court approval of the due diligence agreement (at [365]).
If an offer of funding was to be made, following favourable due diligence, a further 28 days would be required to enter into the agreement and seek Court approval to do so. For that reason, it was unlikely that funding arrangements could be concluded prior to 25 November 2008 (the extended date for service as it stood at the time).
81The SPL agreed in his evidence before the primary Judge that in October 2008, he had effectively received an offer that he could have accepted for the funding of his costs, non-legal expenses and an indemnity of $12 million in respect of adverse costs orders (at [367]).
Although the offer had been subject to due diligence, the SPL appeared to have been confident of the outcome of the process. The SPL had also agreed in his evidence that all delays after October 2008 were connected to his desire to secure additional funding coverage for a possible adverse costs order over and above the sum of $12 million.
Consequently, as at October 2008, the only "hitch" in finalising the funding agreement was the SPL's inability to find an insurer prepared to provide insurance on acceptable terms for adverse costs (as well as the due diligence period provided for in the agreement with Calunius (at [368])). | [
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] | null |
|
nsw_caselaw:54a636e73004de94513d9714:25 | nsw_caselaw:54a636e73004de94513d9714 | The reasons for the confidentiality orders were themselves subject to confidentiality orders: Onefone Australia Pty Ltd v One.Tel Ltd [2010] NSWSC 498, at [5], per Barrett J.
124On 20 May 2010, Barrett J approved the SPL's entry into the final Funding Agreement. The SPL has maintained confidentiality in the terms of the Funding Agreement. Accordingly, they have not been revealed to the respondents or, for that matter, to the primary Judge or this Court.
125The SPL did not adduce evidence as to the date the Funding Agreement was executed. Mr Karkar invited this Court to infer that the agreement must have been finalised a considerable time before 14 May 2010. However, there is no evidentiary basis for such an inference to be drawn.
Indeed, given that this is quintessentially a matter within the knowledge of the SPL, I think it appropriate to infer the evidence is that the final funding agreement was entered into shortly before 14 May 2010, nearly six months after the Fifth Extension was granted: Armory v Delamirie (1722) 1 Stra 505l 93 ER 664.
Reasoning
The Findings
126In my opinion, the primary Judge was justified in making the finding at [417] of the judgment (at [90] above). The SPL's written submissions to Barrett J on the application for the Fifth Extension (at [121] above) explicitly stated that the SPL had had regard to the interests of creditors, particularly the "additional effective cost" of Plan B, in not implementing Plan B to that point.
The written submissions implied that the SPL had deliberately decided not to implement Plan B because he regarded it as more costly to creditors than Plan A.
This reading of the submissions is consistent with the SPL's affidavit of 6 November 2009, in which he said that, although awaiting the judgment in ASIC v Rich had delayed the funding process, it had not prevented the SPL from pursuing alternative sources of funding.
127Plan B was first mooted by Calunius on 30 September 2009. The SPL adduced no evidence to explain why it had taken five months from the 17 April 2009 letter from Calunius (which indicated that one insurer wished to see the ASIC v Rich judgment before proceeding) for this alternative funding proposal to emerge.
Calunius' letter of 30 September 2009 said that if circumstances required prompt action (for example, because the Court would grant only a limited extension of time), it was possible to arrange cash funding (that is, Plan B1).
128In its letter of 5 November 2009, Calunius was "highly confident" that capital funding would be available (not including the $28 million referable to the second layer of a potential adverse costs order). There was still a "high probability" that financing would be successfully completed.
The latter comment was made under the heading "The Prospects for Successful Completion of the Financing", after Mr Wells had discussed Plans A, B1 and B2. Read in context, the comment related to both Plan A and Plan B.
Calunius gave no precise time line for the completion of Plan B, but the SPL said in his affidavit that Plan B could be completed in 11-15 weeks.
The SPL's own estimate supports the finding that Plan B was an available option that did not require the outcome in ASIC v Rich to be known and that would have permitted service within in a short time frame. I do not accept Mr Karkar's contention that at this stage Plan B was "no more than a concept" and that her Honour should have treated it as such.
129For the reasons I have given, the primary Judge was also justified in finding (at [423]) that the SPL had made a deliberate decision not to pursue what he knew was a potential source of funding. That decision meant that at no time between 30 September 2009 and the Fifth Extension on 16 November 2009 did the SPL do anything to advance Plan B. | [
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|
nsw_caselaw:54a636e73004de94513d9714:22 | nsw_caselaw:54a636e73004de94513d9714 | 110Mr Wells recorded in the letter that the preferred insurance provider had made a "broadly acceptable" offer of Indemnity Shortfall Insurance in January 2009. However, the insurance provider had subsequently changed its underwriting policy and proposed terms that were unacceptable. The letter continued as follows:
"We expect there will be further negotiations with the original preferred insurer but are now concentrating our efforts on two alternate providers
● One of these has completed an extensive review of the transaction and is favourably disposed but will not make a firm offer of insurance until judgement has been delivered in the ASIC v Rich proceedings.
● The other is in the process of reviewing the case materials."
111Under the heading "The Prospects for Successful Completion of the Financing", Mr Wells stated his conclusions as follows:
"● the case has now been reviewed by several highly competent, and experienced, assessors of litigation risk for the purposes of both insurance and funding. All of these reviewers have been broadly favourable in their analysis and have found that the case merits capital investment.
In the case of the preferred insurer this analysis has been overshadowed by internal policy issues and macro economic developments but their fundamental favourable stance augurs well for securing acceptable insurance from one of the alternate providers.
● The financial markets, whilst still stressed, are displaying signs of relative calm and a shift back to increased risk tolerance with a consequent willingness to commit capital."
He added this comment:
"This is work for which Calunius has not been paid and will likely only receive payment upon a funding agreement being entered with you. At Calunius we are presented with a large variety of litigious investment opportunities and as a result we have no difficulty in fully utilising our time and capital resources.
The fact that we continue to invest in this transaction is testament to the fact that we are confident it represents a financially viable claim that will be successfully be funded and insured."
112There appears to be no evidence identifying the steps, if any, taken by the SPL between April and September 2009 to secure funding. However, on 15 September 2009, Calunius sent an email to the SPL, apparently in answer to criticisms made by the COI of the litigation funding process.
The email asserted that the SPL's claim was "eminently fundable" and stated that Calunius remained confident that the case could be funded. The email also observed that, as delivery of the judgment in ASIC v Rich was presumably imminent, it was clearly reasonable to see the judgment before proceeding.
113On 30 September 2009, Mr Wells of Calunius prepared a document which incorporated for the first time the so-called "Plan B". The document recorded that Calunius had been engaged in discussions with a number of insurance providers in relation to the Indemnity Shortfall Insurance component of Plan A.
None of the insurers was prepared to proceed until delivery of the judgment in ASIC v Rich. This was "frustrating", but Plan A still represented the most cost effective solution.
114Mr Wells said that it was possible, if circumstances so required, to arrange funding using only a cash investment. Mr Wells suggested two approaches: "Plan B - Extended Funding Agreement" ("Plan B1") and "Plan B - Existing Funding Agreement Plus Separate Indemnity" ("Plan B2").
Plan B1 contemplated increasing the "Indemnity Amount" to the full extent of adverse risk cover required - that is, $40 million.
In this way, the Funding Agreement would cover all capital requirements for the funding of the litigation, but would require an increase in risk capital.
Plan B2 contemplated that the draft Funding Agreement would remain in place, but the Indemnity Shortfall Insurance would not be provided by an insurer, but by a separate special purpose indemnity company. Thus there would be two classes of investor: one providing the funding and the other the Indemnity Shortfall Insurance. | [
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] | null |
|
nsw_caselaw:54a636e73004de94513d9714:26 | nsw_caselaw:54a636e73004de94513d9714 | Her Honour inferred that the SPL's decision had the inevitable effect of prolonging the delay in commencement of the proceedings. Given that Plan B was not dependent on the judgment in ASIC v Rich and, on the SPL's estimate, had a time line of 11-15 weeks, it was well open to her Honour to draw that inference.
130Mr Karkar criticised the findings made by the primary Judge (at [424]) on the basis that there was no evidence demonstrating that the SPL himself appreciated in late 2009 that there was a high probability of funding at the highest level thought to be required.
Mr Karkar also submitted that her Honour's references (at [424]) to the SPL's cross-examination, where he agreed that there was a high probability that he would obtain funding, disclosed error.
In this evidence, as the respondents accept, the SPL was addressing the position as at April 2009. According to Mr Karkar, her Honour mistakenly assumed that the SPL was addressing the position in late 2009, by which time Calunius had proposed Plan B. In fact, since the SPL was addressing the position as at April 2009, his oral evidence related only to Plan A.
131In my opinion, the evidence justified her Honour's finding that the SPL believed in late 2009 that there was a high probability of funding at the level thought to be required.
Calunius had said precisely that in its letter of 5 November 2009, and had given reasons why it was so confident. The SPL said in his affidavit that his understanding, based on discussions with Mr Wells of Calunius, was that either version of Plan B could be completed within 11-15 weeks.
In cross-examination, the SPL said that he agreed with the advice he received from Mr Wells of Calunius that both Plan A and Plan B could be completed within 15 weeks. In these circumstances, it is not difficult to conclude that the SPL believed in November 2009 that there was a high probability that the required funding for Plan B could be put in place.
132Her Honour was also justified in inferring that there was no reason to believe that Plan B would not have been available earlier than 30 September 2009, had appropriate inquiries been made.
The SPL's evidence was that he chose not to pursue Plan B because it was a more expensive option. He also expressly accepted that the delay in the delivery of the judgment in ASIC v Rich had not prevented him pursuing alternative means of funding.
The SPL adduced no evidence as to the specific steps, if any, he took to pursue alternative funding between 15 April 2009 (when an insurer first indicated the need to await the judgment in ASIC v Rich) and late September 2009, when Calunius came up with Plan B.
Nor was there any evidence to suggest that Calunius (or another funder) would have found it more difficult to formulate and work on Plan B in late April 2009, than apparently proved to be the case five months later.
133The primary Judge's reference to the SPL's evidence in cross-examination does not, in my view, demonstrate error. Her Honour meticulously recounted the evidence given by the SPL, referring both to his affidavit and oral evidence. In my view, she understood that the SPL, in the relevant passage in his evidence, was describing the position as at April 2009, prior to the emergence of Plan B.
When the judgment is read as a whole, her Honour was making the point that the SPL had thought that Plan A had a high probability of success some months before Plan B had been formulated.
She considered that the SPL's views in April 2009 indicated the decision in late September 2009 not to pursue Plan B, which was "simply ... less favourable" in relation to cost, did not reflect any different view of the prospects of successfully securing funding.
134For these reasons, I reject the SPL's challenge to the primary Judge's findings of fact relating to the availability of litigation funding.
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] | null |
|
nsw_caselaw:54a636e73004de94513d9714:7 | nsw_caselaw:54a636e73004de94513d9714 | 11. To put this another way, a defendant who has been served and who is thereby given a definitive status in relation to proceedings which it is by then clear will be pursued should be heard only retrospectively on the question of extension of time for service, assuming he or she wishes to be heard at all.
12. This is, to my mind, an example of a situation in which the rules of court expressly put to one side the general expectation that affected persons should be heard before any order affecting them is made.
The expectation evidenced by the rules in this area is one of being heard after the event, not before the event, in much the same way as one might expect in relation to, for example, a subpoena. Much time and effort could be wasted if an unserved defendant were heard on a question that would become entirely academic if the plaintiff eventually decided not to serve at all."
33This decision provided the basis for all subsequent extension applications to be made ex parte, therefore without the respondents either being notified or having the opportunity to be heard.
In addition, the affidavits prepared by the SPL in support of the six applications for extension of time, together with exhibits and certain written submissions, were subject to confidentiality orders made on the SPL's application.
34The respondents did not gain access to the affidavits, exhibits and written submissions until they filed motions in September and October 2010 (after the statement of claim had been served) seeking orders for access.
The SPL resisted the applications, but Barrett J ruled in favour of the News respondents (who had carriage of the motions): Weston v Publishing and Broadcasting Ltd [2010] NSWSC 1288. His Honour held that there was no basis for maintaining the confidentiality orders, except for a limited class of commercially confidential documents relating to the litigation funding arrangements.
4. The Respondents' Entitlement to be Heard After the Event
35As the judgment of Barrett J on PBL's application to be heard in relation to the First Extension made clear (at [12]), the SPL was expressly put on notice (if he was not previously) that the respondents would have the opportunity to be heard on the question of extensions after the event.
Barrett J's judgment proceeded on the basis that an extension of time for service of originating process on an ex parte application could in no way determine the outcome of a subsequent application to discharge the order extending time.
36The point was reinforced on other occasions. In his judgment of 24 April 2009 granting the Fourth Extension, Barrett J observed (at [17]) that:
"if and when service within the extended period is actually effected, the defendants will have ample opportunity to argue that the order extending service should be set aside. This opportunity is assured by rule 12.11(1)(e) ..."
37In his judgment of 20 May 2010 granting the Sixth Extension, Barrett J noted (at [3]) that he had granted the Fifth Extension "with some hesitation" but that he was nonetheless prepared to grant "yet another extension" for two reasons. These were (at [5]):
"first, the broad discretion that the court has upon an application such as this and, second, the safeguard provided for the defendants by rule 12.11(1)(e)..."
38The provisional nature of a grant of extension of time is important. Mr Karkar submitted more than once in this Court that there was an inconsistency between decisions to grant the Fifth and Sixth Extensions and the primary Judge's decision to discharge the orders granting the extensions. The SPL's written submissions, for example, asserted that:
"[t]wo different judicial officers have reached diametrically different conclusions with dramatic adverse consequences for the applicants. There were no new or additional facts before the primary judge that were not before Barrett J which could explain the difference in result." | [
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] | null |
|
nsw_caselaw:54a636e73004de94513d9714:39 | nsw_caselaw:54a636e73004de94513d9714 | 196I have set out earlier (at [20],[21]) the principles governing the exercise of the discretion conferred by UCPR, r 12.11(1)(e). In the light of those principles, if the Court was required to re-exercise the discretion conferred by the sub-rule, I would have made orders discharging the Fifth and Sixth Extensions.
ORDERS
197I think that this is an appropriate case in which to grant the SPL leave to appeal. However, the appeal should be dismissed. The SPL should pay the respondents' costs of the appeal.
198Accordingly, the orders that I propose are:
(1)Grant the SPL leave to appeal.
(2)The appeal is dismissed.
(3)The SPL pay the respondents' costs of the appeal.
**********
DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision.
The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.
Decision last updated: 12 April 2012 | [
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] | null |
|
nsw_caselaw:54a636e73004de94513d9714:29 | nsw_caselaw:54a636e73004de94513d9714 | (4)The summonses issued to the respondents were dismissed by consent on 6 April 2004, on the giving of certain undertakings by the respondents. These included their consent to the extension of the three year limitation period to six years, for causes of action arising under s 42 of the FT Act and s 588FF of the Corporations Act.
It was a condition of the consents and undertakings that the SPL agree not to examine any of the officers in relation to the causes of action until the earliest of the following:
* the outcome of ASIC v Rich being known;
* six months prior to the end of the six year limitation period; or
* further order of the Court (after the respondents had an opportunity to be heard) (at [40]-[41]).
(5)On 26 April 2006, on the SPL's application, White J varied the SPL's powers so as to remove the limitation that he was to assume that One.Tel became insolvent as the result of the cancellation of the RRI (at [53]).
It was in this judgment that White J observed that Austin J had rejected a substantial body of expert evidence in ASIC v Rich and that it was not clear that the decision in that case would resolve the precise questions of solvency relevant to the cancellation of the RRI: Onefone Australia v One.Tel Ltd [2006] NSWSC 349, at [17].
(6)In September 2006 (shortly before expiry of the SPL's agreement not to conduct public examinations of the respondents' officers), the respondents offered to extend the limitation period until six months after delivery of the judgment in ASIC v Rich, but subject to a condition that the SPL not conduct public examinations (at [60]).
The offers related to the causes of action under the Corporations Act and s 42 of the FT Act (at [63]).
(7)The SPL did not accept the respondents' offer and in December 2006 applied for the issue of examination summonses directed to the respondents' officers (at [73]).
The respondents unsuccessfully opposed the issue of the summonses and in March 2007 they unsuccessfully applied to have them discharged. The respondents argued, among other things, that the SPL should defer major investigative efforts until after judgment in ASIC v Rich.
(8)Most of the public examinations took place in April and May 2007 (at [85]).
(9)The respondents did not subsequently offer to agree to the extension of the limitation period or to deferral of service of the statement of claim.
The Findings Were Justified
147It is clear that the respondents wished to avoid or postpone public examinations and, in order to achieve that objective, were prepared to agree to the deferral of the proceedings against them until a time measured by reference to the date of delivery of the judgment in ASIC v Rich.
Her Honour was clearly entitled to find that once the SPL rejected the offer made in September 2006, there was no basis on which the SPL could have reasonably concluded that the respondents were content for him to delay service for any particular period, and certainly not to delay service until May or August 2010.
148Mr Karkar submitted that the respondents had never disavowed the stance they had taken during the negotiations to avoid the holding of public examinations.
But the SPL never asked the respondents, after the SPL rejected their offer to delay the proceedings in return for foregoing public examinations, whether they remained willing to delay the proceedings until delivery of the judgment in ASIC v Rich.
It was hardly up to the respondents to warn the SPL that the offer they had made in an attempt to avoid public examinations would not necessarily be their position once the SPL rejected their offer and insisted on conducting public examinations.
