[1993] HCA 6
Patsalis v State of New South Wales (2012) 81 NSWLR 742
Source
Original judgment source is linked above.
Catchwords
[1993] HCA 6
Patsalis v State of New South Wales (2012) 81 NSWLR 742
Judgment (7 paragraphs)
[1]
Background
Despite the great volume of material generated by this case the background can be stated briefly.
The applicant is the father of three of the five respondents. The other two are corporations (referred to as "E Co" and "EM Co") in which one or more of the three individual respondents have interests. The respondents commenced proceedings in the Equity Division claiming, among many other contentions, equitable relief in the nature of proprietary estoppel. The respondents sought declarations that the applicant held certain farming and other properties on trust for the individual respondents. The respondents also sought orders that the applicant transfer the properties and other assets to them.
The applicant filed a cross-claim seeking orders for the payment of rent founded on an agreement for lease and for repayment of moneys allegedly due to the applicant by one or other of the respondents.
At the time the cross-claim was filed the applicant was in prison having been convicted of a number of sexual offences committed against his grandchildren. It does not appear that the applicant sought or was granted leave to file the cross-claim as the Felons (Civil Proceedings) Act 1981 (NSW) seems to require, although no point has been taken about the absence of leave. [3] Nor does any point appear to have been taken, prior to the hearing in this Court, as to the possibility that leave might be required under that Act to bring this application for leave (something which was considered but not determined in Patsalis v State of New South Wales [4] ). It is because of the prohibition in s 578A of the Crimes Act 1900 (NSW) against publishing any matter identifying the complainants in those proceedings, so as to protect the identities of the victims of the applicant's criminal conduct, that acronyms have been used to describe the parties to the proceedings, just as they were in the judgments at first instance.
The primary Judge provided an overview of the dispute in the Principal Judgment. In that overview her Honour summarised her factual findings and explained that she considered it necessary, when formulating relief, to effect a clean break between the parties. Her Honour observed that to achieve this goal: [5]
"it would be necessary for the sons to buy out their father's interest in E Co/EM Co. I have thus concluded that it would be appropriate, as a term of the relief to be granted under which the sons' interest in the farms is to be accelerated, for the sons to acquire the [applicant's] shares in the companies at a value that represents the present worth of those shares (independently valued) calculated on the assumption that E Co is in a position to continue its farming operations on the properties but having regard to the requirement (to which I turn below) for E Co to pay to the [applicant] the book value of the cattle transferred to it in 2003 and the advances made to it over the years (without interest). However, relief in those terms was not canvassed in oral submissions at the close of the hearing. In those circumstances I propose to seek further submissions on this aspect of the relief to be granted."
At the conclusion of the Principal Judgment the primary Judge explained the orders she considered it appropriate to make. She proposed: [6]
"1241 … to order that the [applicant] transfer to the [individual respondents] (as tenants in common in equal shares) within, say, 28 days the properties listed in the second further amended statement of claim and all farming equipment and machinery on those properties that is currently owned by the [applicant]; that the first [applicant] account to the [individual respondents] for three-quarters of the proceeds of sale of the property referred to as Property No 12 in these reasons (with interest on that sum from the date of settlement); for judgment to be entered for the [applicant] against the [individual respondents] for the sum admitted to be owing under the W Deed and interest thereon from the date it should have been paid; that judgment be entered for the [applicant] against the first [respondent] for the agreed arrears of rent from 2014 to June 2017 (less the amount paid for insurance, rates and taxes in respect of the leased properties by E Co in that period); and to order that there be a set-off in relation to the monetary sums ordered to be paid.
1242 I also consider that an order should be made that, as a condition of the relief to be given in respect of the [respondents'] jointly made proprietary estoppel claims, the [individual respondents] should pay to the [applicant] a sum representing the net present value of the market rent for the properties from the date of judgment for the period of the [applicant's] life expectancy on the Australian Life Expectancy Tables (as valued by an independent valuer); and that the properties should be charged in favour of the [applicant] for the said amount. Further, as a condition of the said relief, the [individual respondents] should be ordered to procure the release of the personal guarantees provided by the [applicant] for the loan facilities for the P and C Hotels referred to in these reasons and should (subject to hearing submissions on this aspect of the relief) be ordered to acquire the [applicant's] shares in E Co and EM Co (as valued by an independent valuer on the basis referred to earlier in these reasons).
1243 If orders are made for the acquisition of the [applicant's] shares in E Co and EM Co, then there should also be orders made for the payment to the [applicant] of the amounts recorded in the books of the [applicant] and E Co as advances made to E Co over the years and for there to be payment to the [applicant] of the book value for the cattle transferred by him to E Co in 2003. Those orders need to make provision for a payment regime and for security to be provided for the payment of those amounts (over the properties) if payment of the said amounts is not made at the time of transfer of the properties to the [individual respondents].
