Agricultural and Rural Finance Pty Ltd v Atkinson

Should the issue be determined as a separate question? 16The first question is whether the issue of the scope of the hearing should be determined in advance of the hearing. In my opinion, it should. 17The principles to be applied by the court in determining whether to order a separate question were set out by Einstein J in Idoport Pty Ltd v National Australia Bank Ltd [2000] NSWSC 1215 at [7]: (1) The power of the Court to order the separate determination of an issue is a discretionary power which must be exercised judicially, but cannot otherwise be fettered: Dunstan v Simmie & Co Pty Ltd [1978] VR 699 at 670 per Young CJ and Jenkinson J. (2) In exercising the power under Pt31, r2, the Court is now enjoined to give effect to the overriding purpose of the Supreme Court Rules; namely to facilitate the just, quick and cheap resolution of the real issues in the proceedings and cannot be stated in a more confined way: Pt1, r3 (1), r3(2) Supreme Court Rules. (3) The Court begins with the proposition that it is ordinarily appropriate that all issues in a proceeding should be disposed of at the one time: Tallglen v Pay TV Holdings Pty Ltd (1996) 22 ACSR 130 at 141 per Giles CJ in Comm D, Hadid v Australis Media Ltd (unreported, Supreme Court of NSW, 29 March 1996 per Rolfe J). Accordingly, it is for the party who wishes to have a question separately determined to show that it is desirable for that to occur. (4) Without being exhaustive, the separate determination of an issue may prove to be an appropriate procedure in at least the following sets of circumstances: (a) where the resolution of that separate issue will have the effect of resolving the entirety of the litigious controversies or of substantially narrowing the field of litigious controversy: CBS Productions Pty Ltd v O'Neil [1985] 1 NSWLR 601 at 606 per Kirby P, Dunstan v Simmie & Co Pty Ltd (supra, at 671 per Young CJ and Jenkinson J); (b) where the resolution of that separate issue carries with it a strong prospect that the parties will thereafter be able to resolve their dispute themselves and thus avoid further litigation: Tallglen v Pay TV Holdings (supra, at 141 - 142 per Giles CJ in Comm D); (c) where there is a clear demarcation between that issue and all other issues in the case, including issues going to the credit of witnesses: CBS Productions Pty Ltd v O'Neil (supra, at 606 per Kirby P), Tallglen v Pay TV Pty Ltd (supra, at 142 per Giles CJ in Comm D), Rajski v Carson (1988) 15 NSWLR 84 at 88 per Kirby P and Hope JA. (5) Conversely, the separate determination of an issue will rarely be an appropriate procedure where: (a) there are intertwined issues of fact or law between the separated question and the other questions such that the determination of the separate question will not have any substantial effect upon the width of the field of litigious controversy or the prospect of the settlement of the balance of the litigation: Law Society of NSW v Bruce (unreported, Supreme Court of NSW, 23 April 1996, per Rolfe J), Parramatta Stadium Trust v Civil and Civic Pty Ltd (unreported, Supreme Court of NSW, 27 August 1996, per Hunter J). (b) where there is a commonality of witnesses and issues of credit as between the separate issue and other issues in the case which will or may necessitate a ruling on the credit of one or more of the common witness, thus possibly precluding that same judicial officer from again dealing with the matters going to the credit of the common witness in accordance with the decision of the Court of Appeal in Australian National Industries Ltd v Spedley Securities Ltd (in liq) (1992) 26 NSWLR 441: Story of Sydney Pty Ltd v Ling (unreported, Supreme Court of NSW 15 November 1994, per Rolfe J), Century Medical v THLD [2000] NSWSC 5; (unreported, Supreme Court of NSW, 3 February 2000, per Rolfe J). (c) there is a possibility that the resolution of the separate issue will not finally determine the issue but will merely result in an appeal from that decision in relation to that separate issue, creating a multiplicity of proceedings, interruption to the court and undesirable fragmentation of the proceedings: Story of Sydney Pty Ltd v Ling (supra), Century Medical v THLD (supra). (6) the experience of courts suggests that the separation of proceedings often does not result in the quicker and cheaper resolution of proceedings as anticipated, but often has the reverse effect, merely causing added delay and expense to the resolution of the litigation. Thus, before an issue is to be separately determined, it must be possible to clearly see that it will facilitate the quicker and cheaper resolution of the proceedings: Tallglen v Pay TV Pty Ltd (supra, at 142 per Giles CJ in Comm D), Parramatta Stadium Trust v Civil and Civic Pty Ltd (supra), Century Medical v THLD (supra). 