149Mr Karkar drew attention to a number of documents which he said demonstrated that the respondents' position was consistently that the judgment in ASIC v Rich would prove central to the SPL's claims. | [
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|
nsw_caselaw:54a636e73004de94513d9714:16 | nsw_caselaw:54a636e73004de94513d9714 | (The coverage related to the second layer of a potential adverse costs order over and above the sum of $12 million already provided for, the additional layer being estimated by the SPL at $28 million.) These difficulties had led Calunius to propose in late September 2009 alternative funding structures for litigation (referred to by her Honour as "Plan B").
87Her Honour summarised (at [400]) the two versions of Plan B as follows:
"[The first version] involved the introduction of additional capital investors into the existing proposed funding syndicate to effectively provide an additional $28 million in capital in lieu of the indemnity shortfall insurance and that under this model all capital investors (in the total amount of funding) would rank pari passu.
A second version of 'Plan B' ... involved an implementation of the draft Funding Agreement structure unchanged, with the indemnity shortfall insurance cover being provided by additional 'contingent' capital investors."
88The primary Judge observed (at [401]) that there had been no suggestion by the SPL when applying for the Fifth Extension that funding for Plan A was not achievable within a relatively short period. The SPL had given affidavit evidence at the time that he had decided not to pursue Plan B because it would involve additional expense to the creditors.
He said in his affidavit that either Plan A or Plan B would take approximately 11 to 15 weeks to implement, but that the time required to implement Plan A would run only from the date of delivery of judgment in ASIC v Rich.
89After referring to Barrett J's judgment granting the Fifth Extension, her Honour found (at [411]) that as at November 2009 (and indeed from November 2007 at the latest):
"it could not safely be assumed by the SPL that the key defendants were prepared to accept that matters of controversy between the special purpose liquidator and those defendants could sensibly be left to await the outcome of ASIC v Rich. Rather, the SPL seems simply to have assumed that that was the case based on the earlier correspondence."
In this respect, she disagreed with Barrett J, who had said in his judgment (at [7]) that the respondents could be taken to have accepted that matters of controversy between them and the SPL could sensibly be left to await the outcome of ASIC v Rich. Her Honour's finding in this respect is not challenged by the SPL.
90The primary Judge continued as follows:
"413. The reasons for the delay were again solely attributable to the position adopted by the SPL as to the choice of litigation funding to pursue and the requirements of the proposed litigation funder.
However, by this stage the further (in my view, very significant) factor to note is that the SPL was aware that he could in all probability have secured litigation funding (even for the catastrophic costs scenario), albeit it at a higher cost, by proceeding with Plan B. He did not do so.
414. ... In his supporting affidavit, [the SPL] indicated that around $9m was available in the company at that time, and that another $8-$9m was expected to become available, giving some $17-18m on top of the legal expenses of more than $6m paid to date...
...
417. ...
[T]he deliberate decision by the SPL to pursue as at September 2009, in effect,
a funding option that required the outcome in ASIC v Rich to be known in advance (and not to pursue what from at least late September 2009 was known to be an available alternative option for funding that did not require the outcome in ASIC v Rich to be known and that would have permitted service within a short period of time - thus eliminating the uncertainty of timing inherent in the Plan A option)
is a significant factor pointing against any further extension.
418. It seems to me that this was a decision by the SPL, made in the awareness of a risk of challenge to the orders for extension (and on the basis that the SPL was apparently urging the court to defer a consideration of prejudice until after the originating process was finally served)... | [
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|
nsw_caselaw:54a636e73004de94513d9714:17 | nsw_caselaw:54a636e73004de94513d9714 | 419. [T]he practical effect of the SPL choosing to pursue Plan A and not Plan B was that (in effect) control of the time at which the originating process was to be served was largely abrogated to the litigation funders (since it was their requirement to await the decision in ASIC v Rich).
...
422. Balancing the factors outlined above, I have concluded that the order extending the time for service of the Statement of Claim (which was made in November 2009 with some hesitation by his Honour), should be discharged ...
423. It seems to me significant that there was a deliberate decision by the SPL not to pursue what he knew at that time was [a] potential alternative source of funding (and one that would not have been dependent on the ASIC v Rich judgment), which had the inevitable effect of prolonging the delay in commencement of the proceedings.
I accept that there was not at that stage a concluded agreement as to funding (and that there would have been a need for completion of the due diligence and hence funding was not assured)...
424. However, by late 2009, the SPL himself saw there being a high probability of funding by this time ...
and simply chose not to pursue that option (that being a deliberate decision on his part) in the time leading up to the November 2009 extension, though it was known by him by late September to have been an available alternative option for funding (and, had inquiries been made of alternative options at an earlier time, there seems no reason to believe that option would not have been available then).
In cross-examination, [the SPL] agreed that he was not prepared to take any risks until a funding agreement was in place even though he knew that the events in question had taken place some 8 years or so before and that there was a high probability that he would obtain funding .
.. His decision not to pursue Plan B (which was not suggested to be an inappropriate or inadequate method of funding, simply a less favourable one) meant that he had made it impossible to progress the proceedings diligently at that point.
425. Therefore, while I accept that the position was ... that there was no offer of funding then capable of acceptance so as to constitute a binding agreement ... the position is that whether or not funding could have been finalised as at late 2009 will never be known because of the SPL's decision not to pursue the avenue that he conceded was then available to him.
The arrangements for funding seem to have been well in train and the decision not to set the clock running (as it was put to [the SPL] in cross-examination) meant that this opportunity was foregone and the SPL was left,
in effect, at the dictates of the litigation funder as to the timing of its decision in relation to the shortfall indemnity insurance cover (without which [the SPL] was not prepared to proceed).
426. The (by then considerable) lapse of time since the events in question ... must have increased the risk of prejudice to the abilities of the [respondents] to conduct their defence (in circumstances where it was apparently known, by reference to Austin J's judgment that not all financial records were still available ...).
...
428. Taking into consideration the rationales by the courts for the imposition of limitation periods and the statutory context in which applications of this kind must be determined ...
the likelihood that continuing delay would prejudice the [respondents] by the inevitable deterioration in the quality of evidence and the oppression of having the spectre of proceedings of this kind, I am of the view that the order made in November 2009 ... should be discharged."
Sixth Extension
91The reason given at the time by the SPL for the delay leading to the application for the Sixth Extension was to permit new legal representatives, apparently retained on the instructions of the litigation funders, to review materials that previous legal representatives had already reviewed. | [
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] | null |
|
nsw_caselaw:54a636e73004de94513d9714:10 | nsw_caselaw:54a636e73004de94513d9714 | 53The reasons why an extension of time for service was sought at that time had nothing to do with the pending judgment in ASIC v Rich (at [344]), nor with the need to carry out further investigations (at [346]).
The reasons related to the need to secure litigation funding (including court approval for any funding agreement) and for proposed amendments to the pleading to be effected once approved by the COI (at [347]).
7. The Alternatives
54The primary Judge summarised (at [90]) the options the SPL believed he had available to him as follows:
"first, to serve the proceedings prior to the expiry of any limitation periods and then to serve the proceedings on all [respondents] notwithstanding that [he] had not completed all of [his] investigations,
the proceedings in ASIC v Rich had not been completed and [he] had not made a final decision as to whether to prosecute the proceedings against any of the [respondents] and the second option being to issue the proceedings prior to the expiry of any limitation periods and then to apply to the courts to extend the time within which to serve the proceedings .
.. (the latter being the course he adopted)."
55The primary Judge found (at [92]) that, leaving aside the possibility of agreeing with the respondents not to issue the proceedings until after judgment in ASIC v Rich, the SPL broadly had a choice either:
* to activate the proceedings by serving the statement of claim and putting in place measures to minimise costs pending judgment in ASIC v Rich; or
* to seek successive extensions of time.
*
56The primary Judge found (at [93]) that the link between the handing down of the judgment in ASIC v Rich and service of the statement of claim arose only in April 2009, when the litigation funders with whom the SPL was negotiating, said that they wished to await delivery of the judgment before making a decision.
The particular difficulty arose when potential insurers, who were asked to provide shortfall insurance cover for the second layer ($28 million) of a potential adverse costs order (on the worst case scenario) of $40 million, indicated that they wished to see the judgment in ASIC v Rich.
(The primary Judge said (at [93]) that the link with the judgment in ASIC v Rich became apparent in 2008, but her Honour's later findings make it clear that the link was first made in April 2009 (see [109] below).)
PRIMARY JUDGMENT
57I have referred, under the heading of "GENERAL OBSERVATIONS" (at [22] above) to some of the findings made by the primary Judge. In this section I summarise her Honour's reasoning on important aspects of the case.
58It is to be borne in mind that her Honour delivered a very detailed judgment, 317 pages in length (although not all issues addressed in the judgment are relevant to the appeal). The News respondents in their submissions described the judgment as "carefully reasoned". In my opinion, that is a fair description.
General Findings
59The primary Judge accepted (at [101]) that the SPL believed, from the time the statement of claim was filed, that the respondents accepted that the SPL's decision whether to proceed should await the outcome in ASIC v Rich. Her Honour did so notwithstanding that the SPL had not seen "fit to share [his belief] with the Court", at least on the earlier applications for extensions of time of service.
60However, her Honour did not accept (at [102]) that there was:
"a reasonable foundation for that belief at least as from the time of the first extension application in November 2007, when it was clear that some of the defendants (the PBL [respondents] and Mr Yates) wished to be heard on that application and to contend that there should be no such extension of time." (Emphasis in original.)
61Her Honour continued:
"103. ...
[w]hile it is certainly the case that, as late as January 2007, the [respondents] had expressed a willingness to agree to an extension of the limitation period (or, perhaps more accurately, | [
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|
nsw_caselaw:54a636e73004de94513d9714:0 | nsw_caselaw:54a636e73004de94513d9714 | Court of Appeal
Supreme Court
New South Wales
Medium Neutral Citation: Weston in Capacity as Special Purpose Liquidator of One.Tel Ltd (in liquidation) v Publishing and Broadcasting Ltd [2012] NSWCA 79
Hearing dates: 22 & 23 February 2012
Decision date: 12 April 2012
Before: Campbell JA at 1
Young JA at 2
Sackville AJA at 3
Decision: 1. Grant the SPL leave to appeal.
2. The appeal is dismissed.
3. The SPL pay the respondents' costs of the appeal.
[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system.
Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]
Catchwords: PROCEDURE - six successive extensions of time for service pursuant to Uniform Civil Procedure Rules, r 1.12 - service of statement of claim three years and three months after filing - primary judge discharges Fifth and Sixth extension pursuant to r 12.
11(1)(e) - whether primary Judge's exercise of discretion miscarried - whether challenges to findings on prejudice should be set aside - significance of the decision by the liquidator of the plaintiff to postpone service until litigation funding arrangements were in place - whether any conflict between extensions of time for service on ex parte applications and discharge orders
Legislation Cited: Corporations Act 2001 (Cth)
Civil Procedure Act 2005
Fair Trading Act 1987
Supreme Court Act 1970
Uniform Civil Procedure Rules 2005
Cases Cited: Agriculture and Rural Finance Pty Ltd v Kirk [2011] NSWCA 67; 82 ACSR 390
Arena Management Pty Ltd (Receiver & Manager Appointed) v Campbell Street Theatre Ltd [2011] NSWCA 128; 281 ALR 304
Armory v Delamirie (1722) 1 Stra 505; 93 ER 664
Arthur Anderson Corporate Finance Pty Ltd v Buzzle Operations Pty Ltd (in liq) [2009] NSWCA 104
Australian Securities and Investments Commission v Rich [2009] NSWSC 1229; 236 FLR 1
Bishopsgate Insurance Australia Ltd (in liq) v Deloitte Haskins & Sells [1999] 3 VR 863
Branir v Owston Nominees Pty Ltd (No 2) [2001] FCA 1833; 117 FCR 424
Brisbane South Regional Health Authority v Taylor [1996] HCA 25; 186 CLR 541
House v The King [1936] HCA 40; 55 CLR 499
IMB Group Pty Ltd (in liq) v Australian Competition and Consumer Commission [2006] QCA 407; [2007] 1 Qd R 148
Jackamarra v Krakouer [1998] HCA 27; 195 CLR 516
Maile v Rafiq [2005] NSWCA 410
Onefone Australia Pty Ltd v One.Tel Ltd [2010] NSWSC 498
Onefone Australia Pty Ltd v One.Tel Ltd [2007] NSWSC 1320
Onefone Australia Pty Ltd v One.Tel Ltd (in liq) [2006] NSWSC 349
Onefone Australia Pty Ltd v One.Tel Ltd (in liq) [2003] NSWC 1228
Rich v Long [2008] NSWSC 487
Tolcher v Gordon [2005] NSWCA 135; 53 ACSR 442
Weston v Publishing and Broadcasting Ltd [2010] NSWSC 1288
Weston v Publishing and Broadcasting Ltd [2010] NSWSC 499
Weston v Publishing and Broadcasting Ltd [2009] NSWSC 1235
Weston v Publishing and Broadcasting Ltd [2009] NSWSC 321
Weston v Publishing and Broadcasting Ltd [2007] NSWSC 1318
Category: Principal judgment
Parties: Paul Gerard Weston in his capacity as Special Purpose Liquidator of One.Tel Ltd (in liq) (First Applicant)
One.Tel Ltd (in liq) (Second Applicant) | [
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|
nsw_caselaw:54a636e73004de94513d9714:5 | nsw_caselaw:54a636e73004de94513d9714 | * PBL and News, on and from 25 May 2001, determined to undertake such steps as might be necessary to procure One.Tel to release them from an agreement which included the terms of the RRI and a commitment by PBL and News to subscribe for their full entitlement in the share offer and to underwrite any shortfall in subscriptions (par 85);
* PBL and News, on and from 25 May 2001, determined to undertake a course of conduct designed to convince the directors, officers and advisers of One.Tel that PBL and News had not been fully informed or had been misled when they determined that a capital raising of $132 million was sufficient to keep One.Tel solvent (par 86(ii));
* PBL and News withheld information from the board and independent directors of One.Tel that might have suggested that One.Tel had practical prospects available to it, as an alternative to insolvent administration (par 86(xv));
* PBL and News asserted to the directors and advisors of One.Tel that the underwriting and subscription agreements to which PBL and News were parties were conditional on satisfactory due diligence when, to their knowledge, they were not (par 86(xxiii));
* pursuant to the determination between PBL and News, PBL represented to the solicitors and auditors of One.Tel that the future cash requirements of One.Tel could be assessed by reference to past expenditure when, to their knowledge, the circumstances of the business had materially changed (par 95); and
* PBL and Mr Packer "feigned" an interest in securing capital from a third party to maintain One.Tel's solvency, when PBL well knew that the third party would require time to consider and obtain approvals for any such investment (pars 96, 97).
2. Non-Disclosure of the Statement of Claim and Other Material
24The respondents were informed, through their solicitors, of the filing of the statement of claim shortly after the event. The PBL respondents applied to the Supreme Court on 28 May 2007, three days after the statement of claim had been filed, seeking an order for access to the pleading.
That application was rejected, apparently by a Registrar of the Court. PBL did not seek review of the decision and did not renew its application. The result was that the respondents did not see the statement of claim until it was served on them on 23 August 2010.
25The primary Judge made findings as to the respondents' prior knowledge of the claims pleaded against them in the statement of claim:
"314. The [respondents] were informed, through their respective solicitors, of the filing of the claim from shortly after that occurred. They had already been on notice of the principal areas of investigation and had been alerted to the prudence of making notification of a potential claim to their insurers some time before.
They were on notice of the likely subject matter of the claims that might be made against them at least insofar as that comprised uncommercial transaction claims; perhaps insolvent trading claims; misleading and deceptive conduct claims; and claims for breach of their duties as directors under the Corporations Act.
315. They had been the subject of examinations in relation to matters relating to the renounceable rights issue and had given evidence in the proceedings before Austin J (and so were aware at least of the thrust of the questioning from the Rich ... perspective)."
26Her Honour accepted (at [317]) that the respondents were on notice of matters of public record such as the SPL's June 2004 report, which referred to possible claims under the Corporations Act 2001 (Cth) and the Fair Trading Act 1987 ("FT Act").
However, her Honour found (at [318]) that the SPL made a conscious decision not to provide the respondents with details of the allegations made in the statement of claim.
Therefore, while it could not be said that the respondents were totally unaware of the existence of potential claims against them or of the broad subject matter of those claims, it equally could not be said that they had specific knowledge of the claims actually made (at [319]). | [
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|
nsw_caselaw:54a636e73004de94513d9714:23 | nsw_caselaw:54a636e73004de94513d9714 | 115Mr Wells wrote a further letter on behalf of Calunius on 5 November 2009, presumably in anticipation of the application for the Fifth Extension. The letter restated the elements of Plans A, B1 and B2. It recorded that capital for the funding (apparently meaning the funding for Plan A) was to come from One.
Tel's funds, Calunius' own resources and from investors associated with or represented by Calunius. The letter reported that the original cornerstone capital partner had a much improved liquidity position and had rejoined the syndicate. Additional capital partners remained committed to the project. Accordingly, Calunius was "highly confident that sufficient Funding Capital will be available".
116The letter of 5 November 2009 noted that efforts in relation to Indemnity Shortfall Insurance had focussed on two providers. Both providers were favourably disposed (particularly the first) but wished to see the ASIC v Rich judgment before committing themselves. The impending judgment therefore represented "an insurmountable obstacle to insuring the adverse cost risk".
117While Plan A would be the best outcome for creditors, Calunius had spent some time considering Plan B1 and Plan B2. Either of these alternatives required a greater amount of cash capital than Plan A.
