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Currawinya Pty Limited v Adam; Adam v Currawinya Pty Limited [No. 3] [2011] NSWSC 229 (30 March 2011)

Last Updated: 1 November 2011

This decision has been amended. Please see the end of the decision for a list of the amendments.

Supreme Court

New South Wales


Case Title:
Currawinya Pty Limited v Adam; Adam v Currawinya Pty Limited [No. 3]


Medium Neutral Citation:


Hearing Date(s):
15 March 2011


Decision Date:
30 March 2011


Jurisdiction:


Before:
Slattery J


Decision:
See paragraph 28 of judgment.


Catchwords:
PROCEDURE - Miscellaneous procedural matters - application to re-open plaintiff's case - Court has given two judgments in the proceedings- application to re-open made before the second judgment - HELD - scope of proposed re-opening limited - no prejudice or embarrassment to the defendants -re-opening will avoid need for separate proceedings - leave to re-open granted.


Legislation Cited:


Cases Cited:
AON Risk Services Aust Ltd v Australian National University (2009) 239 CLR 175
Autodesk Inc v Dyason (No. 2) [1993] HCA 6; (1993) 176 CLR 300
Currawinya Pty Limited v Adam; Adam v Currawinya Pty Ltd [2010] NSWSC 666
Currawinya Pty Limited v Adam; Adam v Currawinya Pty Limited [No. 2][2011] NSWSC 1
DJL v Central Authority [2000] HCA 17; (2000) 201 CLR 226
Smith v New South Wales Bar Association (No. 2) [1992] HCA 36; (1992) 176 CLR 256
Rosser v Maritime Services Board (No. 2) (1998) 14 BCL375; BC 9604305.


Texts Cited:


Category:
Consequential orders


Parties:
Plaintiff/Cross Defendant- Currawinya Pty Limited
First Defendant/First Cross Claimant- Jill Adam


Representation


- Counsel:
Counsel:
Plaintiff/Cross Defendant- Mr G Elliott
Defendant/Cross Defendant- Mr J Priestley


- Solicitors:
Solicitors:
Plaintiff/Cross Defendant-
Defendant/Cross Defendant- James Fuggle Rummery Solicitors


File number(s):
09/484806/6350

Publication Restriction:



JUDGMENT

  1. This is my third judgment in these proceedings. My first two judgments substantially resolved the issues on the Statement of Claim and the Cross Claim: Currawinya Pty Limited v Adam; Adam v Currawinya Pty Ltd [2010] NSWSC 666 ; Currawinya Pty Limited v Adam; Adam v Currawinya Pty Limited [No. 2][2011] NSWSC 1. But some aspects of this litigation still remain unresolved.

  1. The second judgment foreshadowed that the Court would order mediation between the parties under Civil Procedure Act 2005, s 26, subject to hearing submissions from the parties: Currawinya Pty Limited v Adam; Adam v Currawinya Pty Limited [No. 2][2011] NSWSC 1 at [164]. Since then the parties have indicated a willingness to engage in mediation. Orders for mediation are made among the orders at the conclusion of this judgment. It is desirable that mediation take place in the short to medium term. The parties appear to agree upon the mediator to conduct the mediation.

  1. This judgment deals with matters that must still be resolved. The first matter is Currawinya's motion to amend the Statement of Claim and the Defence to Cross Claim and to reopen its case to seek to rely upon a resolution of Currawinya's directors of 19 August 2010. The second is to provide for the disposal of the remaining relief and questions of costs.

  1. This judgment uses the same terminology to describe people and events that the first and second judgments use.

The Motion to Re-Open

  1. Shortly after the first judgment and before the second judgment Currawinya filed a Notice of Motion on 30 August 2010 ("the motion for leave"), which sought leave to file a Further Amended Statement of Claim, an Amended Defence to the Cross Claim and an Amended Reply. In this motion Currawinya also sought leave to re-open its case to rely upon an affidavit of Donna Byer-Smith sworn 26 August 2010. Ms Byer-Smith's affidavit deposes to the holding of a director's meeting of Currawinya's board on 19 August 2010, and the passing of a motion to adopt as a rule of Currawinya "that shareholders are not permitted to graze cattle on the company's common land, or otherwise to keep or allow or authorise others to keep cattle on the common land".