18These principles were stated by reference to Pt 31, r 2 of the Supreme Court Rules 1970 (NSW). However, that rule is not materially different from Uniform Civil Procedure Rules 2005 (NSW) (UCPR) r 28.2, which replaces it. Applying these principles, in my opinion, it is appropriate to make an order that the precise scope of the hearing be determined separately to any other questions arising in the proceedings. I say that for several reasons. 19First, the separate question concerns the scope of the hearing. It does not depend on any facts in issue in the proceedings. Rather, it depends on the correct construction of the orders made by the Court of Appeal. 20Second, by its nature, the issue will have to be determined separately. The Court will need to determine what the issues in the case are in determining, for example, the admissibility of evidence. The defendants do not contend otherwise, although they submit that it would be appropriate to determine the scope of the hearing at its commencement rather than now. 21Third, the issue is a clearly defined one. The parties agree that the real question is whether it is open to the defendants to contend that ARF received payments by the due date notwithstanding the findings of Einstein J. As I have said, the answer to that question does not depend on any factual findings that are relevant to the substantive issues in the case. 22Fourth, determining the issue now will permit preparation of the case to proceed in an orderly fashion. The parties accept that the hearing will be substantially longer if the defendants' contention is correct. If the determination is not made now, both parties will need to prepare the case, and the Court will need to set aside time for the hearing, on the basis that the defendants' contention is correct. That preparation will be wasted, and the hearing of other cases may be unnecessarily deferred, if the true position is that the defendants are not entitled to re-agitate the question of when the payments were received by ARF.

How should the separate question be answered? 23The order for which ARF contends in relation to the separate question is the following: An order pursuant to UCP rule 28.2 that, on the further hearing on remitter of ARF's claims against the defendants who are respondents to this motion, those defendants are, on the proper interpretation of the order for remitter of the Court of Appeal dated 26 April 2012, limited to raising as defences to ARF's Summons, first, the reinstated estoppel defences of Messrs Wardle and Giannuzzi as pleaded in pars 27-31 of their Further Amended Defences and as referred to in par 303 of the Court of Appeal's reasons of 26 April 2012 (the CA's reasons), secondly, the reinstated defences under the Contracts Review Act pleaded in subpar 33(ba) of the Further Amended Defences and as referred to in pars 310 and 340 of the CA's reasons, and thirdly, the defensive Cross-Claims of those defendants limited to issues arising in respect of the prayers for relief made under the Contracts Review Act as pleaded in subpar 33(ba) of the Cross-Claims and referred to in pars 310 and 340 of the CA's reasons. 24I have concluded that an order to that effect should be made. 25The defendants' contention to the contrary depends on two propositions. The first is that the Court of Appeal did not make any determination concerning the question of when the payments were made. The second is that, properly construed, the orders made by the Court of Appeal setting aside the judgment of Einstein J must be understood as an order setting aside all of the conclusions that his Honour reached. I do not accept either of those propositions. 26As to the first, the parties accept that order 6 of the orders made on 30 April 2012 must be read as including the words "consistently with the Court's reasons for judgment". The defendants' first proposition depends on the contention that the Court of Appeal made no determination concerning the question whether the payments were made punctually. However, I do not think that that is correct. One ground of appeal concerned the findings made by Einstein J in relation to when certain payments were made. For example, para 17 of the Notice of Appeal filed by Mr Wardle identified the following ground of appeal: The Trial Judge erred in his finding that the cross-appellant's cheque dated 28 June 1999, which was deposited to the first respondent's bank account on 2 July 1999, was not received by the first respondent until after 30 June 1999 (Judgment 17 June 2010 paras 223-32) 