Calunius had had preliminary discussions with its capital partners regarding the possibility of proceeding without Indemnity Shortfall Insurance. It believed that, subject to satisfactory revision of the structure and terms of the Draft Funding Agreement, capital would be available.
118Mr Wells assessed the prospects for successful completion of the financing as follows:
"there is still a high probability that the financing will be successfully completed based on the following:
● The case has now been reviewed by several highly competent, and experienced, assessors of litigation risk for the purposes of both insurance and funding. All of these reviewers have been broadly favourable in their analysis and have found that the case merits capital investment.
● The financial markets, whilst still somewhat stressed, have shifted back to display an increased risk tolerance with a consequent willingness to commit capital."
119Mr Wells attached a chart showing time lines of the best and worst case projections for Plan A, being 11 and 15 weeks respectively. The letter suggested that the SPL allow for completion of the financing for Plan A to take three months after delivery of judgment in ASIC v Rich.
The author stated that he had not produced a detailed time line for Plan B, but it would not be less than three months and could be "somewhat longer".
120The SPL explained his preference for Plan A over Plan B in his affidavit of 6 November 2009, prepared in support of his application for the Fifth Extension:
"Because the alternatives involve introducing new capital participants with an interest in and claim on any judgment or settlement, both Calunius and I anticipate that the effective cost to the creditors of this strategy is much higher than obtaining insurance cover for the same risk of a capital requirement.
Hence my view remains that if funding can be obtained on the original model consistent with the interests of justice as to when service should be effected, the interests of creditors are best served by the insurance model.
Thus, whilst the delay in the delivery of judgment in ASIC v Rich has caused a delay in the funding process, it has not prevented me pursuing alternative funding, although such alternative funding would be at a greater cost to the creditors of One.Tel.
...
From my discussions with Mr Wells [of Calunius], my understanding is that a funding agreement with the structure envisaged by either version of Calunius' 'Plan B' can be completed within about the same time period as envisaged with Plan A [that is, 11-15 weeks], except that the starting time does not need to await the delivery of judgment in ASIC v Rich."
121The submissions made to Barrett J on the SPL's behalf in connection with the Fifth Extension application contained this statement: | [
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|
nsw_caselaw:54a636e73004de94513d971b:29 | nsw_caselaw:54a636e73004de94513d971b | 169The decision of Hoeben J appears to have been enshrined in a later amendment represented by s 15B(1)(b), which now includes "any unborn child of the claimant" at the time the liability in respect of which the claim is made arises and who is born after that time.
170By analogy, Mr Maiden argued that it does not matter that immediately prior to the death of Tyra, Joshua and Dylan were alive but were not living with Mr Kuehne. Counsel argued that there was evidence that Mr Kuehne had provided domestic service to all his dependants prior to the injury.
Secondly, it was submitted that, some or all of the children having received services from Mr Kuehne prior to Tyra's death, all of his children therefore fell within the class "of a kind" referred to in s 15B(2)(a).
171There is no doubt that there was evidence before the primary judge that Mr Kuehne had lived with his de facto wife and the four children between 1996 and 2004 prior to him moving back to Sydney by himself.
In 2005, Tyra had stayed with him in Sydney for three and half months, up to 15 September 2005, when Jayden then came to live with him. There was evidence about some of the care, albeit somewhat limited, that he had provided to all of his children prior to Tyra's death.
172There was evidence to show that, following the death of Tyra and the sustaining by Mr Kuehne of his psychiatric injury, the remaining children left their mother and moved to live with him.
For a brief period of time the family lived with Mr Kuehne's mother in Sydney. Following that, Mr Kuehne received significant help from the Salvation Army who provided care and assistance for the children after Tyra's death.
While Mr Kuehne was an in-patient in hospital, various family members looked after the children and they also assisted at many other times. Both his sister and his mother provided significant care for the children, helped clean Mr Kuehne's house, provided regular meals and other types of assistance.
173In my opinion, the point made by Hoeben J is applicable in a situation where, as here, a father has been providing services of one kind or another for his children and then, because of a matrimonial split-up, he is, at the immediate time the claim arises, providing services only to one or more of them but not all.
In any event, the evidence did establish that Mr Kuehne was providing services to all his children "before the time that the liability in respect of which the claim was made arose". The cross appeal should succeed on this point.
174As to the second error, I do not consider that this argument has been made good. The primary judge accepted that Mr Kuehne was a man with many pre-existing problems, principally emanating from drug and alcohol abuse: Red 84 H.
Nevertheless, he accepted that Mr Kuehne had developed chronic post-traumatic stress disorder and a chronic major depressive disorder, as a result of Tyra's death. He also found that Mr Kuehne was particularly vulnerable to psychiatric injury and there would have been a significant chance that he would have suffered such injury "as a result of a separate traumatic incident": Red 84 K-M.
175His Honour said at 84 U-W:
"I am also satisfied, and this is equally relevant to the care claim, that simply raising three young boys (two of them with ADHD) would test any single parent and could be a source of significant emotional conflict. In addition, until the end of 2010, Mr Kuehne continued to use marijuana which might have affected his mental state. ...
I am satisfied, based on the plaintiff's medical material and on the evidence of his mother and sister, that the plaintiff does continue to suffer the affects of the psychiatric injury stemming from his daughter's death.
I am also satisfied that with the provision of further treatment it is likely to improve so that he will return to a state where he will no doubt have many issues of anxiety and perhaps periods of depression, but they will be part of the condition that would have existed but for the injury." | [
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] | What is the relevance of a parent providing domestic services to their children prior to an injury, in relation to a claim under section 15B of the relevant legislation? | [
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nsw_caselaw:54a636e73004de94513d971b:0 | nsw_caselaw:54a636e73004de94513d971b | Court of Appeal
Supreme Court
New South Wales
Medium Neutral Citation: Warren Shire Council v Kuehne & Anor [2012] NSWCA 81
Hearing dates: 6 February 2012
Decision date: 16 April 2012
Before: McColl JA at [1]
Whealy JA at [2]
Sackville AJA at [184]
Decision: (1) Appeal allowed.
(2) Set aside judgment of Elkaim DCJ.
(3) Verdict and judgment for the appellant.
(4) Respondents to pay the appellant's costs of the proceedings and of the appeal.
(5) Respondents, if qualified, to have a certificate under the Suitors' Fund Act 1951 (NSW) in respect of the costs of the appeal.
(6) Cross appeal dismissed with costs.
[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system.
Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]
Catchwords:
TORTS - Appeal - negligence - common law duty of care - s 33 Companion Animals Act 1998 (NSW)
- whether local council owed a duty to residents to declare a dog "dangerous" - Stuart v Kirkland-Veenstra - whether a special statutory power - relationship between council and residents created by special statutory power - degree of control exercised by council - vulnerability of those who depend on proper exercise of statutory power.
TORTS - Appeal - negligence - breach of duty - whether hunting dogs inherently "dangerous" for the purposes of s 33 Companion Animals Act 1998 - whether hunting dogs had previously attacked "without provocation" - s 43A Civil
Liability Act 2002 - exercise of "special statutory power" - whether dogs had "repeatedly" threatened to attack or "repeatedly" chased people - Wednesbury unreasonableness standard - whether council's failure to declare dog(s)
dangerous so unreasonable no authority possessed of special statutory power could properly consider omission to be reasonable - s 44 Civil Liability Act 2002.
DAMAGES - Appeal - s 15 Civil Liability Act 2002 - meaning of "dependents" - s 15B(2)(a) Civil Liability Act 2002 - whether services needed to be provided to a class of dependents to claim gratuitous domestic services.
Legislation Cited: Civil Liability Act 2002 (NSW) - s 5B, s 5D, s 5E, s 15B, s 33, s 43, s 43A and s 44
Companion Animals Act 1998 (NSW) - s 8, s 9, s 10, s 10A, s 11, s 13, s 14, s 15, s 16(3), s 18, s 21, s 23, s 33, s 34, s 36, s 51, s 52
Local Government Act 1993 (NSW) Ch 12 Part 3
Supreme Court Act 1970 (NSW) - s 65, s 69
Cases Cited: Allianz Australia Insurance Ltd v Roads and Traffic Authority of NSW [2010] NSWCA 328
Associated Provincial Picture Houses Ltd v Wednesbury Corporation [1948] 1 KB 223
Brodie v Singleton Shire Council [2001] HCA 29, 206 CLR 512
Bromley London Borough City Council v Greater London Council [1983] 1 AC 768
Caledonian Collieries Ltd v Speirs (1957) 97 CLR 202
Council of Civil Service Unions v Minister for Civil Service [1985] AC 374
Crimmins v Stevedoring Industry Finance Committee [1999] HCA 59, 200 CLR 1
Graham Barclay Oysters Pty Ltd v Ryan (2002) 211 CLR 540
Kendrick v Bluescope Steel (AIS) Pty Ltd [2007] NSWSC 1288
Kuhl v Zurich Financial Services Australia Ltd [2011] HCA 11, 243 CLR 361
Kuru v State of New South Wales [2008] HCA 26; 236 CLR 1
Pyrenees Shire Council v Day [1998] HCA 3, 192 CLR 330
Roads and Traffic Authority of NSW v Dederer (2007) 234 CLR 330 | [
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] | What is the relationship between a local council and residents created by a special statutory power in the context of declaring a dog "dangerous" under the Companion Animals Act 1998 (NSW)? | [
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nsw_caselaw:54a636e73004de94513d971b:30 | nsw_caselaw:54a636e73004de94513d971b | 176In deciding to award Mr Kuehne a buffer for both past and future economic loss, the primary judge noted that this was "a difficult question" because his diminution in earning capacity, and its translation into economic loss, was complicated by his poor work history, his pre-existing health problems and his obligations to care for his children.
Indeed, his Honour found that Mr Kuehne had reached a stage by the time of trial that his inability to work was a consequence of his having to care for his children, rather than a product of his injury: Red 86 K-N.
177In relation to the care claim under s 15B, it was noted that the Council had submitted that he could not care for his children because he was, in any event, unable to do so without assistance. In that context his Honour said (89N):
"I think there is some force in the argument that Mr Kuehne's inability to look after the children is a product of him, with his general background, simply not being able to cope with three young boys, two of whom had been diagnosed with ADHD."
178The resolution of this argument was that the primary judge found, in Mr Kuehne's favour, that his ability to care for his children had been seriously impaired by his psychiatric injury. However, his Honour was concerned to ascertain the length of time for which Mr Kuehne had required compensable assistance, and whether it was required for the future.
This led his Honour to examine the facts that led to Mr Kuehne being present at the Nepean Hospital on 7 June 2009 where his diagnosis was "adjustment disorder, methadone dependence and pathological grief reaction". Following discharge from the Nepean Hospital, Mr Kuehne was admitted to Foundation House to deal with his methadone problem. His Honour said (at Red 91 T-V):
"I think his discharge from Foundation House signals a point in time when his incapacity to look after the children due to the injury would have ceased. This was on 20 July 2009 exactly three years from the death of Tyra."
179Again, at Red 92 L-M, his Honour said:
"Because I do not think the link between the injury and the need for services for Jayden can be extended beyond three years I do not allow any sum for future care."
180In my opinion, this was a finding that was open to his Honour. While it is true that aspects of Mr Kuehne's psychiatric injury were found to be likely to continue into the future, they were not such as to prevent him, on that basis, from looking after his children.
The difficulties which required the assistance of other people really arose, as his Honour observed, from the innate nature of bringing up three boys, two of whom had ADHD.
181Mr Kuehne's claim had been for thirty-eight hours per week, but it was cut down by the primary judge to ten hours on the basis that the claim could only apply to Jayden and not to Joshua and Dylan.
As I have said, that restriction in damages was not warranted. However, I consider that his Honour has not erred in confining the length of the period for which the damages were to be awarded to 20 July 2009, with no allowance for the future beyond that.
182Had the Council's appeal been unsuccessful, I would have directed the parties to bring in Short Minutes of Order to reflect the successful aspect of the cross appeal. In view of my decision that the Council's appeal must be upheld, I would simply dismiss the cross appeal.
183The orders I propose are:
(1) Appeal allowed.
(2) Set aside judgment of Elkaim DCJ.
(3) Verdict and judgment for the appellant.
(4) Respondents to pay the appellant's costs of the proceedings and of the appeal.
(5) Respondents, if qualified, to have a certificate under the Suitors' Fund Act 1951 (NSW) in respect of the costs of the appeal.
(6) Cross appeal dismissed with costs.
184SACKVILLE AJA: I have had the privilege of reading of Whealy JA's comprehensive reasons for judgment. | [
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] | What did the primary judge decide regarding Mr Kuehne's ability to care for his children? | [
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nsw_caselaw:54a636e73004de94513d971b:18 | nsw_caselaw:54a636e73004de94513d971b | 105The respondents' written submissions referred to general findings made by the primary judge that, it was argued, suggested a justification for a declaration on the alternative basis.
These included statements suggesting that the dogs were "roaming the streets", that they were "not properly secured", that Mr Wilson's property did not have "a child-proof fence", that the dogs were "untethered in the front yard", and that there were "many incidents with the dogs".
As I have said, quite apart from the difficulties of identification, these findings really did not address the issue. They were, at best, findings related to the dogs being a nuisance in the neighbourhood.
106Similarly, the written submissions made reference to the various entries in Mrs Todhunter's notes and the diary entries that were tendered as the remainder of Mr Langby's notes. None of this material added to the evidence I have already analysed.
There was also evidence from William James Langby Senior. He was the father of Mr Langby the Council ranger. He was scarcely a satisfactory witness, as he himself acknowledged. He had a number of serious health problems, which he described, and said (Black 158 L-M):
"It's brought me undone, can't remember a bloody thing."
He was asked to do the best he could. He said:
"Well I can, all I can say is I can recollect that I lived one vacant block, one road away from where the little girl got killed. And I can't say what the dog yard was like, I've never been inside the yard.
But he used to - and I also realise that what I say it [sic] an ounce of difference to what you fellows do or not because I know it's going to come out in the wash where - some way it's got to come out in the wash.
And I think the dog was - belonged to the young fellow which killed the kid or the kid had died from a heart attack or whatever, died from scared to death or petrified or something [sic]. But if a dog can get out, a kid can get in and a dog can get out.
And we, we lived as I said lived in and we had a fence around our yard and the dogs used to come to our place, jump over the fence, scare hell of my wife [sic]. And that's probably the only ...
Q: How often did that occur:
A: Not very often but it happened.
Q: What dogs are you referring to?
A: Oh well he had about 20 of them so which one would you pick?
...
Q: So when you observed these incidents of the dogs from the Wilson's property being out and on occasions jumping your fence what did you do?
A: I just - all I did was just walk outside and the dog would just shot through again. But dog - the dog was very, very, very - oh I don't know you - timid I suppose in a lot of ways but you just - that's the dog."
107Mr Langby Snr said he reported "it all" to the shire a couple of times. He added:
"Young Bill said 'We can't do anything about it - 'cause it was his to [sic] - problem. The Shire wouldn't do anything about it and everything."
108Mr Langby Snr said he could not remember when he had made any such report but said he always spoke to Mr Wielinga, the general manager of the shire. He added that he thought he'd probably rung two or three times but "sometimes it was over a tree and the kids in the school bus and sometimes it's over dogs": Black 160 D-F. The witness also complained that the dogs were "messing up" his lawn.
109I do not consider that Mr Langby Snr's evidence has any real significance for the matters raised by the Notice of Contention. It is a very slender reed on which to base any finding of substance.
110Mr Sheldon raised another argument in the context of the Notice of Contention. He argued that, as Mr Clark's evidence showed, potential witnesses were occasionally unwilling to be involved in any court proceedings that might follow from the Council's declaration of a dog as a dangerous dog. Mr Sheldon argued that this type of attitude "hamstrung the Council". | [
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|
nsw_caselaw:54a636e73004de94513d971b:12 | nsw_caselaw:54a636e73004de94513d971b | Target Boxer/Greyhound/Pit bull 10/11 months Male
Cage Boxer/Cattle dog/Greyhound 2 Male
Jessie Boxer/Wolfhound/Staghound 5 months Female
This table comes from Red 55 P-W. His Honour remarked, having set out the table, that Mr Wilson said that Widge, Ouzo and Cage were all trained pig hunters. Target was being trained. Tika was a pet. It appears that, after the attack on Tyra all the dogs (with the exception of Tika), were destroyed.
64Unusually, Mr Thomas Wilson was called by the respondents in their case. He gave his occupation as a drover and an accredited pig hunter. He said that he kept "a number of dogs" at 29 Garden Avenue in July 2006. Tika was his daughter's pet, and the other dogs were hunting dogs or being trained for that purpose.
He identified the dogs in accordance with the table prepared by the primary judge. He also gave the ages of the dogs although, in the case of Target, there was later evidence that he was about eighteen months old at the relevant time. Mr Wilson said that, on the evening when Tyra was attacked, Ouzo was "not loose in the back yard"; he was in a separate cage.
Jessie was a pup out of Tika and she was only five months old as at July 2006. It was suggested by his evidence that Mr Wilson had a number of other dogs that were owned either by himself or his son, but these were not at the premises on the day in question. They were normally kept out of town.
Indeed, Mr Wilson maintained (although the primary judge did not accept him on this) that there were only two dogs, Tika and Widge, who were always at Garden Avenue. Mr Wilson said that about a fortnight before 19 July 2006 the majority of his dogs had been located out of Warren, but they had been brought back into town because there had been a theft of dogs from their normal location.
65Mr Wilson said that when he found the girl's body in the back yard, Target and Cage were loose in the yard. Target's collar was broken and it appeared that he had broken free. Widge was also running free, although Mr Wilson maintained that Jessie was still in the cage down the back and Tika was on a chain. Ouzo was in another compartment in a cage "down the back": Red 176.