  1. The motion for leave was listed before me for directions on 9 September 2010 and 20 December 2010.

  1. On 9 September 2010 the motion for leave was adjourned until after the giving of my second judgment. The parties sought to reserve their positions in relation to the effect of the adjournment of the motion for leave. Currawinya argued on 9 September that if the motion for leave was to be adjourned until after the second judgment that it did not expect to face another argument after the second judgment that the motion should have been heard between the first and second judgments. The defendants indicated that they would not put such an argument. Although it was clear that the defendants would be opposing a grant of leave to re-open, upon the adjournment of the motion, including on the ground that the evidence of the kind to be relied upon should have been brought before the hearing concluded before the first judgment. In their final arguments on the motion for leave the parties respected the terms upon which the motion for leave had been adjourned and not heard in September 2010. Now that the second judgment has been given on 28 January 2011 Currawinya seeks the orders on the motion for leave and the defendants oppose them.

  1. The motion for leave seeks amendments to the pleadings and leave to re-open and adduce further evidence. The orders sought are interdependent. The proposed amendments to the pleadings would plead for the first time a resolution of Currawinya's Board of 19 August 2010 in form passing for the first time a "rule or regulation" about the grazing of cattle on common land. The application for leave to re-open has no point unless the pleadings are amended. Without the amendment to the pleadings the leave to re-open would introduce material which risks being classified as irrelevant.

  1. Currawinya sought amendment to its Defence to Cross Claim by the addition of paragraph 51A which, if allowed, would provide as follows:-

"51A. Alternatively, on 19 August 2010 the cross-defendant prescribed a rule or regulation that shareholders are not permitted to graze cattle on the company's common land, or otherwise to keep or allow or authorise others to jeep cattle on common land.

Particulars

Resolution of directors of the cross defendant passed at a meeting held on 18 August 2010."

  1. Currawinya also proposes the amendment of its Statement of Claim and Reply. In the proposed Further Amended Statement of Claim Currawinya pleads that in June 2000 Currawinya had informed Ms Adam that Currawinya required all cattle belonging to her to be permanently removed from the common land within 60 days. Then the proposed pleading, with the amendments underlined, pleads in paragraphs 10 and 11:-

"10. Since being so informed or in the alternative, since the plaintiff prescribed the rule or regulation pleaded in paragraph 51A of the amended defence to the cross claim the first defendant has not had and does not have the permission or licence of the plaintiff to run cattle on the common land.

11. Since being so informed, or in the alternative, since the plaintiff prescribed the rule or regulation pleaded in paragraph 51A of the amended defence to the cross claim , the second defendant has not had and does not have the permission or licence of the plaintiff to run cattle on the common land."

  1. The proposed Amended Reply incorporates minor consequential amendments as a result of the amendments to the Statement of Claim and the Defence to Cross Claim.

  1. The evidence that Currawinya proposes to read if it is given leave to re-open is substantially set out in the affidavit of Donna Byer-Smith of 26 August 2010. The affidavit annexes the minutes of a meeting of Currawinya's directors of 19 August 2010 which in form passed a motion in the following terms:-

"MOTION 2

That this meeting of directors of Currawinya Pty Ltd, in order to avoid any doubt about the effect of company decisions made in previous years, including but not limited to motion 12 carried by the company's general meeting held on 13 March 1999 and motion 11 carried by the company's annual general meeting held on 16 October 2002, determines as follows:

1. That the company adopt as a rule the rule expressed in paragraph 2 and 3.

2. That shareholders are not permitted to graze cattle on the company's common land, or otherwise to keep or allow or authorize others to keep cattle on the common land.

3. That in paragraph 2, 'common land' means all land not set aside or designated or assigned to the use and occupation of an individual share or shareholder (including joint shareholders) pursuant to clauses 2(a)(i), 2(a)(ii) and 2(a)(iii) of the Memorandum of Association of the company."