27Campbell JA dealt with the issue raised by that ground of appeal under the heading "Set Aside Findings of Lack Of Punctual Payment Even If No "Postal Rule" Defence?" at [241] to [255] of the judgment delivered on 26 April 2012. Campbell JA records the issue in these terms (at [241]): Mr Epstein submits that even if the judge was right in striking out the "postal rule" defences, his findings in the Principal Judgment that the relevant defendants other than Mr Holmes had not paid punctually should be set aside. The judge approached the question of whether the payments were made on time by enquiring whether each Appellant had established that his or her payments were made on time. Mr Epstein submits that the judge should have approached the matter by enquiring whether ARF had established that the payments in question were not made on time. After discussion, his Honour reached the following conclusion (at [255]): For these reasons, the primary judge made no error in deciding the Principal Judgment on the basis that each Appellant bore the onus of proving that he or she had made the payments in question punctually. 28It is true that Campbell JA did not specifically deal with the factual finding made by Einstein J. However, that factual finding was not challenged except on the onus of proof and postal rule grounds. That is made clear by the following paragraphs from the judgment delivered on 30 November 2012: [17] Another issue considered in the Principal Judgment was whether the Appellants had paid all instalments punctually. The judge considered that question on the basis of his earlier rejection, in the Strike Out Judgment, of the contention of the Appellants that the date of payment should be decided in accordance with the so-called "postal rule". The judge held that none of the Appellants had paid all instalments punctually. [18] There were two challenges to that finding on the appeal. The first, applicable to all the Appellants, was that the findings were vitiated by the judge applying an incorrect onus of proof. That challenged failed. The second related only to whether Mr Holmes had failed to pay punctually. That challenge succeeded, by virtue of facts that were peculiar to Mr Holmes. 29Having disposed of those two grounds, Campbell JA must be understood as having disposed of the ground of appeal in para 17 of the Wardle Notice of Appeal (among others) and, in doing so, as having rejected any challenge to the finding of Einstein J that there had not been punctual payment. It would be inconsistent with that conclusion for the court in the remitted hearing to determine that the payments were made punctually. 30As to the defendants' second proposition, it is necessary to consider the orders in context. It is clear that the Court of Appeal cannot order a new trial unless it appears to the Court that there has been a substantial miscarriage of justice: see UCPR r 51.53. It may order a new trial on any question: UCPR r 51.53. Against that background, an order that involves a further hearing should not readily be interpreted as involving a hearing on issues that are severable and are not infected by any error. To approach the interpretation of the order in some other way would be inconsistent with the principle that lies behind UCPR r 51.53 - namely, the finality of litigation and the desirability of avoiding the hardship and costs of a new trial: see, eg, Singler v Ferguson [2010] NSWCA 325 at [110] per Young JA (in dissent, but not on this point). The order in this case was an order for a further hearing. The need for a further hearing arose from two matters. First, the Court of Appeal concluded and Mr Wardle and Mr Giannuzzi were entitled to a hearing on their estoppel defence. On that question, Campbell JA said (at [303]): Mr Wardle and Mr Giannuzzi should have been permitted to have a trial on their estoppel defences. For that reason, the judgments against them should be set aside, and a new trial ordered. Rather than restore paras [27]-[31] of the Further Amended Defence, the estoppel defences should be repleaded, with the extent of the repleading permitted by this court being confined to inserting the particulars now contained in para [27] into paras [28]-[31], and permitting those particulars to be modified to make clear that Mr Lloyd is alleged to be acting on behalf of both ARF and OAL. Such an order will not preclude a judge in the Commercial List from allowing a further amendment, if a case for a further amendment is made out. 31Second, the Court of Appeal concluded that the defendants should have a new trial on their defence based on the CRA. On that question, Campbell JA said (at [340]): Thus, the orders striking out para (ba) of the Contracts Review Act defences, insofar as para (ba) depends upon the round robin allegations, should be set aside. The orders striking out corresponding allegations in the various cross claims should likewise be set aside. That will in turn mean that the verdict entered against all the Appellants who sought to rely upon such a Contracts Review Act defence should be set aside. A new trial will be needed concerning the question of liability of all those Appellants. 