66The primary judge made a number of findings of fact about the attack on Tyra, including the circumstances of her being in the rear yard of the Wilson's home. He observed that there had been traces of dead chicken found on Tyra's clothing, the inference being that this may have been some type of precipitator for the attack.
Although his Honour could not ascertain precisely how the child obtained access to the rear of the Wilson property, it was either, he said, through or over the two gates on the western side of the house or through the house via the front and rear doors. His Honour favoured the former possibility, although the situation was not precisely clear.
67In any event, his Honour recited the circumstances of the discovery of the child after she had been attacked. Target was found with a red stain, apparently blood, on his fur. This was one of the dogs Mr Wilson had said was loose when he came upon the child in the rear yard. His Honour said (Red 59):
"The dogs were taken to the pound. Five of them were destroyed the following day. Tika was spared. On Snr Constable Walker's evidence there were seven dogs at the house when she attended. Mr Wilson only identified six dogs. Nothing of significance arises from the inconsistency.
There was no evidence to specifically identify which dog, or dogs, attacked Tyra. The fact that five dogs were destroyed perhaps raises an inference about their involvement; however, I think there would be too much speculation involved in that inference to make it reliable."
68The history of "aggressive" behaviour on the part of Mr Wilson's dogs conveniently starts with the evidence of a local woman, Mrs Moriarty. As with a good deal of the evidence on this topic, it was rather imprecise. | [
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|
nsw_caselaw:54a636e73004de94513d971b:27 | nsw_caselaw:54a636e73004de94513d971b | 156There were two aspects of Mr Wilson's evidence that the primary judge rejected that were not the subject of any complaint from Mr Sheldon. They were each a matter which his Honour was perfectly entitled to disbelieve. At Black 179 T-W, Mr Wilson claimed that his dogs "never roamed the street". That was clearly contrary to the evidence of a number of people, including the Council officers.
157Secondly, Mr Wilson denied having a number of dealings with Mr Langby about complaints concerning the dogs "being out and about": Black 180 DK. Again, in view of the competing evidence, the primary judge was perfectly entitled to reject this denial. It must have been obvious, to say the least, that Mr Wilson's evidence was, in a number of respects, highly suspect.
158The third matter was the one that Mr Sheldon complains of in this appeal. At Black 178 R-X, the following evidence was given by Mr Wilson:
"The truth of the matter is those six dogs - well four of those dogs, I kept out the road and I had my dogs stolen from out in the stock route behind the dog pound at Warren where I kept those dogs and I brought those dogs into town in fear that they'd come back and steal those - that was Ouzo was out there, Target and - what's the other one - Ouzo, Target and Cage."
159However, Mr Wilson also said that he brought those dogs into town "from time to time". They were with him at his Warren address if he went pig hunting. They would be with him "early in the morning" and they would be "back there late at night" after the pig hunting had finished.
On the basis of this evidence, it is clear the Council could not maintain an argument that, save for the period of two weeks prior to the attack on Tyra, there were no dogs, with the exception of Tika and Widge, at the Wilson premises.
160Mr Wilson was obviously a problematic witness. I think that the primary judge was perfectly entitled to doubt him on this aspect of his evidence. In any event, it is clear from his evidence that the dogs were at his property "from time to time", even if there was a lack of precision involved in that description.
I can see no denial of procedural fairness in the finding made by the primary judge. Mr Wilson was not in either party's camp. The judge was not bound to accept his evidence.
161In my opinion, there is no substance in this ground of appeal.
162I turn now to consider the cross appeal.
The respondents' cross appeal
163The cross appeal concerns two aspects of the judge's assessment of damages relating to the cross appellant's (Mr Kuehne) loss of capacity to provide care for his children pursuant to s 15B of the Civil Liability Act. Section 15B(2) provides as follows:
"When damages may be awarded
Damages may be awarded to a claimant for any loss of the claimant's capacity to provide gratuitous domestic services to the claimant's dependants, but only if the court is satisfied that:
(a) in the case of any dependants of the claimant of the kind referred to in paragraph (a) of the definition of dependants in subsection (1) - the claimant provided the services to those dependants before the time that the liability in respect of which the claim is made arose, and
(b) the claimant's dependants were not (or will not be) capable of performing the services themselves by reason of their age or physical or mental incapacity, and
(c) there is a reasonable expectation that, but for the injury to which the damages relate, the claimant would have provided the services to the claimant's dependants:
(i) for at least 6 hours per week, and
(ii) for a period of at least 6 consecutive months, and
(d) there will be a need for the services to be provided for those hours per week and that consecutive period of time and that need is reasonable in all the circumstances.
Note. Section 18 provides that a court cannot order the payment of interest on damages awarded for any loss of capacity of a claimant to provide gratuitous domestic services to the claimant's dependants." | [
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] | null |
|
nsw_caselaw:54a636e73004de94513d971b:3 | nsw_caselaw:54a636e73004de94513d971b | (e) The defendant, pursuant to s 34, should have declared the dogs to be dangerous. Its failure to do so was an act of negligence.
(f) Had the declaration been made, the effect would have to been to require the dogs, if they remained at 29 Garden Avenue, to be housed in a child-proof enclosure ...
(g) If the back yard of 29 Garden Avenue had been child-proof, Tyra could not have entered.
(h) As a result of Tyra's death, the plaintiffs suffered nervous shock injuries giving rise to substantial damages."
The findings by the trial judge
13His Honour found that the appellants owed both respondents a duty of care.
In this regard, the respondents had submitted that the combination of the duties imposed on Councils and the objects of the Companion Animals Act, read together with the principles stated by the High Court in cases such as Caledonian Collieries Ltd v Speirs (1957) 97 CLR 202, Sutherland Shire Council v Heyman (1985) 157 CLR 424,
Crimmins v Stevedoring Industry Finance Committee [1999] HCA 59, 200 CLR 1, and Graham Barclay Oysters Pty Ltd v Ryan (2002) 211 CLR 540, established in the present circumstances a duty to prevent harm from a foreseeable risk of injury actionable at the behest of each of the plaintiffs.
14His Honour accepted these submissions and made the following observations (Appeal Book 67-68):
"In dealing with section 44 I came to the conclusion that the plaintiffs had a sufficient interest to enable them to enforce the powers of the Council under s 34 of the Companion Animals Act. I would go further, however, and conclude in the terms referred to by McHugh J, that the plaintiffs here have a personal right to sue for damages.
The Companion Animals Act provided the Council with a regime to prevent its residents from being exposed to dangerous dogs. It is implicit in the control of dangerous animals that persons may be subject to the obvious dangers associated with the animals.
Residents of Warren depended on the Council to exercise its statutory obligations in respect of dangerous dogs. The Companion Animals Act gave the Council the necessary powers.
The residents of Garden Avenue were personally interested in the control of the dangerous dogs that lived at number 29. In my view, this reliance created a right to sue for damages for contravention of the Council's statutory duties so that a duty of care existed."
15His Honour's next critical finding related to the arguments dealing with breach of duty of care. Importantly, he identified, as he saw it, the nub of the plaintiffs' case. This was identified by his Honour as follows (Appeal Book 68-69):
"133. The plaintiffs submitted that the breach of the duty of care was constituted by the failure of the Council to declare the dogs residing at Number 29 Garden Avenue as 'dangerous' as defined in Section 33 of the CAA. The definition, as then applicable, was:
'For the purposes of this division, a dog is 'dangerous' if it has, without provocation:
(a) attacked or killed a person or animal (other than vermin); or
(b) repeatedly threatened to attack or repeatedly chased a person or animal (other than vermin).'
134. The plaintiffs submitted, and as I have found, that the Wilson dogs were a source of frequent complaint to the Council. The plaintiffs then submitted the Council knew that they were dangerous. Pursuant to its duty to regulate the dangerous dogs it should have, under Section 34, declared the dogs to be dangerous. Section 34, again as then in force, was as follows:
'(1) A council may, if satisfied that a dog is dangerous , declare it to be a dangerous dog. It does not matter if the dog is ordinarily kept in another council's area.
(2) A declaration can be made on the council's own initiative or on the written application of a police officer or any other person.
(3) A declaration has effect throughout the State. It is not limited in its operation to the area of the council. | [
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|
nsw_caselaw:54a636e73004de94513d971b:8 | nsw_caselaw:54a636e73004de94513d971b | 35Secondly, the expression "without provocation" is an ordinary English expression. Provocation is defined in dictionaries as follows. Oxford English Dictionary (on-line):
"n. The action of provoking or inciting; incitement, impulse; instigation; (also) an instance of this; an incentive, a stimulus."
Macquarie Dictionary:
"1. the act of provoking.
2. something that incites, instigates, angers, or irritates.
3. Law words or conduct leading to a killing in hot passion and without deliberation."
36There is no warrant, in the context of this statute, to confine the meaning of the expression "goaded". This is an ambiguous expression itself, carrying with it a somewhat emotive element.
In my view, in a situation where a dog has been specifically trained to hunt and attack pigs, it may properly be said, in accordance with ordinary English usage, that the owner of the dog has incited or instigated the dog to do exactly what it was trained to do.
The dog hunted the pigs because it was trained to do so and acted precisely on those instructions. As a consequence, the dog has attacked an animal but not "without provocation".
37While it may be true (as the respondent argued in its written submissions at trial: Black 357 L-T) that "pig hunting dogs have been exposed to learning experiences that encourage aggressive behaviour", that is precisely the training that removes them from the definition of s 33.
38Thirdly, there is no warrant for concluding (as the respondents suggested in their submissions on appeal) that the provocation envisaged in the section must emanate from the animal that has been attacked. The language is not restricted in that way.
Nor does s 16(3) of the Act (which deals with offences by owners where a dog has attacked a person or an animal) assist the respondents. The section creates "a defence" where there is a finding that the incident occurred "as a result of a dog being teased, mistreated, attacked or otherwise provoked". This statutory context is rather different from the language and content of s 33.
39It must follow, therefore, that the respondents' case that the Council negligently failed to exercise its powers to declare the dogs - any or all of them - as dangerous on the basis that they were trained hunting dogs, must fail. Indeed, as is quite clear, this was the only basis upon which the primary judge made findings to support the conclusions he reached on breach and causation.
40By the time of their final submissions, the respondents, although they had not altogether abandoned the alternative basis of their pleaded case, put their favoured position quite bluntly:
(a) with one exception, all the dogs at 29 Garden Avenue on 19 July 2006 were pig hunting dogs;
(b) pig hunting dogs were dangerous dogs (within the definition);
(c) the Council knew that there were pig hunting dogs at 29 Garden Avenue;
(d) a reasonable response of a relevant local authority was to exercise its powers to deal with the pig hunting dogs, i.e. to declare them dangerous;
(e) the Council, in breach of its obligation, failed to make the necessary declaration or declarations;
(f) but for the Council's negligence, Tyra would not have been killed and the injuries suffered by the respondents as a consequence.
41In my opinion, this argument cannot stand because the mere fact that the dogs were pig hunting dogs could not, without more, sustain the finding that they were therefore required to be declared as dangerous dogs.
Even if the Council knew that pig hunting dogs were kept at 29 Garden Avenue, it had to be demonstrated that their attacks on pigs were "without provocation". The evidence established precisely the opposite.
42Mr Sheldon raised three further arguments which were allied to this issue. First, he submitted that the Council did not know that pig hunting dogs were kept at Mr Wilson's home or, at least, the evidence did not establish that the Council had knowledge of this fact. In that regard, Mr Sheldon asked this Court to overturn the primary judge's finding. | [
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|
nsw_caselaw:54a636e73004de94513d971b:9 | nsw_caselaw:54a636e73004de94513d971b | Secondly, although it was somewhat inconsistent with his principal argument on "provocation", Mr Sheldon argued that the dogs were not trained to attack, but simply to hold the pig until it was killed by Mr Wilson. Thirdly, he argued that it was only the Council in full session which could make the relevant declaration.
43I do not accept these arguments. As to the first, there is no doubt that Council officers attended Mr Wilson's property in Garden Avenue numerous times and spoke with him about the dogs.
Warren was a relatively small town and it is clear that, quite apart from Council officers, many people in the town knew that Mr Wilson kept dogs for pig hunting purposes, as well as for use in his droving ventures.
He often carried the dogs in the back of his pig hunting truck. The dogs were seen at his home on many occasions. This was observed by a number of witnesses in the case. For example, Mrs Kelly said that she had seen pig hunting dogs "living at the Wilson residence": Red 71W. Mr Clarke saw his vehicle "driving around town": Black 196E.
44In my opinion, the primary judge was entitled to make the finding he did concerning the Council's knowledge, especially through its rangers, that Mr Wilson kept a range of pig hunting dogs that were at his premises from time to time between 2000 and 2006.
45At the trial, his Honour asked Mr Sheldon whether the Council disputed its knowledge that the dogs were pig hunting dogs: Black 283. Mr Sheldon did not make an outright admission, it must be conceded. He rather reserved his position. However, Mr Boyd in his submissions detailed the evidence upon which the primary judge would be entitled to make a finding as to the Council's knowledge.
This included diary entries by the ranger, Mr Langby, and the evidence that Mr Wilson's truck was equipped with cages and pig racks, and that it regularly travelled through Warren.
Mr Wilson had said in evidence that in 2006 he hunted daily and took the pigs to the chiller in Warren. Mr Langby was frequently at Mr Wilson's premises and appeared to have a reasonably open relationship with him. This evidence thoroughly supported the primary judge's findings.
46As to the second matter, Mr Sheldon sought to draw a distinction between an attack by a dog on a pig, on the one hand, and a situation where the trained dog "skewered" the pig, as it were, and kept it there until its owner came and despatched it.
47In my opinion, this argument should be rejected. Mr Wilson had described in very brief terms the consequence of his training of the dogs in these terms (Black 171 B-E):
"Q: And what's the training involve for dogs for the purpose of pig hunting?
A: Well, you've got a dog, you can teach him to find pigs. You take a pup out, well you've trained one, and then you take a younger dog out and he - learns off that dog, the older dog. He catches the pig and then you stick the pig, hang it on your crate and away you go with the next one."
48This description is apt to describe a situation in which the pig is "attacked" by the dog. In any event, the argument leads nowhere because, even on the basis advanced by Mr Sheldon, the dogs' action, subject to the provocation issue, would fall within the second limb of "dangerous", that is, repeatedly threatening to attack or repeatedly chasing animals.
49As to the third matter, I agree with the primary judge's conclusion that the making of a declaration was a matter that could have been dealt with under delegation: Red 73 A-E; Local Government Act 1993 (NSW) Ch 12 Part 3 (power to delegate).
Notice of Contention
50I turn then to the matter raised in the Notice of Contention.
The question is: can the primary judge's conclusion (that there was a basis for a declaration under s 34 of the Act) be sustained because the evidence demonstrated that the dogs which attacked Tyra had, prior to the incident, to the knowledge of the Council "without provocation, repeatedly threatened to attack or repeatedly chased a person or animal (other than vermin)"? | [
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|
nsw_caselaw:54a636e73004de94513d971b:26 | nsw_caselaw:54a636e73004de94513d971b | "In my view Mr Kuehne, either living in Garden Avenue, or as the parent of children living there, and Dylan, as a resident of Garden Avenue, did have an interest substantially greater than the public at large.
The family living in Garden Avenue would in my opinion have personally benefited from the making of an order under Section 34 to the extent that it would have potentially prevented a significant threat to their safety and, even at a lower scale, to their capacity to pursue their lives without harassment from the Wilson dogs."
149Section 44(1) of the Civil Liability Act 2002 (NSW) is in the following terms:
"When public or other authority not liable for failure to exercise regulatory functions
(1) A public or other authority is not liable in proceedings for civil liability to which this Part applies to the extent that the liability is based on the failure of the authority to exercise or to consider exercising any function of the authority to prohibit or regulate an activity if the authority could not have been required to exercise the function in proceedings instituted by the plaintiff."
150Mr Sheldon argued that the respondents had not satisfied s 44 because they could not demonstrate that any action they might have brought under s 65 Supreme Court Act would have been successful.
In my opinion, s 44 is concerned with the issue of standing, rather than the issue as to whether a particular plaintiff would succeed on the merits in proceedings instituted alleging failure of an authority to exercise or to consider exercising a function to prohibit or regulate an activity.
151In the present matter, Mr Kuehne and his family had complained to the Council about the children being chased by the Wilson dogs. If they were not satisfied with the Council's action and considered that proceedings should be taken in an endeavour to force the Council to at least consider taking action to regulate the dogs' activity, they would have been entitled to do so.
The power of the Court in any such proceedings would have been sufficiently wide, even if it took the view that the Council should not be forced to act under s 34, that it might be required, nonetheless, to take action of a lesser kind, for example declaring the dogs a nuisance.
152In any event, I consider that no error has been demonstrated in relation to the primary judge's finding on this point.
153The appellant also challenged the primary judge's findings on causation (s 5D Civil Liability Act) and breach (s 5B Civil Liability Act). In view of my conclusions on the breach issue, I do not think it is necessary to respond to those submissions.
154The final matter relied on by the appellant was an allegation that it had been denied procedural fairness. This assertion was the basis for appeal grounds 1 and 7. The appellant's complaint arose out of the rather unusual feature that Mr Wilson was called by the respondents.
Part of his evidence was that four of the dogs were brought back to his property only approximately a fortnight before the attack on Tyra.
It will be recalled that he said that he had brought them back because there had been a theft of some of his dogs from the location out of town where all the dogs were normally kept. It was his claim that only two dogs habitually resided at the Garden Avenue premises.