  1. If the Court grants leave to re-open, the validity of this resolution will be put in issue.

  1. The Court held a further directions hearing on 15 March 2011 on which date the motion for leave was argued. The legal principles that apply to the exercise of discretion on the motion for leave were not in contention between the parties. The exercise of the discretion to re-open is governed by principles stated by the High Court in Smith v New South Wales Bar Association (No. 2) [1992] HCA 36; (1992) 176 CLR 256 at 266-267:-

"It is again necessary to distinguish between the considerations which may bear on a decision to re-open and the processes involved in reconsideration once a case has been re-opened. If an application is made to re-open on the basis that new or additional evidence is available, it will be relevant, at that stage, to inquire why the evidence was not called at the hearing. If there was a deliberate decision not to call it, ordinarily that will tell decisively against the application. But assuming that that hurdle is passed, different considerations may apply depending on whether the case is simply one in which the hearing is complete, or one in which reasons for judgment have been delivered. It is difficult to see why, in the former situation, the primary consideration should not be that of embarrassment or prejudice to the other side. In the latter situation the appeal rules relating to fresh evidence may provide a useful guide as to the manner in which the discretion to re- open should be exercised. But those considerations bearing on re-opening are not decisive of the question whether, a matter having been re-opened by reason of error, further evidence can be called.

Not every case involving error will invite further evidence: it will depend entirely on the issue that is opened up. If the issue is one that invites further evidence, then, prima facie and subject to the ordinary rules of evidence, that evidence should be allowed. We say prima facie because there may be situations in which the particular evidence involved would cause embarrassment or prejudice such that, in the circumstances, it would be unfair to allow it."

  1. The present case has some of the characteristics of a proceeding which is "simply one in which the hearing is complete", as further reasons for judgment were still to be delivered in respect of the remaining questions reserved for consideration in the second judgment. But the application to re-open also came after "reasons for judgment have been delivered", namely the first judgment. The first question is what is the appropriate test to apply for the grant of leave to re-open in these circumstances.

  1. Where judgment has been given the Court may amend, vary or recall a final judgment before it is formerly entered; the Court ordinarily only loses its power to set aside a final judgment after it has been entered: DJL v Central Authority [2000] HCA 17; (2000) 201 CLR 226 at 245. The present argument about re-opening is possible because no orders consequent upon the first and second judgments have yet been entered. The parties referred the Court to Uniform Civil Procedure Rules , s 36.16(1), " the Court may set aside or vary a judgment or order if notice of motion for the setting aside or variation is filed before entry of the judgment or order". The motion for leave does not involve an automatic application to vary the judgments already given. But were the motion for leave to be successful and were Currawinya then successfully to argue that the 19 August 2010 resolution validly created a rule or regulation under Currawinya's memorandum clause 2(a)(iii), then the final relief in the proceedings would change. The Court's findings on the material considered to date are that Currawinya has not made a rule or regulation under memorandum clause 2(a)(iii). If Currawinya is wholly successful, then final relief would be altered by upholding a rule or regulation prohibiting the grazing of cattle after 19 August 2010.

  1. The parties have identified a number of discretionary factors that bear upon the decision as to whether or not to grant leave to re-open and to amend. I will first consider the factors to be weighed against a grant of leave and then the factors favouring a grant of leave. In my view the factors favouring a grant of leave are more persuasive.

  1. The defendants identified a number of reasons why the Court should not grant leave. Mr Priestley first submits that where a judgment is not entered and a party seeks a variation of it, that the public interest requires caution in the exercise of the power, especially where the variation sought would have the practical effect of re-opening the proceedings to enable a significant re-hearing: Autodesk Inc v Dyason (No. 2) [1993] HCA 6; (1993) 176 CLR 300. Were this a case in which the Court had pronounced upon all the matters in dispute between the parties in its first judgment the defendants argument as to the exceptional nature of the exercise of this discretion would have significant weight. But the reality here is that at the time Currawinya filed its motion for leave on 30 August 2010 my first judgment had expressly reserved for further consideration many matters in issue in the proceedings and had invited submissions upon matters that did not appear to be adequately addressed by the parties prior to the first judgment: Currawinya Pty Limited v Adam; Adam v Currawinya Pty Ltd [2010] NSWSC 666 at [90], [91] and [94]. In analogous circumstances, the reservation of further consideration gives more scope to the parties to raise matters subsequently, where the issue is one of the breadth of a grant of liberty to apply: Rosser v Maritime Services Board (No. 2) (1998) 14 BCL375; BC 9604305.