1244 For the present, I propose only to make orders in relation to procedural matters and to make directions for the parties to prepare short minutes of order (and submissions if those cannot be agreed) in order to reflect these reasons. It may be necessary for there to be a brief oral hearing on those matters if agreement cannot be reached between the parties.
1245 I therefore order as follows:
…
Direct the parties to prepare short minutes of order to reflect these reasons and to forward those and any brief written submissions in relation to those orders to my associate by 4pm on 24 April 2018."
[2]
Primary Judgment
The parties disagreed as to whether the respondents should be able to adduce further evidence to support their submissions as to the final orders the primary Judge should make. In the Primary Judgment her Honour summarised the issues in respect of which the respondents proposed to call evidence: [7]
" the [respondents] identified five issues arising in respect of the relief 'as formulated in' my principal judgment: first, the need to calculate the quantum of the various set-offs there contemplated (as to the costs liability, the acceleration of future rent, and the value of the [applicant's] shares in the [E Co]), in respect of which it was submitted that there was a need to appoint appropriate experts with relevant expertise; second, as to the party which should bear the liability for the acceleration of future rent (i.e., [E Co], being the lessee, or the individual [respondents] - I interpose that this may affect the resolution of the third issue identified by the [respondents]); third, the assumptions on which the share value should be determined; fourth, the terms of a 'reasonable payment regime which will not jeopardise [E Co's] ongoing business and operations' … and, fifth, the terms on which the orders should 'make provision for a payment regime and for security to be provided for the payment of those amounts (over the properties) if payment of the said amounts is not made at the time of the transfer of the properties to the [individual] respondents' … A sixth issue identified was as to the implications of taxation in respect of the remedy to be granted by the Court."
The primary Judge explained the competing positions of the parties as follows: [8]
"23 The set of orders proposed by the [respondents] made provision for the entry of judgment in their favour but contemplated that final orders not be made in respect of any one payment until all the various amounts had been quantified and that the final determination of matters of quantification be set down for a hearing estimated at up to one day to be held in three or four months' time. The orders also contemplated … the appointment by the Court of experts pursuant to r 31.46 of the Uniform Civil Procedure Rules 2005 (NSW) in order to quantify the various amounts to be payable as between the parties, namely: an expert costs consultant; an expert rural land valuer (to determine the market value and market rent of the [applicant's] farms); an expert actuary (to determine the net present value of the net future rent of the properties to the [applicant] during his expected lifetime); and an expert forensic accountant (to determine the value of the [applicant's] shares in [E Co and EM Co]). The curriculum vitae of each of the proposed court-appointed experts was provided with the material prepared by the [respondents].
…
25 Broadly speaking, the [applicant's] position (accepting that expert valuers should be appointed to value the market rent of the properties and the [applicant's] shares …) was that there was no need for debate as to the instructions to be given to the valuers (on the basis that such instructions could be incorporated into the terms of the order and that, should the valuers require any further information, the parties should provide such information on request). The [applicant] did not agree that an actuarial determination was required for the purposes of determining the net present value of future rent payable (submitting that the 3% discount rate ought to be ordered in line with Todorovic v Waller (1981) 150 CLR 402 at 423-424; [1981] HCA 72); and did not agree that there should be an assessment of costs in advance of the making of final orders."
The respondents supported their contention that they should be permitted to adduce further evidence by suggesting that it might be: [9]
"financially ruinous for them for the Court to give effect to a 'clean break' by ordering an inter vivos transfer of the Subject Properties on terms that millions of dollars are paid by them to the [applicant] (on the assumption that such an amount was charged against the Subject Properties), with the attendant risk that default could result in a court ordered sale of the Subject properties, then leaving the [respondents] in no different position than that which the [applicant] ultimately intended, that is, that the [individual respondents] get 'absolutely nothing' out of the farms." (Emphasis in original.)
The primary Judge summarised her conclusions on the respondents' application as follows: [10]
"I am not persuaded that leave to re-open is strictly necessary in order for the [respondents] to be permitted now to make submissions as to the appropriate form of relief (or conditions to be attached thereto) that I had concluded in my principal judgment would be appropriate but I have concluded that leave is necessary if the [respondents] wish to adduce further evidence going to the issue of relief since, in effect, that amounts to a re-opening of the evidence in the hearing. That said, to the extent that such leave is necessary, then for the reasons set out below I would grant it."