155Mr Sheldon's complaint is that, although the primary judge did not accept this part of Mr Wilson's evidence, he had not indicated to the appellant that he would reject any part of the witness's evidence.
Hence, it was said there had been procedural unfairness and the appellant had been deprived of the advantage of one of its arguments, that reflected in appeal ground 7, without the opportunity of appraising the finding. | [
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|
nsw_caselaw:54a636e73004de94513d971b:20 | nsw_caselaw:54a636e73004de94513d971b | The primary judge's decision on s 43A
116His Honour's findings were briefly stated (Red 76 E-P):
"A finding that reasonableness is at a high level is not easily made. I do, however, think that I can make that finding in these cases. The defendant, over a number of years, had received complaints about the Wilson's dogs. The defendant had the power to do something about them. The defendant had apparently reached a conclusion that nothing would be done about the dogs (evidence of Mr Langby Senior).
This attitude existed notwithstanding that no attempt had ever been made to control Mr Wilson and his dogs through a declaration under Section 34 of the CAA. The possibility of very serious harm being caused by these dogs, whether in the backyard at Number 29 Garden Avenue, or as they freely roamed the local streets, was evident. These dogs were trained hunting machines.
Against this background it is my view that the Council's failure to act was unreasonableness at a high level. I am satisfied that the circumstances were such that the Council's failure to act was 'so unreasonable that no authority having the special statutory power in question could properly consider the act or omission to be a reasonable exercise of, or failure to exercise its power.'"
117In reaching these conclusions, as I stated at the outset of these reasons, the primary judge placed reliance on two recent decisions of this Court: Allianz Australia Insurance Ltd v Roads and Traffic Authority of NSW; Roads and Traffic Authority (NSW) v Refrigerated Roadways Pty Ltd.
Each of these decisions (especially the latter) has carefully examined s 43A and determined its scope. The arguments in the present case do not require me to re-examine the established jurisprudence emerging from these decisions. The following propositions, however, may be deemed appropriate for the determination of the issue in this appeal:
(1) The language of s 43A states a precondition for the existence of civil liability in the context with which it is concerned.
Once it is found or assumed, by reference to the pre-existing common law of negligence, that a duty of care exists and there has been a failure to exercise reasonable care, s 43A(3) imposes an additional requirement, beyond those of the common law, before liability can be established.
(2) The origin and legislative history of s 43A make it plain that language modelled on that of Wednesbury unreasonableness was adopted from Associated Provincial Picture Houses Ltd v Wednesbury Corporation ([1948] 1 KB 223) with the intention of raising the bar for plaintiffs in proof of breach of duty of care by an authority in the exercise of a special statutory power.
(3) Notwithstanding the difficulty of transposing the concept of Wednesbury unreasonableness, derived as it is from administrative law, to the law of negligence, the concept now has statutory force in s 43 and s 43A and is to be applied to an authority's act or omission.
(4) The words "could properly consider" require a determination to be made from the perspective of the authority, but with an objective element. (As I see it, the objective element is particularly important in examining an allegation that the Council has negligently failed to exercise a power available to it.)
(5) Although the concept of Wednesbury unreasonableness has been expressed in varying terms, some extreme, some more moderate, its transposition into the law of civil liability requires that the unreasonableness must be at a high level. The language of s 43A ("could properly consider" with the restraint of "could" moderated by "properly") necessarily requires questions of degree and judgment.
118Does the primary judge's reasoning reveal error? With respect, I think it does. His Honour's remarks are brief but I do not think that the proposition that he has failed to give reasons can be sustained. It is the reasons, however, which reveal the error. | [
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|
nsw_caselaw:54a636e73004de94513d971b:24 | nsw_caselaw:54a636e73004de94513d971b | 136The factors that their Honours stressed in evaluating the relationship between the holder of the power and the person or persons to whom it is said that a duty of care is owed were:
i) the degree and nature of control exercised over the risk of harm that has eventuated;
ii) the degree of vulnerability of those who depend on the proper exercise of the relevant power;
iii) the consistency or otherwise of the asserted duty of care with the terms, scope and purpose of the relevant statute.
137Their Honours emphasised that often it will be "the factor of control that is of critical significance".
138In Stuart, the joint judgment of Crennan and Kiefel JJ emphasises the "measure of control" point. At [136] their Honours said:
"The measure of control which may be provided by a statute, with respect to the safety of persons or property, has been considered to be indicative of a duty of care."
And again at [138] their Honours said:
"Questions about the degree of a public authority's control over the risks to which a plaintiff was exposed will usually be answered by reference to the statute providing for those measures.
Where a statute provides significant and special measures, which may be seen to be directed towards the risk of harm to a class of persons or property, attention is directed to the purpose for which the measures have been provided.
If part of the rationale for excepting a public authority from the general rule of the common law, that no affirmative action is required, is the availability of statutory powers, their purpose must necessarily be considered."
139Applying these principles to this case, I am prepared to accept that, upon the proper construction of the Companion Animals Act, significant and special measures have been created which may properly be regarded as directed towards the risk of harm to a class of persons or property, such as the respondents and their daughter in the present matter.
The position here is quite different from that in Stuart's case where the element of "control" rested solely with the unfortunate Mr Veenstra, who had determined to take his own life.
The other point of difference in that case was that the legislation in question fastened upon the opinion formed by the police officers. They clearly had taken the view that Mr Veenstra was not a mentally ill person and, accordingly, did not require apprehension.
140When regard is had to the terms, scope and purpose of the Companion Animals Act it may properly be said, in my opinion, that the relevant statutory regime erected a relationship between the Council and that class of persons to whom the respondents belong.
That relationship may properly be said to demonstrate sufficient of the necessary characteristics for intervention by the tort of negligence. In that regard, the degree of control given to the Council is a highly significant matter.
141The objects of the Act are stated in s 3:
"To provide for the effective and responsible ... management of companion animals."
Section 6A, however, more precisely provides that the general duties of Councils include:
"To take such steps as are appropriate to ensure that it is notified or otherwise made aware of the existence of all dangerous and restricted dogs ... that are ordinarily kept within its area."
142All animals are required to be identified and registered. s 8, s 9, s 10. The owner of an unregistered companion animal is guilty of an offence if the animal is in a place other than where it is ordinarily kept: s 10A. The owner is required to notify of changes, including whether a declaration has been made by a Court that a dog is dangerous: s 11.
143Part 3 of the Act deals with responsibilities for the control of dogs. Where a dog is in a public place but not under the effective control of a competent person by means of chain, cord or leash, the owner of the dog may be prosecuted for an offence and, where the owner is present, the dog can be seized by an authorised officer if the contravention continues: s 13. | [
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|
nsw_caselaw:54a636e73004de94513d971b:28 | nsw_caselaw:54a636e73004de94513d971b | 164"Dependants", in relation to a claimant, are defined in s 15B(1) to mean:
"(a) such of the following persons as are wholly or partly dependent on the claimant at the time that the liability in respect of which the claim is made arises:
(i) ...
(ii) ...
(iii) a child, grandchild, sibling, uncle, aunt, niece, nephew, parent or grandparent of the claimant (whether derived through subparagraph (i) or (ii), adoption or otherwise),
(iv) any other person who is a member of the claimant's household, and
(b) any unborn child of the claimant (whether derived through paragraph (a) (i) or (ii), adoption or otherwise) at the time that the liability in respect of which the claim is made arises and who is born after that time."
165Mr Kuehne argues that the primary judge fell into error in two respects in relation to this aspect of the claim for damages. The first relates to his finding that, prior to 20 July 2006, two of his children, Joshua and Dylan, "were receiving services from another person" and that they could not "therefore be classified as a kind of dependant or fitting into a class of dependant": Red 88 S-V.
His Honour found that, immediately before Tyra's death, Mr Kuehne was only looking after his son, Jayden, and that Joshua and Dylan were living with their mother in Warren. Consequently, Mr Kuehne was held not entitled to recover damages for any loss of his capacity to provide gratuitous domestic services to Joshua and Dylan following upon and as a consequence of his psychiatric injury.
166The second error Mr Kuehne points to relates to the period of incapacity. The primary judge found that Mr Kuehne's "discharge from Foundation House signals the point in time when his incapacity to look after the children due to the injury would have ceased.
This was on 20 July 2009, exactly three years from the death of Tyra": Red 91 T. Mr Kuehne says there was no warrant for the imposition of this time limitation.
167If these two errors are found to have occurred, Mr Kuehne argues that his claim for damages on this basis should have been greater, in that it should have extended to gratuitous care provided for all three children and that it should have enured well into the future.
168In relation to the first error, Mr Kuehne places reliance upon the decision of Hoeben J in Kendrick v Bluescope Steel (AIS) Pty Ltd [2007] NSWSC 1288. He argues that this decision is applicable to the present case. In those proceedings, the plaintiff was rendered a quadriplegic as a result of a collision between his vehicle and a dump truck. His injuries were catastrophic.
Prior to the accident, the plaintiff had provided services of the kind in respect of which damages were being claimed for provision of gratuitous assistance required by his three children. There was no doubt that he did provide child care services in relation to two of the children, but his youngest child was not born at the time of the accident. Hoeben J said (at 310-311):
"310. This creates a potential problem for the plaintiff. The section makes no express provision for the situation where a child is born after the injury. Because the plaintiff did not provide any services for Mikayla before he was injured, a literal reading of the section would give him no entitlement to damages for services provided to Mikayla by somebody else after his injury.
311. I do not think the section should be read in that way. Section 15B(1) identifies various classes of dependants. That is why there is a reference in the preamble to subs(2)(a) of 15B to 'dependants ... of the kind'.
Read in that way, it is only necessary that before injury the plaintiff provided services to that class of dependants in order for the precondition to be satisfied. As indicated, I am satisfied that he did provide such services although the services were limited in time and extent by his hours of work." | [
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nsw_caselaw:54a636e73004de94513d971b:25 | nsw_caselaw:54a636e73004de94513d971b | Dogs are prohibited in certain public areas (s 14) and greyhounds and other breeds are to be muzzled: s 15.
If a dog rushes at, attacks, bites or chases any person or animal, the owner is guilty of an offence. If a dog attacks or bites any person or animal, an authorised officer may seize the dog in certain circumstances: s 18.
Dogs may be declared to be "nuisance dogs" and Council officers may issue an order to the owner of a dog requiring the owner to prevent the behaviour that is alleged constitute the nuisance: s 21.
144More relevantly, an owner of a dangerous dog who fails to comply with the Act may be, in certain circumstances, permanently disqualified from owning a dog and from being in charge of a dog in a public place: s 23.
An obligation falls on a Council to declare a dog as dangerous, if it is satisfied that a dog is dangerous: s 34. The definition of "dangerous" is an objective one, dependent upon specified circumstances: s 33.
Where notice is given to the owner of a dog that there is an intention on the part of the Council to declare it dangerous, the owner must ensure that, when the dog is away from the property where it is ordinarily kept,
it is under effective control of a competent person by means of an adequate chain, cord or leash, and that it has a muzzle securely fixed on its mouth to prevent it from biting any person or animal:
s 36.
If this section is contravened, the dog may be seized. Where a dog is declared dangerous, the onerous restrictions imposed by s 51 apply.
The owner of a dangerous dog must, inter alia, keep the dog in an enclosure where the dog is ordinarily kept and, when it is outside its enclosure, it must be both controlled by a competent person and muzzled. If any of the requirements of s 51 are not complied with, the dangerous dog may be seized by a Council officer: s 52.
145It will be seen from these matters that there is a very high degree of control and that it is vested in the local council. The power to declare a dog dangerous is exercisable upon the existence of objective facts. This is to be contrasted with the subjective situation referred to in Stuart.
146Moreover, the level of vulnerability in the present case of Tyra, her family (and other residents of Garden Avenue) is plainly obvious. If there had been credible material before the Council to warrant the making of a declaration, it is clear that its failure to do so would throw up a real concern for the safety of persons likely to be affected by reason of that failure.
It may properly be said that the legislation provided the Council with the power to control the source of the risk of harm that would likely flow to people in the vulnerable position of the respondents and other nearby residents.
That power was not available to the class of persons of which the respondents were members, nor was it available to members of the public generally.
Although reliance may not presently be seen as significant as the other matters referred to by the plurality in Stuart, it may properly be said that the respondents belonged to a class which, of necessity, relied upon the Council as the principal repository of powers under the Companion Animals Act to protect them by controlling the Wilsons and their dogs.
147I would hold that the primary judge was not in error in finding that, at the appropriate level of abstraction, there was a duty of care, and in recognising that the scope of that duty extended to the circumstances of the case sought to be made by the respondents. This duty was not inconsistent with the terms, scope and purpose of the relevant statute.
148Similarly, I would not be prepared to find that the primary judge was in error in relation to the conclusion he reached concerning s 44 of the Civil Liability Act. The primary judge dealt with this issue at 63-66.
Essentially, his Honour held that the respondents would have had standing so as to bring proceedings under s 65 Supreme Court Act to obtain an order forcing the Council to issue a declaration under s 34 Companion Animals Act. At Red 66, his Honour said: | [
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] | null |
|
nsw_caselaw:54a636e73004de94513d971b:19 | nsw_caselaw:54a636e73004de94513d971b | I do not think there is any merit in Mr Sheldon's argument. If there was evidence that warranted the making of a declaration, it would have been the duty of the Council to proceed to do so, even if potential witnesses were reluctant to appear at a subsequent court hearing.
The recalcitrance of a potential witness would be no justification for failing to make a declaration if it were otherwise clearly warranted.
111If I be wrong in my conclusion that there was insufficient evidence to justify the Council making a declaration on the alternative basis, I would nevertheless find that s 43A Civil Liability Act stood fairly and squarely in the way of the respondents' action succeeding. I will now turn to address this matter.
The impact of s 43A Civil Liability Act 2002 (NSW)
112Section 43A is in the following terms:
"Proceedings against public or other authorities for the exercise of special statutory powers
(1) This section applies to proceedings for civil liability to which this Part applies to the extent that the liability is based on a public or other authority's exercise of, or failure to exercise, a special statutory power conferred on the authority.
(2) A special statutory power is a power:
(a) that is conferred by or under a statute, and
(b) that is of a kind that persons generally are not authorised to exercise without specific statutory authority.
(3) For the purposes of any such proceedings, any act or omission involving an exercise of, or failure to exercise,
a special statutory power does not give rise to civil liability unless the act or omission was in the circumstances so unreasonable that no authority having the special statutory power in question could properly consider the act or omission to be a reasonable exercise of, or failure to exercise, its power.
(4) In the case of a special statutory power of a public or other authority to prohibit or regulate an activity, this section applies in addition to section 44."
113It was accepted by the parties that s 43A had application to the case mounted by the respondents. There was no argument, for example, that the power to make a declaration under s 33 was not a "special statutory power".
In view of the common approach of the parties, I would accept for the purposes of the present discussion that s 43A applied to the proceedings on the basis that s 43A was capable of defeating the respondents' action against the Council:
"... unless the ... omission [to make the declaration] was in the circumstances so unreasonable that no authority having the special statutory power in question could properly consider the ... omission to be a reasonable ... failure to exercise, its power."
114Again, it was commonly accepted on the appeal that the power given by s 33 was one "to prohibit or regulate an activity" as described in s 44.
115Mr Sheldon argued that the section requires much more than that a Council acting reasonably would, in all the circumstances, have declared a dog or the dogs dangerous. He referred to the decision of this Court in Allianz Australia Insurance Ltd v Roads and Traffic Authority of NSW; Kelly v Roads and Traffic Authority of NSW [2010] NSWCA 328.
Essentially, the appellant argued that the primary judge did not give adequate reasons for concluding that the s 43A test had been satisfied and had, in effect, replaced the test with a wrong test that "the appellant's failure to take reasonable care was so gross as to be at a very high level".
The respondents, on the other hand,
argued that the failure of the Council in the present matter to exercise its power to make a declaration was "so devoid of plausible justification that no reasonable body of persons could have reached it" (Bromley London Borough City Council v Greater London Council [1983]
1 AC 768 at 721) and "so outrageous in its defiance of accepted moral standards that no sensible person who applied his mind to the question could have arrived at it":
Council of Civil Service Unions v Minister for Civil Service [1985] AC 374 at 410. | [
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|
nsw_caselaw:54a636e73004de94513d971b:22 | nsw_caselaw:54a636e73004de94513d971b | Secondly, there were complaints about "aggressive behaviour". Although arguments could be advanced against the conclusions I have reached, the better view, in my opinion, is that those incidents did not constitute activity that fell within the phrase "repeatedly threatening to attack or repeatedly chasing" people.
Consequently, I have concluded that a declaration could not have been made lawfully on the second basis.
126For the purposes of my finding on s 43A, I will assume that the Council owed a duty of care to the respondents as alleged. I will assume, contrary to the findings I have made above, that the "aggressive behaviour" of the dogs was sufficient to warrant a declaration being made on the alternative basis.
In other words, I will assume, contrary to my own findings, that the few instances between 2004 and 2006 when the dogs (which may or may not have been the same dogs at the premises in July 2006) chased people, growled at them or encircled them, answer the description of "repeatedly threatening to attack or repeatedly chasing".
127Given that the Council knew of some of those complaints, does it follow that Council's failure to have a declaration made that the dogs were dangerous was so unreasonable, in the sense provided for in s 43A, that liability should be imposed?
Putting the question in the statutory context, could an authority having the statutory power in question properly consider the omission to make the declaration an unreasonable failure to exercise its power?
128In my opinion, the answer to these questions must very prominently favour the Council in the present case. The sporadic and infrequent nature of the complaints could have been reasonably dealt with, as they in fact were, by approaches being made to Mr Wilson and fines being issued to him on occasions when his dogs were roaming the streets.