  1. At the time of delivery of the first judgment the Court had only decided questions 1 to 4 of the 9 questions raised on the Statement of Claim and none of the questions raised on the Cross Claim. Even my second judgment still leaves open some of the relief claimed on the Cross Claim, such as the defendant's claim of oppression and for a winding up orders on the just and equitable ground: Currawinya Pty Limited v Adam; Adam v Currawinya Pty Limited [No. 2][2011] NSWSC 1 at [160] and [161]. In my view, despite the completion of the hearing and the giving of the first judgment, the motion for leave should be classified as one advanced when much of the relief claimed by the parties was undetermined by judgment. But the motion for leave was adjourned until after more matters were determined in my second judgment, as a matter of convenience. In my view Currawinya should not be prejudiced in the Court's exercise of discretion in relation to the re-opening because the motion for leave was heard after the second judgment. Currawinya should be in no worse position than if the motion for leave had been heard in September 2010.

  1. Currawinya's 30 August 2010 motion for leave was filed before the Court decided question 5 of the remaining questions for decision. That was the question that decided the validity of the 13 March 1999 resolution. Because this question was unresolved at the time the motion for leave was filed this is a matter where the Court should approach the application for leave on the basis that the case is, in the words of the High Court in Smith v The New South Wales Bar Association , "simply one in which the hearing is complete" rather than one in which reasons for judgment have been delivered. Thus in my view the primary consideration for the Court in exercise of the discretion to grant leave is the level of embarrassment or prejudice to the defendants that arise from this application. A more liberal approach to the question of granting leave is justified as the Court had reserved further consideration of the matters the subject of the motion for leave when it was filed. Thus in my view a dominant consideration in this case is the question of embarrassment or prejudice to the defendants from the application.

  1. The defendants' next argument is that the application runs against the general rule that a party's cause of action needs to be perfected prior to the commencement of the proceedings. This argument is not persuasive. The submission is contrary to Civil Procedure Act 2005, s 64 which allows the making of amendments to proceedings to add or substitute a cause of action "that has arisen after the commencement of the proceedings": Civil Procedure Act 2005, s 64(3). Indeed far from prohibiting the amendment the express purposes of the Civil Procedure Act and rules suggest that in considering the amendment of the document the Court must "act in accordance with the dictates of justice" and must facilitate the just, quick and cheap resolution of the real issues in the proceedings: Civil Procedure Act 2005, ss 56 and 58. Whilst the 19 August 2010 resolution could be regarded as a new issue it is closely related to an existing issue. Analysed either way the determination of the issue now raised would facilitate the resolution of the real issues in controversy between the parties in the proceedings: Civil Procedure Act 2005, s 56 and AON Risk Services Aust Ltd v Australian National University [2009] HCA 27; (2009) 239 CLR 175 at [14] and [71].

  1. Thirdly the defendants argue that the motion for leave is futile because the 19 August 2010 motion cannot be a valid rule or regulation. This is the final question to be determined if the motion for leave is to be granted. The defendants have argued that the 19 August 2010 resolution is invalid because it is only a resolution of the Board and because it is not part of a composite prescribed set of rules and regulations. It seems to me however that its validity is at least arguable and that the application for amendment should not be dismissed on the basis that the validity of the 19 August 2010 resolution cannot be upheld.

  1. The Court raised with Mr Priestley, counsel for the defendants, what prejudice his clients would suffer if Currawinya was allowed to re-open its case in the manner proposed. Mr Priestley indicated that costs, time and an ongoing matter for his client to worry about and deal with would be the prejudice. These are important considerations that the Court must weigh up. But they are to be weighed against the countervailing consideration that if the amendment is not allowed that Currawinya would be entitled to commence a separate set of proceedings to raise the same issues. There seems to me to be a high probability that the defendants will face this issue in some form in these or in future proceedings. There is less delay and more efficiency overall in the validity of the 19 August 2010 resolution being determined in these proceedings.