Later in the Primary Judgment her Honour explained in more detail the reasons for permitting the respondents to reopen the hearing: [11]
"113 … I am persuaded that the arguments put for the [respondents] in the course of submissions as to the proposed final orders point to potential error in the proposed exercise of the discretion to impose, as a condition of relief, the obligation to pay a notional market rent - due to a misapprehension on my part as to the potential impact of such a condition on the [respondents] (namely, as to their ability to retain ownership of the [applicant's] land). Whether such an order would necessarily have that effect, I do not know. It might be, as I had contemplated at the time the reasons were published, that finance could be obtained (secured over the properties) in order to enable the relevant payments to be made and the land to be retained. However, I am concerned that the [respondents] have not addressed submissions or evidence in relation to that issue and, insofar as this was not raised directly by me as a potential outcome (even though the issue as to the amount of the notional future rent was the subject of some debate in the course of submissions), the [respondents] might be said to have been denied procedural fairness if they were not now permitted to do so. …
114 I have taken into account the public interest in the finality of litigation. In my opinion that is promoted in the present case by having the question of relief finally determined at this stage of the litigious process on the basis of the evidence and submissions that the [respondents] now wish to put before the Court on the issue as to the market rent of the properties (and, of course, the [applicant's] response thereto). A course that left open a potential challenge … based on a lack of procedural fairness at this stage would in my opinion be more likely to lead to delay in finalising the proceedings at first instance (particularly if the ultimate determination of a procedural fairness complaint were to result in the remittal of the matter for further hearing) than allowing the submissions (and evidence) to be put before the Court before final orders at first instance are made.
115 As to the principles mandated by s 56 of the Civil Procedure Act 2005 (NSW), I accept that the inevitable delay in finalisation of the proceedings at first instance is not desirable. … The reality is that this is hard and long-fought litigation, in the context of which a delay from now until November this year is relatively short in the scheme of things. I am conscious of the fact that the overriding mandate for the conduct of litigation in this Court is not simply for the resolution of disputes to be quick and cheap but also that it be just."
The primary Judge made the following orders:
"(1) The hearing be re-opened to permit evidence (including expert evidence) to be adduced, and further submissions to be made, as to the final orders to be made in these proceedings including: as to the rent (market or otherwise) for the [applicant's] properties for the period from judgment to the balance of his life expectancy; as to the potential impact of a condition for payment of that rent on the relief proposed to be granted to the [individual respondents] by way of the acceleration of their interest or equity in the [applicant's] properties; as to the appropriate discount rate to be adopted for the calculation of the net present value of the notional future rent over the balance of the [applicant's] life expectancy; and as to the matters otherwise referred to at [64] of these reasons and the "variables" referred to in the [applicant's] submissions dated 27 April 2018.
(2) List the matter for further hearing as to final relief on 19-21 November 2018."
Her Honour also made a series of consequential directions for the obtaining and filing of evidence, including expert evidence.
[3]
The application for leave to appeal
The essence of the applicant's submissions on the application for leave to appeal was that the conditions required to reopen the proceedings were not satisfied. The applicant relied on a passage from the judgment of Mason CJ in Autodesk Inc v Dyason (No 2): [12]
"What must emerge, in order to enliven the exercise of the jurisdiction, is that the Court has apparently proceeded according to some misapprehension of the facts or the relevant law and that this misapprehension cannot be attributed solely to the neglect or default of the party seeking the rehearing. The purpose of the jurisdiction is not to provide a backdoor method by which unsuccessful litigants can seek to re-argue their cases."
The applicant contended that it was not enough for the primary Judge to point to a "potential error" in the proposed exercise of her discretion nor for her Honour to rely on the possibility that the respondents might have been denied procedural fairness. The principal of finality, so it was argued, requires that the matters proceed to the making of final orders without the primary Judge hearing further evidence.
The application for leave to appeal is from a discretionary interlocutory decision on a matter of practice and procedure. The principles governing such an application are those stated in Young v Hones (No 2): [13]
"[14] ... Challenging such decisions is a difficult task: Warragamba Winery Pty Ltd v State of NSW [2010] NSWCA 174 at [6]; Micallef v ICI Australia Operations Pty Ltd [2001] NSWCA 274 at [45]. Ordinarily, it is appropriate to grant leave to appeal from such decisions only where there is an issue of principle involved or a question of general public importance or an injustice which is reasonably clear in the sense of going beyond what is merely arguable: Jaycar Pty Ltd v Lombardo [2011] NSWCA 284 at [46].