To the extent that it could be argued that the Council had failed to act reasonably in seeking a declaration in respect of any of the dogs prior to July 2006, that failure could not, in my view, be said to be based on unreasonableness "of an order sufficient to attract liability under the statute".
129Similarly, in relation to the primary argument that the declaration should have been made on the basis that the dogs were pig hunting dogs, the same conclusion must be reached. They were not, to use the expression discredited somewhat in RTA v Dederer ((2007) 234 CLR 330), "an accident waiting to happen".
Yes, there had been several aggressive incidents, but I doubt whether anybody in the local community, including officers of the Council, had any real anticipation of the tragic events of 19 July 2006.
If I be wrong in my conclusion that the dogs at Mr Wilson's property were dogs which had attacked animals, but only with provocation, I would nevertheless hold that the failure of the Council to obtain a declaration on that basis, if it were unreasonable, was not unreasonableness of a high order. For these reasons, in either situation, liability should not be imposed.
Duty of care
130The findings I have made have proceeded on the assumption that a duty of care existed as between the Council and Tyra, and hence between the Council and the respondents. Of course, if no such duty existed, then the respondents must fail on that threshold basis and the question of breach is immaterial.
Because of the findings I have made, it is, on one view, unnecessary to consider this complex question. However, the parties are at issue on the point and consequently it is necessary that I address it. For practical reasons, I will do so briefly.
131The respondents' case was not one of breach of statutory duty. Rather, their case was simply a claim for damages for injury caused by negligence. The duty asserted in this case was a common law duty of care. | [
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|
nsw_caselaw:54a636e73004de94513d971b:16 | nsw_caselaw:54a636e73004de94513d971b | I think it scared me as much as I scared it. And it growled at me and one of the kids ran back inside and told Darren. He came out with a broom and threw it at it and it ran back up the road. But whether it went back to the Wilsons I don't know ..."
89Mrs Clark said she had seen this dog before and she was able to identify it as the dog Tika, which belonged to the Wilsons' daughter, Crystal. She said that she did not do anything following the incident and she did not make any observations of her husband doing anything.
90Mr Clark, however, gave evidence concerning the incident described by his wife. He said that he had contacted Bill Langby and asked him to come and do something about it. He said he had chased the dog out of the yard.
His recollection was that both Mr Langby and Mr Love, his superior, came out to the home. He dated it as only days before the incident when Tyra had been attacked. He said there were discussions between Mr Langby and Mr Clark in an endeavour to identify the dog that had come into their yard.
He described it as "a greyhound-cross looking dog". He saw the ranger and his superior heading towards Tommy Wilson's end of the street. He confirmed that he did not actually see the incident involving his wife, but he could hear it, and when he came out he observed a dog in the yard "being aggressive, growling".
He described it as looking "more like a greyhound cross breed" than anything else. He identified, from the photographs shown to him, one dog which he believed was the dog in question. The dog he identified appeared on Exhibit K: Black 194.
91Mr Clark also gave evidence that he had spoken to Council officers prior to this incident complaining about the Wilson dogs being out on the street. In his cross examination, he agreed that he had "a bit of a bee in his bonnet" about people who did not keep dogs on leads.
92As to the conflict between Mr and Mrs Clark on the identity of the dog involved in the incident, the primary judge said (Red 53 R-W):
"The incident which occurred some days before Tyra's death was described by Mr Clark as involving a greyhound-cross. He identified the dog in Exhibit K (Target). When Mrs Clark gave evidence she said the dog involved was a Boxer belonging to Crystal Wilson.
The fact that the Clarks each described a different dog does not, in my view, take away from the burden of their evidence, namely, that one of the Wilson dogs came to their yard and acted in an aggressive fashion. Mrs Clark also said that for a period of time the Wilsons' dogs used to visit at night to rummage through the garbage."
93It will be apparent from the whole of the evidence I have recounted that the issue raised in the Notice of Contention presents difficulties for the respondents' case.
Quite apart from the difficulty of identifying with precision any dog involved in chasing or threatening people, and linking it to the attack on Tyra, it is by no means clear that the incidents I have described, with some arguable exceptions, could satisfy the test of "without provocation, repeatedly threatening to attack or repeatedly chasing people".
94The incident involving Mrs Moriarty's daughter occurred "many years ago" and the primary judge correctly regarded it as not significant: Red 54 F-J. The dog was not identified and, in any event, it was almost certainly not one of the dogs present when Tyra was attacked. Moreover, the matter was, it seems, never reported to the Council.
95The incident on 4 August 2000 when a man was said to have been bitten by one of the Wilson dogs led nowhere. Whether it was one of Mr Wilson's dogs and, if so, which one, was never revealed by the enquiries made by Mrs Todhunter.
96The third incident related to Mrs Todhunter's report of a dog "having a go" at a small child. This fell within the description of, at least, a threatened attack. It seems the dog belonged to Mr Wilson's daughter and that "she said that she would tie it up". | [
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|
nsw_caselaw:54a636e73004de94513d971b:10 | nsw_caselaw:54a636e73004de94513d971b | 51The respondents argued that there was material before the primary judge that would have justified such a finding and that, indeed, his Honour made reference to a good deal of the evidence in his reasons.
A schedule was provided to this Court which 'dot pointed' the references in the transcript. The schedule also contained a summary of findings by the primary judge which were said to be relevant to the matter raised in the contention.
52The respondents submitted that, based on all of the available evidence and the Jones v Dunkel inference properly to be made regarding the Council officers not being called, the primary judge should have found that the dogs were dangerous within the meaning of s 33 of the Act because they had, without provocation, repeatedly threatened to attack or repeatedly chased people.
The dogs were not trained to attack or chase people, so the "without provocation" argument could not save the situation if the evidence favoured the respondents' case on this alternative basis.
53The reference to Jones v Dunkel was said to arise because the appellant did not call evidence. The respondents had called the two former rangers who had on occasions reported matters to their superiors. The Council, however, did not call those superiors or any other senior officers in the Council structure.
54I turn then to outline the scope of the arguments advanced on appeal. The appellant argued, first, that the primary judge had declined to find that any one of the dogs on the Wilson premises on the night of the attack had engaged in conduct, other than the hunting of pigs, that would have justified the making of a dangerous dog declaration.
55Secondly, the appellant argued that the criteria for being declared dangerous was not shown, on the evidence, to have been present in any, let alone all, of the dogs present on the Wilson premises on the night of the attack.
Thirdly, because of this identification issue, unless all of the dogs could have been declared dangerous, the respondents could not prove that the dog, or dogs, actually responsible for the attack on Tyra could have been, on the basis of prior behaviour, subject to a dangerous dog declaration.
Fourthly, the appellant submitted that no individual dog had been shown to have repeatedly "threatened to attack or chase". The legislation did not permit aggregation of a number of traits of various dogs owned by the same person from time to time.
The relevant characteristic had to be present in an individual dog. His Honour had accepted this construction: Red 71R. The respondents had not challenged this construction of the Act.
56Fifthly, Mr Sheldon submitted that the evidence went only so far as to show that, on a number of occasions, complaint had been made to the Council ranger and that he or she responded by speaking to Mr Wilson and, on three occasions, by fining him.
The evidence did not establish, for example, that there was more than one complaint about the same dog. Nor did the evidence support the submission that the Council had entered upon the exercise of the power to declare a dog dangerous by speaking to Mr Wilson from time to time.
In this regard, the respondents, who had called the two rangers, did not call evidence from either to suggest that, in speaking to Mr Wilson, either understood, believed or intended that he or she were doing so as part of, or even as a precursor to, the process of declaring a dog dangerous.
The fact that such evidence was not called from the respondents' witnesses gave rise to the inference that they could not have given evidence to support such a proposition: Kuhl v Zurich Financial Services Australia Ltd [2011] HCA 11; 243 CLR 361 at 384 [63].
57Finally, the appellant responded to the schedule sought to be relied upon by the respondents and suggested that its own schedule (tendered at the hearing of the appeal) was more accurate in relation to the issues raised in the Notice of Contention.
Resolution of the Notice of Contention | [
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] | null |
|
nsw_caselaw:54a636e73004de94513d971b:7 | nsw_caselaw:54a636e73004de94513d971b | If this were an error, as Mr Sheldon argued, it appeared there was no other finding made by the primary judge that could sustain the proposition that the dogs were dangerous so as to qualify them for a declaration under s 34 of the Act. Since the Council's breach was said to be the failure to make such a declaration (or declarations), the respondents' case, it was argued, must fail.
28In those circumstances, Mr Maiden SC (who, with Mr J.D. Cairn, represented the respondents on the appeal, but not at trial) ultimately sought and was granted permission to file a Notice of Contention in these terms:
"The respondent contends that the decision below should be affirmed on grounds other than those relied on by the Court below:
... His Honour's judgment below can be sustained on the basis that the dogs were dangerous within the meaning of s 33 of the Companion Animals Act 1998 because they had, without provocation, repeatedly threatened to attack or repeatedly chased people."
29It will be seen that this contention is based on the second limb of the definition in s 33 of the Act.
Since that aspect of the legislation had been part of the original pleadings and had not been abandoned at trial by the plaintiffs (even though, by final address, their trial counsel, Mr Boyd, clearly favoured the "pig hunting" limb of the definition), this Court gave permission to the plaintiffs to rely on the contention.
This indulgence, however, required the filing of further written submissions by the parties and these were completed by 20 February 2012.
Resolution of the liability issue
30I shall discuss the damages issue arising on the cross appeal at a later point in these reasons. I turn first to resolve the liability issue.
31There is no need to detail the comprehensive submissions made by each side on the liability issue. The various matters requiring decision are those I have especially identified in the primary judge's decision, together with the two additional matters that were raised during the hearing of the appeal.
32Since I have come to a firm conclusion that the appeal must succeed, in part on the narrow point argued in relation to the definition in s 33 of the Act and, more broadly, the issue raised by s 43A of the Civil Liability Act, I will not dwell overlong on the many other issues raised in the appeal.
I will first deal with the critical issues (as I see them) that require that the appeal succeed. I will then briefly deal with the remaining issues, all of which I consider should be found in favour of the respondents.
33The first critical issue relates to the basis on which the primary judge found that, with one exception, the dogs on Mr Wilson's property at the time of Tyra's death were pig hunting dogs and were therefore dangerous within the meaning of the legislation. The "provocation" point was dealt with by the primary judge at [136]-[138] of his decision: Red 70.
I have set out his Honour's reasoning at [18] (above). The conclusion he reached was that "provocation" meant an attack or killing after the dog "had been goaded into doing so". It did not extend to directing a dog to attack "in accordance with its training".
34There are three responses to this. First, his Honour has plainly revealed his primary approach to the interpretation of s 34 of the Act. He has concluded that "a dog trained to hunt is likely to be a dangerous dog".
This may be true but it is not the definition in s 33. The assumption his Honour has made, although possibly correct as a matter of common sense, is not the path dictated or permitted by the terms of the statute.
As a matter of interest, following the death of Tyra, the Act was amended in a number of significant respects. One was an additional category of "dangerousness", namely, a dog "kept or used for the purpose of hunting". However, that change in the legislation can play no part in the interpretation of the section as it stood at the time of the attack that led to her death. | [
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|
nsw_caselaw:54a636e73004de94513d971b:4 | nsw_caselaw:54a636e73004de94513d971b | This Part also gives a Local Court the power to declare a dog to be dangerous in certain circumstances.'"
(I should interpolate that, earlier in his decision, the primary judge had made a finding (contested in this appeal) that the Council knew Mr Wilson's dogs were pig hunting dogs. At Appeal Book 57E-G his Honour had said:
"The Wilson dogs were well known to the Council (via Mrs Todhunter and Mr Langby, and probably also Mr Love and Mr Davis) as pig hunting dogs.")
16His Honour then listed three points that had been argued by the Council (Red 69-70, [135]):
"(a) The structure of Sections 33 and 34 was such that the declaration applies to an individual dog. The evidence did not establish that the dogs that were present when Tyra was attacked were dogs that had been identified by the Council, or ought to have been, as dangerous. The evidence was either absent or unreliable.
An example of the latter, which I have already referred to, is that Target could not have been the dog identified by Mrs Moy because it was not yet born when the incident she described occurred. Accordingly it could not be established that the Council had any reason to make a declaration in respect of Target. The same reasoning applied to the other dogs.
(b) The declaration envisaged by Section 34 was one that could only be made by the Council (presumably by resolution). An employee of the Council of his, or her, own accord could not make the decision. Further a decision of the Council was not justiciable.
(c) The Council's power to act was discretionary. Section 34 says the Council 'may' declare a dog to be dangerous. A court could not presume the exercise of the discretion one way or another. Consequently the Council could not be negligent in failing to declare a dog dangerous because its discretion enabled it to decline to make such a declaration."
17As to the arguments based on s 33 of the Act and, in particular, whether any of the dogs fell within the definition of "dangerous", his Honour said (Red 70):
"136. Dealing first with the structure of Sections 33 and 34. The plaintiffs submitted that all of the dogs, except Tika, were necessarily dangerous because, as pig hunting dogs, they had attacked an animal. It was not necessary for there to be an individual incident linked to each dog.
The defendant countered this argument by submitting that the plaintiffs' interpretation of 'dangerous' omitted reference to the words 'without provocation'. The defendant said that while the dogs may well have attacked pigs they had done so only when provoked by their owner to initiate the attack.
137. In my view the provocation envisaged by Section 33 does not include the type suggested by the defendant. Applying a 'purposive interpretation' the reference to provocation, in the context of the section, must be a reference to a dog not being declared dangerous when it has attacked or killed a person or animal after it has been goaded into doing so.
Generally this provocation is one that could be seen as justifying (albeit it in a broad sense) the dog's attack.
138. I am satisfied that the provocation referred to in Section 33 does not include the act of directing a dog to attack in accordance with its training. If one contemplates the intent of protecting the public from dangerous dogs it is immediately apparent that a dog trained to hunt is likely to be a dangerous dog." (Emphasis in original.)
18His Honour then considered an argument raised by the defendant that pigs were "vermin". His Honour rejected this and continued:
"142. I am satisfied that the dogs' history as pig hunters was sufficient to enable their classification as dangerous within Section 33. [Underlining added]
143. The defendant's submission that a declaration is restricted to an individual dog is correct. It is also correct that the specific dogs present when Tyra died have not been individually and reliably identified as having been involved in the incidents observed by the various witnesses. | [
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|
nsw_caselaw:54a636e73004de94513d971b:17 | nsw_caselaw:54a636e73004de94513d971b | 97The next incident related to Mrs Moy, and she was certainly threatened and indeed bitten by a dog. As I have mentioned earlier, she was clearly wrong in her identification of the dog and the matter, in any event, was not brought to the Council.
98In my opinion, these various matters in 2000-2002 were relatively sparse and were sufficiently ancient in historical terms to be of little significance to the issue raised by the Notice of Contention.
99The incident involving Mr Kuehne's children being chased by some dogs in 2004 was, on the other hand, capable of representing an incident that was plainly within the statutory definition. Moreover, it was reported to the Council. It was acted upon by Mr Langby attending at the Wilson property and speaking to Mr Wilson.
It does not appear, however, that the incident was repeated so far as Mr Kuehne's household was concerned. It seems that the child, Tyra, was friendly with several of the dogs at the Wilson property. Ms Fogden said that Tyra had never seen Tika and Squizzy (a dog not present at the time of the attack) act aggressively towards the child or, for that matter, any other person.
100There were no further instances of aggressive behaviour until 2006. Mrs Hollicks' statement shows that when she walked past the Wilson home, two of the dogs came out of the premises and walked around her in a circle as she continued to walk along Garden Avenue.
It is doubtful whether this description would qualify as an act of threatening to attack or chasing. The matter was reported to Council, and Mr Langby, as the evidence shows, visited Mr Wilson about the incident.
101Mrs Kelly's description of two tan Boxers "breathing and growling and following" her to her daughter's house again would not necessarily answer the description of threatening to attack or chasing. There was no complaint to the Council on this occasion and the particular dogs were not identified.
102The final incident related to Mrs Clark finding one of the dogs on her verandah. Once again, it is equivocal as to whether the dog's behaviour would answer the description of "threatening to attack". It ran away when confronted by Mr Clark. Mrs Clark's description that "it scared me as much as I scared it" and that then the dog "growled" at her did not necessarily amount to a threatened attack.
This incident was reported to the Council and the Council officers, it seems, attended on Mr Wilson after the report. It also appears clear from Mrs Clark's evidence that the dog was Tika, Mr Wilson's daughter's pet. This dog was not involved in the attack on Tyra.
103Thus, from this brief analysis, it will be seen that there were three arguable incidents in 2006 that may have qualified, although only two were reported to the Council under the section. There were no incidents in 2005. In 2004 there was the one incident involving Mr Kuehne's children being chased.
It clearly qualified but there was no repetition of it in that year. There were no incidents in 2003. There was one incident in 2002 involving Mrs Moy, but this was not reported to Council and she was clearly mistaken in identifying the attacking dog as Target.
Between 2000 and 2002 there were two, possibly three, incidents. If the analysis is confined to the period between 2004 and 2006, there was, on one view of it, only the one incident involving Mr Kuehne's children that definitely answered the statutory definition.
Taking an expansive view of the evidence, there were possibly three further incidents known to the Council in the three year period between 2004-2006, including one "chasing" incident.