32It was not suggested in the judgment that there should be a new trial for any other reason. In those circumstances, the order that there should be a further hearing should be interpreted as an order that there should be a further hearing in relation to the matters on which the Court considered that it would be necessary to have a new trial. 33That conclusion is reinforced by the pains the Court of Appeal went to in the judgment delivered on 30 November 2012 to identify with precision those orders made by Einstein J on 29 April 2010 that should be set aside. If the Court of Appeal had intended that there should be a retrial on all issues, there would have been no point in making the orders the Court of Appeal did. Moreover, the Court of Appeal made extensive costs orders. It is difficult to make sense of those costs orders if the Court of Appeal contemplated that there would be a rehearing on the question of punctual payment, with the possible result that the defendants would succeed on that issue. It might have been thought that, in those circumstances, it would be more appropriate for the question of costs to await the outcome of the rehearing of the question whether the defendants had paid punctually.

Mr Wardle's amendment application 34The estoppel defence raised by Mr Wardle is a defence that ARF was estopped from asserting that it was entitled to demand strict compliance with the obligation to pay punctually in order for Mr Wardle to obtain the benefit of the indemnity because it was represented to Mr Giannuzzi that strict compliance was not necessary. 35At the time the strike out application was heard by Einstein J, Mr Wardle's defence gave the following particulars of that representation: (i) On 30 October 1998, the Defendant's accountant, Mr Gianuzzi spoke to Mr Steven Lloyd of OAL, in relation to the Defendant's principal repayment for Loan Agreement TT 125 and told him that the payment would be late. Mr Lloyd said that it would be "ok". The representation was not retracted or qualified by ARF and OAL at any material time after it was made. (ii) On 29 September 1999, Mr Gianuzzi spoke to Mr Lloyd, in relation to the Defendant's principal repayment for Loan Agreement TT 308 and told him that the payment would be late. Mr Lloyd said that it would be "ok". The representation was not retracted or qualified by ARF and OAL at any material time after it was made. 36Einstein J struck out the defence (and a waiver defence based on the same facts) on the basis that it had been determined in the Gardiner Test Case that Mr Lloyd was not the agent of ARF. 37The Court of Appeal overturned that finding on the basis that the Gardiner Test Case had only determined the question whether Mr Lloyd had authority to make representations in an investment seminar on behalf of ARF. It did not determine whether Mr Lloyd had authority to make the representations on which Mr Wardle relied. 38On 24 April 2014, Mr Wardle filed an amended defence. The relevant particulars to the amended defence are in the following terms: (i) On 30 October 1998, the Defendant's accountant, Mr Gianuzzi spoke to Mr Steven Lloyd acting on behalf of both ARF and OAL, in relation to the Defendant's principal repayment for Loan Agreement TT 125 and told him that the payment would be late. Mr Lloyd said that it would be "ok". The representation was not retracted or qualified by ARF and OAL at any material time after it was made. (ii) On 29 September 1999, Mr Gianuzzi spoke to Mr Lloyd, acting on behalf of ARF and OAL in relation to the Defendant's principal repayment for Loan Agreement TT 308 and told him that the payment would be late. Mr Lloyd said that it would be "ok". The representation was not retracted or qualified by ARF and OAL at any material time after it was made. It is obvious that these amendments were made in accordance with order 4 of the orders made by the Court of Appeal on 30 April 2012. 39Mr Wardle now seeks to amend those particulars by changing the name "Mr Stephen Lloyd" in particular (ii) to "Mr Rob Henry". 