15 What must be shown is error in the House v R sense (House v R [1936] HCA 40; (1936) 55 CLR 499 at 505), namely that the primary judge: made an error of legal principle; made a material error of fact; took into account some irrelevant consideration; failed to take into account, or to give sufficient weight to, some relevant matter; or arrived at a result so unreasonable or unjust as to suggest that one of the foregoing categories of error had occurred (even though the error in question may not explicitly appear on the face of the reasoning). It is not sufficient merely to show that the primary judge was arguably wrong: Be Financial Pty Ltd as Trustee for Be Financial Operations Trust v Das [2012] NSWCA 164 at [32]. Nor is it to the point that the appellate Court might have arrived at a different result had it exercised the relevant discretion at first instance (House v R at 504-505)."
In the present case the primary Judge has not yet made any orders dealing with the substantive relief claimed by the respective parties. The applicant sought to challenge directions that permit the respondents to adduce further evidence in support of their contentions as to the form of relief that is appropriate. At best, the applicant advanced an arguable case that the primary Judge's discretion to reopen the hearing miscarried (although the applicant's submissions were not framed in terms of a challenge to a discretionary decision). The applicant would face a formidable barrier in establishing that the discretion miscarried. Although her Honour said only that the respondents "might be said to have been denied procedural fairness", she appears to have accepted that the respondents were not given an opportunity to be heard in relation to certain orders proposed (but not made) in the Principal Judgment. In any event, the application for leave to appeal does not raise any issue of principle.
Mr Priestley SC, who appeared with Mr LLoyds for the applicant, submitted that the applicant would suffer injustice if leave to appeal were refused. He identified the injustice as the delay and uncertainty and additional cost that would be experienced before the proceedings were finalised.
However, if leave to appeal were granted, and the appeal allowed, it is unlikely that this Court would be in a position to make final orders in the proceedings. Mr Priestley accepted that in the event of a successful appeal the matter would have to be remitted to the primary Judge to determine what orders should be made in the light of the parties' extensive submissions. If leave to appeal were granted and the appeal dismissed, the proceedings would be no further progressed, but the parties would have incurred substantial additional expense and suffered significant delays in finalising the proceedings.
There is therefore a substantial risk that a grant of leave to appeal would actually prolong this already very lengthy and expensive litigation. For the reasons given by the primary Judge the most efficient and convenient course is for the further hearing to take place before her Honour. She will then be in a position to make final orders taking into account any evidence the parties wish to adduce. It remains open to the applicants to seek a special order as to the costs of the further hearing. If the applicant is dissatisfied with the outcome he will be entitled to appeal as of right. As Mr McInerney SC, who appeared with Mr Kabilafkas for the respondents, accepted, any issue the applicant wishes to raise on his application for leave to appeal affecting the final orders could be dealt with on any such appeal, together with all other issues raised by the appeal (and any cross-appeal).
It is for these reasons that the Court dismissed the application for leave to appeal.
[4]
Endnotes
ADM v FDGK (No 3) [2018] NSWSC 646 (Primary Judgment). The summons for leave to appeal names two applicants but only one has played an active part in the application.
ADM v FDGK [2018] NSWSC 442 (Principal Judgment).
The Felons (Civil Proceedings) Act 1981 (NSW) relevantly provides as follows:
[5]
"4 Leave to sue required for persons convicted of serious indictable offences
A person who is in custody as a result of having been convicted of, or found to have committed, a serious indictable offence may not institute any civil proceedings in any court except by the leave of that court granted on application.
[6]
5 Grant of leave
A court shall not, under section 4, grant leave to a person to institute proceedings unless the court is satisfied that the proceedings are not an abuse of process and that there is prima facie ground for the proceedings."
[7]
The expression "civil proceedings" is not defined but may well include the filing of a cross-claim.
4. (2012) 81 NSWLR 742; [2012] NSWCA 307 at [5]-[6], [43]-[57] and [112]-[117].
5. Principal Judgment at [79].
6. Principal Judgment at [1241]-[1245].
7. Primary Judgment at [22].
8. Primary Judgment at [23], [25].
9. Primary Judgment at [26].
10. Primary Judgment at [40].
11. Primary Judgment at [113]-[115].
12. (1993) 176 CLR 300; [1993] HCA 6.
13. [2014] NSWCA 338 at [14]-[15] per curiam.
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: 23 August 2018
MJF Legal Pty Ltd (Respondents)
File Number(s): 2018/179695
Decision under appeal Court or tribunal: Supreme Court of New South Wales
Jurisdiction: Equity Division
Citation: [2018] NSWSC 646
Date of Decision: 14 May 2018
Before: Ward CJ in Eq
File Number(s): 2014/198212