104I would conclude, based on the evidence I have recited, that the respondents have failed to make out a case that justified the making of a declaration on the basis that a number of the dogs present at the time when Tyra was attacked had, between 2004 and 2006, without provocation, repeatedly threatened to attack or repeatedly chased people. | [
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|
nsw_caselaw:54a636e73004de94513d971b:15 | nsw_caselaw:54a636e73004de94513d971b | 82That then was the substance of the 2004 incident. It does not seem that there were any further "aggressive" incidents involving the dogs until 2006, even though there were occasions when the Wilson dogs were out in the street.
83In 2006, several months before the attack on Tyra, there were, however, three incidents. It is not possible to ascertain the precise order in which the first two incidents occurred. One witness, Mrs Hollick, provided a statement which was tendered in Court without objection. The statement read:
"Several months before the incident in 2006 involving the young child, I was walking down Garden Avenue with some young children I was looking after. I am a family day-care mum. When we went past Wilson's place two of the dogs came out of his premises and walked around us in a circle as we continued to walk down Garden Avenue, Warren.
It was scary and I was terrified and when we got to the park in Garden Avenue only fifty metres from Wilson's house I rang the Council to complain about the dogs. I spoke to Bill Langby, I told him what had happened and he said 'I will go and see Mr Wilson'. On the way home I saw Bill Langby there."
84As I have said, Mr Sheldon raised no objection to the reading of the statement and indicated that he did not require the witness for cross examination. There was also an agreement recorded in the transcript (Red 220 P-R) that the reference to two of the dogs in the description was a reference to two of the dogs "involved in the incident on the night of Tyra's death".
85The second "incident" was related by Mrs Kelly, who had lived in Garden Avenue in 2006. A few months before the incident involving Tyra, Mrs Kelly said that she had been walking towards her daughter's home. Her daughter resided in a cul de sac behind Garden Avenue. She said (Red 216):
"I had a white bag in my hand and as I was walking past Tommy Wilson's I cut across the spare paddock and there were these two tan Boxer dogs and they were so close I could hear them breathing and growling as well until I got to my daughter's house. They followed me all the way to my daughter's house."
86Mrs Kelly said she was scared and when she arrived at her daughter's house she complained to her because the dogs "were never tied up". She also said that she had seen "two pig dogs on Mr Wilson's front lawn" about two or three times a week.
Apparently she had some experience with pig hunting and she was able to identify the dogs she had mentioned as "pig hunting dogs". She also gave evidence that she had seen Mr Wilson driving a pig hunting truck. She had seen him bring the vehicle back into town with pigs on it and that this had happened on four or five occasions.
She had also seen the Council pound truck up at Mr Wilson's place on occasions and had seen Mr Langby and Tommy Wilson talking on those occasions. There was one other occasion on a Saturday night when she said that Mr Wilson Jnr had three of his pig dogs in the cage of the truck and "they just went ballistic as I walked past".
It does not appear that Mrs Kelly made any complaints to the Council about the incident that occurred a few months prior to the attack on Tyra. Nor does it appear that she made any complaint about the dogs to the Council on any occasion.
87The third incident was described by Mrs Clark, who lived near the Wilson's property. Mrs Clark said that dogs that were housed from time to time at the Wilson residence were out in the street and at night "they usually get into our garbage".
She said she'd observed this happen three times a week, maybe more, over a period of twelve months or two years. She had seen the dogs but was not able to identify them.
88The particular incident she described occurred in the morning. She described it in these terms (Black 208 E-H):
"Yes, I'd just got the kids ready for school and we were renovating our house at the time. We had a front verandah without the railing on it and I walked to the end of the verandah and there was a brown Boxer standing at the end of the verandah. | [
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] | null |
|
nsw_caselaw:54a636e73004de94513d971b:23 | nsw_caselaw:54a636e73004de94513d971b | The negligence, however, was said to be that of a body in which was reposed the statutory power to declare that a dog or a group of dogs was dangerous. This may properly be described as a novel claim falling outside the accepted range of relationships giving rise to a duty of care, such as employer and employee, teacher and pupil, carrier and passenger, etc.
132The law has in recent times grappled with the problem of ascertaining whether a duty of care arises in such cases. This is especially so in a case where a person has been harmed, arguably as a consequence of a failure by a person or body to exercise an available statutory power.
In such a case, the existence and nature of the statutory power is central to the resolution of the problem. As Gummow J pointed out in Pyrenees Shire Council v Day ([1998] HCA 3; 192 CLR 330) at [126]:
"Some of these distinctions and doctrines are entrenched in the common law of Australia, others are not. All of them ... tend to distract attention from the primary requirement of analysis of any legislation which is in point and of the positions occupied by the parties on the facts as found at trial.
This analysis is of particular importance where ... the facts do not fall into one of the classes ... already recognised by the authorities as attracting a duty of care, the scope of which is settled."
133Several years later, in Brodie v Singleton Shire Council ([2001] HCA 29, 206 CLR 512), the plurality (Gaudron, McHugh and Gummow JJ, at [102]) said:
"Whatever may be the general significance today in tort law of the distinction between misfeasance and non-feasance, it has become more clearly understood that, on occasions, the powers vested by statute in a public authority may give it such a significant and special measure of control over the safety of the person or property of citizens as to impose upon the authority a duty of care.
This may oblige the particular authority to exercise those powers to avert a danger to safety or to bring the danger to the knowledge of citizens otherwise at hazard from the danger. In this regard, the factor of control is of fundamental importance."
134In more recent times, the High Court has re-addressed these difficult issues and has re-emphasised the matters which have to be examined. In Stuart v Kirkland-Veenstra ([2009] HCA 15, 237 CLR 215), the High Court warned of examining the issue from the wrong perspective.
At [103], the plurality (Gummow, Hayne and Heydon JJ) pointed out that whether the asserted duty exists is not determined by whether the conditions for exercise of the statutory power were shown to have existed in a particular case. The existence of facts satisfying those conditions, their Honours pointed out, would, however, be a central part of the inquiry about breach. Their Honours added:
"Rather, in deciding whether the officers owed the asserted duty it is necessary to consider what is the duty which it is said is owed by those who have a specific statutory power, and how is that duty said to arise out of the 'relationship' created by the existence of that power. Both the specificity of the duty and the nature of the alleged 'relationship' require further examination."
135In that context the plurality noted that, while power is a necessary condition of liability, it is not a sufficient condition. The mere fact that there is a statutory power to act in a particular way, coupled with the fact, if action is not taken, it is reasonably foreseeable that harm will ensue, is not sufficient to establish a duty to take that action. At [112], the plurality said:
"Rather, as was pointed out in Graham Barclay Oysters Pty Ltd v Ryan, the existence or otherwise of a common law duty of care owed by a statutory authority ... 'turns on a close examination of the terms, scope and purpose of the relevant statutory regime'.
Does that regime erect or facilitate 'a relationship between the authority ... and a class of persons that, in all the circumstances, displays sufficient characteristics answering the criteria for intervention by the tort of negligence'?" | [
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] | null |
|
nsw_caselaw:54a636e73004de94513d971b:31 | nsw_caselaw:54a636e73004de94513d971b | 185I agree with his Honour's conclusion that the appellant ("the Council") was not negligent in failing to make any declaration, pursuant to s 34 of the Companion Animals Act 1988, that one or more of Mr Wilson's dogs was or were dangerous. I agree with his Honour's reasons for reaching this conclusion.
186I would add this comment. As Whealy JA has noted, the tragic death of Tyra can only engender great sympathy for the respondents. We were not told whether the respondents had taken action against Mr Wilson or, if so, with what result.
However, the respondents' action against the Council required them to demonstrate that the Council had breached its duty of care by failing to make one or more declarations under the Companion Animals Act.
As Whealy JA has explained, this Court must assess the respondents' success or failure in this regard without relying on the wisdom of hindsight and without being influenced by natural feelings of sympathy for the respondents.
187In Kuru v State of New South Wales [2008] HCA 26; 236 CLR 1, at 6 [12], the High Court stated that intermediate appellate Courts of Appeal should consider whether to deal with all grounds of appeal, not merely the decisive ground. Having given consideration to that question, I do not think it appropriate to express a view on the operation of s 43A of the Civil Liability Act 2002.
To do so requires the making of factual assumptions for which there is no clear basis in the evidence and which cannot be stated with any clarity (cf at [126] above). Not only would consideration of s 43A involve unnecessary work, but it is difficult to see any practical utility in the exercise even if the matter were to go further.
188I agree with Whealy JA's observations in relation to the cross appeal.
**********
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Decision last updated: 16 April 2012 | [
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|
nsw_caselaw:54a636e73004de94513d971b:21 | nsw_caselaw:54a636e73004de94513d971b | 119It is true that the Council had, as his Honour said, received complaints over a number of years about the Wilsons' dogs. But, in the main, these were complaints about the dogs being a nuisance, e.g.
barking, roaming the streets or polluting lawns, etc. Complaints of that nature did not require the Council to make a dangerous dog declaration. They did not require the Council to consider s 33 and s 34 at all.
In so far as his Honour purports to rely on the evidence of Mr Langby Snr, I am of the view that no real weight could be attached to it. It certainly could not be taken from that imprecise piece of evidence that there had been some decision made by the Council, even at ranger level, that, notwithstanding anything that might happen, there would be "nothing done about the dogs".
120Nor, with respect, am I able to agree that the evidence established "the possibility of very serious harm being caused by these dogs". It seems that Mr Wilson owned many dogs over the years and, although they often roamed the local streets without adequate control from their owner, with one or two exceptions, they had not harmed anyone.
At best, they were a nuisance, sometimes a considerable one. The statement that "these dogs were trained hunting machines" is highly emotive and overlooks the fact that they were trained to hunt pigs not humans.
121With every respect to his Honour, I consider that his Honour's considerations on this point reflect a fair degree of hindsight reasoning arising from the tragic and terrible consequences for Tyra that ensued after she had wandered into the Wilsons' backyard in 2006. The Act was amended in a number of respects as a response to this tragic death.
One of those amendments was to proscribe "hunting dogs" as dangerous dogs. That was not the situation that existed prior to July 2006. It is inescapable, it seems to me, that his Honour has been influenced by the tragic death of Tyra and perhaps by the new legislation in reaching the conclusion that these were "trained hunting machines".
122It is necessary for me, on this rehearing, to form my own view as to whether s 43A precluded liability. The respondents' case is that, on the basis of the Council's knowledge (through its officers), it was bound to make a declaration that the dogs at the Wilson premises on 19 July 2006 were dangerous.
Further, that the Council, owing as it did a duty of care to the respondents, negligently failed to make such a declaration thus causing the damage complained of in the proceedings.
The primary judge made a finding, at the behest of the respondents, that the Council had been bound to make a declaration that the dogs were dangerous on the basis that they were pig hunting dogs, and that this was known to the Council.
123A second basis has been propounded in this appeal, as an alternative, namely that Council was bound to make a declaration on the basis that the dogs had repeatedly threatened to attack or had repeatedly chased people.
124I have thus far concluded that the Council could not have made the declaration, sustainable in law, that the dogs were dangerous on the basis that they, without provocation, had attacked or killed animals, namely pigs.
Such a declaration could not have been made because the dogs were trained to do precisely what they did and consequently their actions could not be described as "without provocation".
125In relation to the alternative basis, I have concluded that the complaints about the dogs (at least about any of those present at Mr Wilson's premises when Tyra was attacked) fell into two categories.
First, they were complaints relating to the dogs barking, roaming the streets and generally being a nuisance. Complaints in that category could not have warranted the making of declaration on the basis of the alternative stated in the Notice of Contention. | [
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|
nsw_caselaw:54a636e73004de94513d971b:11 | nsw_caselaw:54a636e73004de94513d971b | 58Since the primary judge did not make any findings on the alternative basis for making a declaration that any of the dogs were dangerous, it will be necessary to refer in some detail to the contested matters arising from the schedules prepared and exchanged between the parties.
It might be observed generally that the respondents may well have preferred the path of showing "dangerousness" by reference to the dogs being all, with one exception, hunting dogs for a sound forensic reason.
This was because the evidence about complaints made to Council officers about the behaviour of the dogs was generally sporadic, somewhat unsatisfactory and presented severe difficulties of identification.
It was clearly an advantage for the respondents to be able to group the dogs together and identify one common characteristic which might have satisfied the relevant criteria. Be that as it may, it is necessary now to turn to the material before the primary judge which bears on the resolution of the Notice of Contention.
59The two former Council rangers who were called were Beth Todhunter (nee Cohen) and William Langby Jnr. Mrs Todhunter was a part-time Council ranger from 28 October 1999 to 16 August 2002. Mr Langby was employed in a similar situation between 2003 and 2008.
Their duties included patrolling the streets of Warren, responding to complaints from the public about animals generally, and caring for any dogs that happened to be in the pound. As Mrs Todhunter said, ninety per cent of her complaints concerned dogs: Red 46 P-Q.
60Ms Todhunter said that over the period of her employment she thought she had spoken to either Mr Wilson or his son about their dogs on six to eight occasions. Complaints about the Wilson dogs generally concerned them barking, the dogs roaming the streets and, on one occasion, a 'Collie' chasing a child.
She had visited their home at 29 Garden Avenue and issued some three infringement notices to the Wilsons in the course of her duty. Her notes were contained in Exhibit G.
61Mr Langby Jnr had kept work diaries during the time he was a ranger. He was not able to produce all of them at the hearing because his diaries had been stolen from his utility when he had been in another township attending a literacy course. There were a number of extant entries, however, and these became Exhibit V.
62The primary judge said this of Exhibits G and V (Red 56Q-57G):
"I think the following matters emerge from the oral evidence and from Exhibits G and V:
(a) Mr Wilson's dogs were a source of perpetual complaint.
(b) Most of the complaints concerned the dogs roaming outside of the Wilson residence.
(c) Some of the complaints related to aggressive behaviour by the dogs.
(d) It must follow that the enclosure in which dogs were kept was not secure. The backyard of the Wilson residence was clearly not capable of containing the dogs that lived there.
(e) Mr Langby frequently visited Mr Wilson at his home and spoke to him in the front yard. This is consistent with the description of the conversation between Mr Langby and Mr Wilson given by Mr Kuehne.
(f) The Wilson dogs were well known to the Council (via Mrs Todhunter and Mr Langby, and probably also Mr Love and Mr Davis) as pig hunting dogs. The rangers often visited 29 Garden Avenue, they often spoke to Mr Wilson and his utility bore the attributes of a pig hunting vehicle."
(Mr Love and Mr Davis referred to in (f) were the superiors of Mrs Todhunter and Mr Langby.)
63Before examining the evidence that might establish any "aggressive behaviour" on occasions by the dogs at Mr Wilson's property, it is convenient to set out his Honour's findings about the identity of the dogs present at the premises when Tyra was attacked and the details of their ages:
Name Type of dog Age Sex
Widge Boxer/Cattle Dog/Mastiff 6 Male
Tika Pure bred Boxer (mother of Widge) 10 or 11 Female
Ouzo Mastiff/Greyhound/Bull Terrier 4 Male | [
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|
nsw_caselaw:54a636e73004de94513d971b:1 | nsw_caselaw:54a636e73004de94513d971b | Roads and Traffic Authority (NSW) v Refrigerated Roadways Pty Ltd [2009] NSWCA 263
Stuart v Kirkland-Veenstra [2009] HCA 15; 237 CLR 215
Sutherland Shire Council v Heyman (1985) 157 CLR 424
Category: Principal judgment
Parties: Warren Shire Council (Appellant/Cross Respondent)
Peter Kuehne (First Respondent/Cross Appellant)
Dylan Kuehne, by his tutor Peter Kuehne (Second Respondent)
Representation: Counsel:
R.S. Sheldon SC (Appellant/Cross Respondent)
P.G. Maiden SC, J.D. Cairn (Respondents/ Cross Appellant)
Solicitors:
DLA Piper Australia (Appellant/Cross Respondent)
Herbert Weller Solicitor (Respondents/Cross Appellant)
File Number(s): 2009/336152
Decision under appeal Jurisdiction: 9101
Citation: Kuehne v Warren Shire Council
Date of Decision: 2011-05-25 00:00:00
Before: Elkaim SC DCJ
File Number(s): 2009/336152
2009/336153
Judgment
1McCOLL JA: I have had the privilege of reading Whealy JA's judgment in draft. I agree with his Honour's reasons and the orders his Honour proposes. I also agree with Sackville AJA's comment in [186].
2WHEALY JA: On 19 July 2006, a young girl, apparently unsupervised, wandered into the back yard of a property at 29 Garden Avenue, Warren, in western New South Wales.
Although the precise sequence of events is unknown, it is apparent that she encountered a number of dogs in the back yard. One or more of six dogs mauled her terribly and she died the next day. The dogs were kept there by their owner, Mr Thomas Wilson.
3Two separate proceedings were brought in the District Court by the girl's father, one of which was by him as tutor for her brother, Dylan. The defendant in each case was Warren Shire Council ("the Council"). The claim on behalf of each plaintiff was that he had suffered nervous shock injuries giving rise to substantial damages.
The proceedings were consolidated and heard together before his Honour Judge Elkaim SC (the primary judge). The claims were ultimately successful. Judgment was entered for the plaintiffs. A verdict and judgment was entered for Tyra's father in the sum of $95,330.60. A verdict and judgment was entered on behalf of Dylan in the sum of $28,506.15. Costs were awarded against the Council.
4The Council has appealed in each matter. It asserts that the primary judge erred in his finding that a duty of care was owed by the Council to Tyra and members of her family and, even if a duty were owed, his Honour erred in finding that there was a breach of duty.
Moreover, the appellant maintains that s 43A and s 44 Civil Liability Act 2002 (NSW) ("Civil Liability Act") required the judge to find in its favour on liability.