  1. The considerations in favour of allowing the motion for leave become more persuasive if potential prejudice to the defendants upon any re-opening is clearly limited in scope. Upon any re-opening the evidence that will be allowed will only relate to the 19 August 2010 resolution and what Currawinya has done with that resolution. Upon a re-opening Currawinya will not be permitted to re-argue the case generally. It should not be necessary for a further oral hearing to take place. The Court will make directions for the filing of evidence in relation to the 19 August 2010 resolution. The filed evidence surrounding the 19 August 2010 resolution does not appear to require any cross-examination and seems unlikely to be factually contentious. One consequence of allowing the motion to proceed is that the question of the defendants' rights to graze cattle on Currawinya on or after 19 August 2010 will be reserved. The declarations and orders that the Court will make will cover the rights of the parties up to and including 19 August 2010.

  1. Another factor favouring the exercise of discretion to give leave to re-open is that the 19 August 2010 resolution is a matter relevant to the as yet undetermined question on the Cross Claim as to whether the Court will grant relief for the winding up of Currawinya or for the valuation and compulsory purchase of the defendants' shares. The defendants have not abandoned this part of their Cross Claim. In those circumstances Currawinya says, with some force in my view, that the validity or otherwise of the 19 August 2010 resolution may be relevant to the relief to which the Court might grant under Corporations Act 2001, s 233. For example, if the 19 August 2010 resolution is held to be valid and presently operates to deny the defendants any right to graze cattle on Currawinya's common property then some of the defendants' allegations of oppressive conduct may well be modified. But an interesting question will remain as to the effect of the 19 August 2010 resolution upon the defendants' oppression case, in circumstances where no lease has yet been created between Currawinya and the defendants as was contemplated by memorandum clause 2(a).

Costs and Other Relief

  1. It is inefficient to determine issues of costs or to determine the balance of relief sought on the Cross Claim under Corporations Act 2001, s 233 until the Court resolves the validity of the 19 August 2010 motion and the parties have attempted mediation. Although it is theoretically possible to make a determination of costs up to 19 August 2010 that seems to me to be an artificial division. The issue of costs is best looked at when all other issues that remain are resolved. That is the course that I will take.

  1. The relief undetermined on the Cross Claim is the Corporations Act 2001, s 233 relief. If the mediation is unsuccessful that will relief will be determined. The orders and directions that the Court makes, assume that the mediation will be completed within a limited time. If not the proceedings will be re-listed for determination of the issues of Corporations Act 2001, s 233 relief. If the parties cannot agree now on the declarations and other orders to be made at this stage and if they want them made now, before the mediation then I will publish the orders I propose to make. Obviously in light of these reasons any declarations about entitlements to graze on Currawinya will only be made up to 19 August, 2010.

Orders

  1. Accordingly, I make the following orders:-

1. Grant leave to the plaintiff, Currawinya to re-open its case and to amend its pleadings in accordance with Orders 1 and 2 of the plaintiff's motion of 30 August 2010.

2. Order the plaintiff to file any evidence in relation to the re-opened issues by 5:00pm on Friday, 15 April 2011.

3. Order the defendants to file any evidence in relation to the re-opened issues by 5.00pm on Friday, 29 April 2011.

4. Order the plaintiff to file any evidence in reply on the re-opened issues by 5.00pm on 6 May 2011.

5. Direct the parties to exchange written submissions on the re-opened issues by 5.00pm on 12 May 2011.

6. Direct the parties to exchange written submissions in reply on the re-opened issues by 5.00pm on 19 May 2011.

7. Order pursuant to Civil Procedure Act 2005, s 26 that the parties engage in mediation of all issues in the proceedings such mediation to take place before Friday, 27 May 2011.

8. Grant liberty to apply.

9. Reserve the costs of the plaintiff's motion to re-open and amend dated 30 August 2010.

**********

Amendments

27 Apr 2011 Typographical error. Paragraphs: 18

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