5There is a cross appeal alleging that the primary judge erred in one aspect of his damages findings, namely, the conclusions he reached in relation to s 15B Civil Liability Act.
The nature of the proceedings and issues involved
6The seminal event identified in the pleadings filed on behalf of the plaintiffs was the death of the young girl, Tyra, as a consequence of the attack upon her by a group of dogs housed at Mr Wilson's property at 29 Garden Avenue, Warren. The facts surrounding the death of Tyra, although uncertain in some respects, were not essentially in issue.
7The plaintiffs in their Statements of Claim alleged that the dogs had been trained to hunt and chase pigs (para 7) and that prior to the deceased's death one or more of the dogs had repeatedly roamed the streets of Warren (para 8). | [
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|
nsw_caselaw:54a636e73004de94513d971b:13 | nsw_caselaw:54a636e73004de94513d971b | Mrs Moriarty had lived at Garden Avenue for some 23 years. When her daughter (who was seventeen at the time of the trial) was a small child "many years ago", she had been bitten on the arm when she stepped off the school bus.
This happened near the corner where the Wilsons lived. Mrs Moriarty did not witness the incident but was told about it by a neighbour's child. She said her daughter did not receive any treatment although she did ring the police about it. She was not able to identify the dog that had bitten her daughter.
69In the period between 2000 and 2002, Mrs Todhunter, the Council ranger, was asked what dealings she'd had with Mr Wilson and his dogs: Red 92. She responded:
"A couple of times I was called around for them barking. There was once one of his dogs had got out and chased a little kid. And another one was that there were so many dogs in his yard."
70There was one entry in Mrs Todhunter's notes that suggested on 4 August 2000 she had made an entry in relation to a phone call that "a man had been bitten by a dog". Her notes indicate that she went and spoke to the man who had been bitten and explained to him that he had to be able to identify the dogs before the Council could take any action.
The notes indicate that "he wasn't real sure". Apparently there was a witness who saw the attack and Mrs Todhunter noted that she would follow this up, but there is no notation as to the consequences.
71Mrs Todhunter's notes for the remainder of the year showed that she was busy on a daily basis retrieving lost dogs, impounding dogs that were wandering the streets uncontrolled, and otherwise attending to various matters concerning any animal-related complaints. There were no further entries in 2000 related to Mr Wilson. On 5 January 2001, her notes record that there was:
"... a report of Tommy Wilson's black and white dog having a go at small child - mother talked to Tommy's daughter and she said she would tie it up. I went round. No one home. Dog in back yard but not on chain."
The dog was not further identified nor was there any further detail of the complaint, although Mrs Todhunter mentioned the same incident during her evidence in chief.
72Mrs Todhunter was asked (Red 98):
"Q: From your recollection during the time that you were working for the Warren Council how many times did you have cause to go and speak to the Wilsons in relation to their dogs?
A: Probably six to eight.
Q: And are you able to tell the Court why you went to the Wilsons' home to talk to them about their dogs?
A: It was either for their dogs barking or out on the street. There was one occasion a black and white Border Collie chased a little kid across the road."
The witness also said that if she ever saw the Wilson dogs roaming in the street she would impound them. It would then be necessary for them to be reclaimed from the pound by their owner. On one occasion she said that she rang the RSPCA because she did not consider that the Wilson dogs looked in good health.
She thought that she had personally written out three infringement notices to Mr Wilson. One was for dogs roaming the streets and she was unable to remember what the others were: Black 97 T-W.
73Mrs Todhunter described visiting the Wilson residence to find boxers sitting on the verandah, just outside the front door. She described that, on her approaching the door, these dogs barked and growled at her. However, despite being shown photos of Mr Wilson's dogs at trial, the witness was unable to identify these boxers.
Further, in my opinion, the barking and growling would seem unremarkable behaviour for dogs at home on their owner's property in response to someone unfamiliar approaching a front door, and not supportive of a peculiar 'dangerousness'.
74Moving to some time towards the end of 2002, there was evidence given by a Mrs Moy that, on an occasion when she was taking her granddaughter for a walk in her stroller, two dogs came across "snapping and snarling". This was on Garden Avenue itself. One of the dogs had bitten her on the leg. She "yelled at them to leave" and they did. | [
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] | null |
|
nsw_caselaw:54a636e73004de94513d971b:5 | nsw_caselaw:54a636e73004de94513d971b | The defendant submitted that because the "dangerous" tag could only be attached to a particular dog, the Wilson dogs, as a group, could not have been subject to a declaration under Section 34.
144. However, with the exception of Tika, all the dogs were trained, or being trained, as hunting dogs. These dogs, I am satisfied, were long term residents of 29 Garden Avenue and were known as such by the Council ..."
19The next argument considered by his Honour was whether it was necessary for a declaration to be made by the Council or whether it could be achieved by delegation to an officer of the Council. His Honour was of the view that the power to make a declaration could be delegated by the Council to an employee. His Honour then summarised his conclusions on breach as follows (Appeal Book 73-74):
"152. Thus far I have made the following findings:
(a) The Council knew that pig hunting dogs resided at Number 29 Garden Avenue.
(b) The Council knew that these dogs often escaped into the neighbourhood and, therefore, that 29 Garden Avenue was not a secure holding ground for the dogs.
(c) The Council had dealt with many complaints about the dogs, but despite frequent conversations with Mr Wilson and the issuing of infringement notices, the problem continued.
(d) The problem with the Wilson dogs continued over a number of years.
(e) The Council knew Garden Avenue was a residential area inhabited by families with young children. Mr Langby was often in the area and had spoken to parents of young children (eg the Clarks).
(f) The Council had available to it, through Section 34 of the CAA, a means to regulate the keeping of dogs at 29 Garden Avenue.
(g) The Council owed a duty to residents of, at least, Garden Avenue, to exercise its powers for their protection.
(h) It is accepted that the Council did not declare the dogs dangerous or ever consider such a declaration.
153. In my view, on the basis of the above findings, there was a clear and apparent obligation on the part of the Council to exercise its powers under the CAA and have the dogs declared dangerous. It must follow that the failure to take this action was a breach of its duty."
20His Honour then considered s 5B Civil Liability Act and concluded that the plaintiffs had satisfied him that each of the various matters dealt with in the section should be found in their favour.
21His Honour also considered s 43, s 43A and s 44 Civil Liability Act.
As to the latter section, he held after some deliberation, that the plaintiffs in the proceedings before him had an interest substantially greater than the public at large and therefore would have been entitled to bring the proceedings under s 69 Supreme Court Act 1970 (NSW) to require enforcement by the Council of its obligation to issue a declaration under s 34 Companion Animals Act.
22The primary judge considered that s 43A rather than s 43 was the applicable section requiring consideration. (That finding is accepted for the purposes of this appeal.
) His Honour placed reliance upon the observations of this Court in Allianz Australia Insurance Ltd v Roads and Traffic Authority of NSW [2010] NSWCA 328, and its earlier decision in Roads and Traffic Authority (NSW) v Refrigerated Roadways Pty Ltd [2009] NSWCA 263. His Honour said (Appeal Book 76):
"161. A finding that reasonableness is at a high level is not easily made. I do, however, think that I can make that finding in these cases. The defendant, over a number of years, had received complaints about the Wilson's dogs.
The defendant had the power to do something about them. The defendant had apparently reached a conclusion that nothing would be done about the dogs (evidence of Mr Langby Senior).
This attitude existed notwithstanding that no attempt had ever been made to control Mr Wilson and his dogs through a declaration under Section 34 of the CAA. The possibility of very serious harm being caused by these dogs, whether in the backyard at Number 29 Garden Avenue, or as they freely roamed the local streets, was evident. These dogs were trained hunting machines. | [
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] | null |
|
nsw_caselaw:54a636e73004de94513d971b:2 | nsw_caselaw:54a636e73004de94513d971b | It was also alleged that, prior to the deceased's death, one or more of the dogs had repeatedly chased and attacked people (para 9). These facts, especially the last, were in issue at the trial. Also in issue was the fact, as asserted by the plaintiffs, that employees of the Council either knew of or had received complaints about the dogs and their behaviour.
8By its pleadings, the Council denied that it knew or ought to have known that one or more of the dogs that injured Tyra was or were dangerous and presented an unreasonable risk to people such as Tyra.
9In their Statements of Claim, each plaintiff alleged that the Council owed both Tyra and the relevant plaintiff a duty of care to take reasonable care to avoid foreseeable risk of injury to them. This was denied on the pleadings.
10Further, by paragraph 15 of each Statement of Claim, the death of Tyra was alleged to have been caused by the negligence of the Council. The particulars of negligence were as follows:
"Particulars of negligence
(a) Failing to take reasonable care to protect the deceased from the risk of harm, in circumstances where complaints about one or more of the dogs had been made to the defendant by the plaintiff and other people, and the risk that one or more of the dogs would attack a person such as the deceased or someone else was foreseeable and was not insignificant.
(b) Failing to act as authorised under the Companion Animals Act, particularly sections 18, 21 and 34 and thereby exposing the deceased to a foreseeable and significant risk of injury which could have been avoided by reasonable care on its part.
(c) Failing to act on complaints made to it concerning the potential risk to people's safety posed by one or more of the dogs by not taking reasonable steps to avoid the foreseeable risk of injury.
(d) Failing to require the owner or occupier of the premises to secure the dogs pursuant to the provisions of the Companion Animals Act and Companion Animals Regulation.
(e) Failing to ensure the dogs' owners or the owner or occupier of the premises where the dogs were ordinarily kept complied with the enclosure requirements of the Companion Animals Act and Regulation.
(f) Failing to seize the dogs pursuant to its powers under the Companion Animals Act."
11The Council, by its Amended Statement of Defence, denied each particular of negligence pleaded in paragraph 15 of the Statement of Claim. Further, in answer to the whole of the Statement of Claim, the defendant denied that it owed any duty of care to the plaintiff under s 5B of the Civil Liability Act 2002.
It denied, in the event, that if it were found to have owed either plaintiff a duty of care, that any act or omission on its part caused injury, loss or damage: s 5D CLA. It also pleaded and placed reliance upon s 43, s 43A and s 44 of the Act. There were other matters pleaded, but it is not necessary to recite them all.
Proceedings of trial
12As I have said, both matters were heard together. Although the plaintiffs' pleadings had identified s 18, s 21 and s 34 of the Companion Animals Act 1998 (NSW) as relevant to the allegations of negligence on the Council's part, by the end of the hearing the plaintiffs did not further rely on s 18 and s 21.
The principal issues were identified by the primary judge in his decision given on 25 May 2011. He summarised the plaintiffs' case as follows:
"(a) The Council was aware that a number of dogs resided at number 29 Garden Avenue, Warren.
(b) It was aware that some of the dogs were trained to hunt pigs.
(c) It was aware the dogs were not kept securely on the premises. They were known to, and often did, roam freely in the local area.
(d) Because they were pig hunters and because of frequent complaints about their behaviour, the dogs fell within the definition of 'dangerous' in s 33 of the Companion Animals Act. | [
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|
nsw_caselaw:54a636e73004de94513d971b:14 | nsw_caselaw:54a636e73004de94513d971b | Mrs Moy described the dogs as best she could, and said she had seen them in the area before. She thought that they lived at the Wilson house. She was shown photographs and identified a photograph of Target as being the dog that had bitten her. She said that she was definite about that: Black 168 R-W. She could not identify the other dog which she described as "a red dog".
75Two points can be made regarding Mrs Moy's evidence. As the primary judge observed (Red 52 G), it was simply not possible that the dog that bit Mrs Moy was Target. He had been at most eighteen months old in July 2006. As his Honour said:
"Mrs Moy therefore could not have seen him in 2002 or 2003."
76The other point is that there was no evidence that Mrs Moy reported the incident to the Council or that any Council officer or, for that matter, the police, were aware of the incident.
77There were no further instances of "aggressive behaviour" until a reasonably significant event occurred in 2004. This incident was dealt with at some length by the primary judge.
In that year, the first respondent, Mr Kuehne, had been living with his de facto partner, Ms Fogden. Although Ms Fogden was unsure of when the incident occurred, it appears that it is accepted as having occurred some time in 2004. His Honour said (Red 47 M-W):
"In early 2004 Ms Fogden told Mr Kuehne about a dog from number 29 chasing their sons after they had left the school bus. Mr Kuehne telephoned Mr William Langby, who he knew to be the person at the Council concerned with animals. Initially Ms Fogden spoke to him but Mr Kuehne took over when Ms Fogden became 'huffy and puffy'.
This referred to her aggressive tone. Mr Langby came to the Kuehne household where a similar pattern emerged. Ms Fogden was initially aggressive and Mr Kuehne intervened and told Mr Langby that it was 'not acceptable that kids are being chased on the street when getting off the bus'. The conversation was in the proximity of a number of neighbours.
After some discussion, Mr Langby said he would visit the Wilsons and 'sort the matter out'. Mr Kuehne saw Mr Langby drive to the Wilson residence and speak to Mr Tom Wilson for fifteen to twenty minutes. Mr Kuehne said that about six weeks later Mr Joel Wilson confronted him in a pub about reporting the matter to the Council."
78Ms Fogden said that there were a few other occasions when she had rung the Council about the dogs, but she was not able to be more specific as to when these were or what they related to: Black 110 B-H. It appears that Ms Fogden's two boys had to pass the Wilsons' home after they had alighted from the school bus as they made their way back to their home.
79Mr Kuehne gave evidence about this matter as well. He had not witnessed the incident, although he had been told, he said, that one of the dogs that had been chasing his boys up the street that afternoon was the dog, Tika.
He also identified the dog Widge as a dog he had seen on the streets on occasions, or on the Wilsons' ute or out the front of their property. He was unable to identify the other dogs shown to him in a bundle of photographs, they being photos of the dogs that were impounded after the attack on Tyra.
80This incident became something of an issue for the primary judge to resolve. Apparently, on instructions, Mr Sheldon suggested to Mr Kuehne that the whole incident with Mr Langby had never occurred.
Reliance was placed on a statement made by Mr Kuehne to a Legal Aid solicitor which was somewhat inconsistent with the evidence he had given. A similar inconsistency was raised in relation to Ms Fogden's evidence.
81However, the primary judge said that, at least in broad detail, he accepted Mr Kuehne's evidence that a complaint had been made to Mr Langby leading to his attendance at the Kuehne household, and was then followed by discussion between Mr Langby and Mr Wilson: Red 49 P-Q. | [
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|
nsw_caselaw:54a636e73004de94513d971b:6 | nsw_caselaw:54a636e73004de94513d971b | Against this background it is my view that the Council's failure to act was unreasonableness at a high level. I am satisfied that the circumstances were such that the Council's failure to act was 'so unreasonable that no authority having the special statutory power in question could properly consider the act or omission to be a reasonable exercise of, or failure to exercise, its power'."
23His Honour also found in the plaintiffs' favour on causation (s 5D and s 5E Civil Liability Act). He then considered damages and awarded them in the sums I have earlier mentioned.
The course of the appeal
24There were a considerable number of issues raised by the Council at the hearing of the appeal. It is convenient to set out the appeal grounds in full:
"1. His Honour Judge Elkaim SC denied the Appellant procedural fairness in relation to his rejection of unchallenged evidence of a witness called by the Respondents.
2. His Honour Judge Elkaim SC erred in finding that the Companion Animals Act 1998 (NSW) gave rise to a duty of care.
3. His Honour Judge Elkaim SC erred in his construction of the Companion Animals Act 1998 (NSW) so that there was, on the proper construction, no proper basis for declaring a relevant dog dangerous.
4. His Honour Judge Elkaim SC erred in finding the Appellant was negligent.
5. His Honour Judge Elkaim SC erred in finding that the Appellant was guilty of negligence capable of satisfying the requirements of section 43A of the Companion Animals Act 1998 (NSW) ("Wednesbury unreasonableness"), in its failure to declare one or more dog or dogs dangerous, and that his Honour did not give adequate reasons in support of his finding in that regard.
6.
His Honour Judge Elkaim SC erred in finding that section 44 of the Companion Animals Act 1998 (NSW) was met by the Respondents in that they had standing to seek an order compelling the council to act, including that his Honour did not determine what order might have been made and whether that order equated with the duty being asserted by the Respondents;
and, as to whether a court would have made any order in the nature of mandamus.
7. His Honour Judge Elkaim SC should have found that there was no occasion in the 2 weeks during which the dogs were present at 29 Garden Street, Warren for the making of a declaration that a dog or the dogs were dangerous and that there was not sufficient time in which an order could be made."
25In addition, during the hearing of the appeal, Mr Sheldon SC (who appeared for the Council both at trial and on the appeal) sought and was given permission to challenge the finding made by the primary judge (Red 57E-G) that "the Wilson dogs were well known to the Council as pig hunting dogs".
26The appeal initially proceeded on the basis that a central issue on liability was whether it had been open to the primary judge to conclude (as he undoubtedly did) that the Council's negligence lay in its failure to make a declaration under s 34 of the Companion Animals Act 1998 that one or more of Mr Wilson's dogs was or were "dangerous".
The sole basis, it appeared, on which the primary judge had reached this conclusion was that the dogs, being pig hunting dogs, necessarily fell within the definition of "dangerous" mentioned in s 33 of the Act. This was, it will be recalled:
"For the purposes of this Division, a dog is 'dangerous' if it has, without provocation
(a) attacked or killed a person or animal (other than vermin) ..."
27One of the submissions put by Mr Sheldon (both at trial and in this Court) was that because the dogs were specifically trained to attack pigs, it could not be said that their characteristic of so doing was "without provocation". For this reason, senior counsel argued that the primary judge had erred in finding the dogs were dangerous on the basis that they were pig hunting dogs. | [
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