40This amendment is said to be justified by evidence given by Mr Giannuzzi in an affidavit sworn by him on 19 March 2010. In para 40 of that affidavit, Mr Giannuzzi gives the following evidence of a conversation he had on or about 29 September 1999 (the day before repayment of part of the principal was due): I rang to speak to Steve Lloyd and I spoke to a male person at ARF, who may have been Rob Henry. I said that David's payment may be up to a week late and the person I spoke to replied in words to the effect - "That will be no problem." It appears that that evidence was overlooked at the time that Mr Wardle propounded the defence which Einstein J struck out. 41The amendment is also said to be supported by letters dated 2 June 1999 and 7 July 1999 that Mr Wardle received from Ms Edwards saying that "[s]hould you have any queries please contact myself or Rob Henry...". 42The question of amendment is governed by ss 56-58 of the Civil Procedure Act 2005 (NSW). Section 58(1) provides as follows: In deciding: (a) whether to make any order or direction for the management of proceedings, including: (i) any order for the amendment of a document, and ... (b) the terms in which any such order or direction is to be made, the court must seek to act in accordance with the dictates of justice. 43Section 58(2) provides that, for the purpose of determining what are the dictates of justice in a particular case, the court must have regard to the provisions of ss 56 and 57 and may have regard to other matters set out in s 58(2). Section 56 relevantly provides: (1) The overriding purpose of this Act and of rules of court, in their application to civil proceedings, is to facilitate the just, quick and cheap resolution of the real issues in the proceedings. (2) The court must seek to give effect to the overriding purpose when it exercises any power given to it by this Act or by rules of court and when it interprets any provision of this Act or of any such rule. 44Section 57 provides: (1) For the purpose of furthering the overriding purpose referred to in section 56 (1), proceedings in any court are to be managed having regard to the following objects: (a) the just determination of the proceedings, (b) the efficient disposal of the business of the court, (c) the efficient use of available judicial and administrative resources, (d) the timely disposal of the proceedings, and all other proceedings in the court, at a cost affordable by the respective parties. (2) This Act and any rules of court are to be so construed and applied, and the practice and procedure of the courts are to be so regulated, as best to ensure the attainment of the objects referred to in subsection (1). 45In my opinion, it would not be in the interests of justice to permit the amendment. I say that for two reasons. 46First, up until now, the case has been conducted on the basis that Mr Giannuzzi spoke to Mr Lloyd on 29 September 1999. It was on that basis that ARF sought to strike out the estoppel defence. That application succeeded before Einstein J and failed before the Court of Appeal. Those findings had costs consequences for ARF. Mr Wardle accepts that, if the amendment were allowed, he would have to pay the costs thrown away by the amendment, and he accepted that those costs may include a proportion of the costs incurred by ARF in relation to the strike out application. However, in determining what costs order should be made, it would be necessary for the Court to form a view on what would have happened if the amendment had been made before the strike out application was heard. In my opinion, the Court should not engage in speculation of that type. Up until now, the case has been conducted on a particular basis. ARF has made tactical decisions on that basis. The Court of Appeal remitted the matter back to this Division to determine a particular question - namely, whether Mr Lloyd was acting as an agent for ARF in making the representations he is alleged to have made. In my opinion, it is now too late for Mr Wardle to seek to conduct the case on some different basis. 47Secondly, I do not accept that there would be any utility in permitting the amendment. In my opinion, the evidence in para 40 of Mr Giannuzzi's affidavit would be excluded under s 135 of the Evidence Act 1995 (NSW) on the basis that the evidence might be unfairly prejudicial to ARF or cause or result in undue waste of time. 48The evidence is of a conversation that occurred approximately 11 years before the evidence was given. Mr Giannuzzi does not say that he spoke to Mr Henry. Rather, he says that he rang to speak to Mr Lloyd. He gives no evidence of how he ended up speaking to someone else, and he gives no explanation of the basis of his belief that it may have been Mr Henry. Without knowing these matters, and assuming for the moment that the evidence is accepted, in my opinion, it is doubtful that any weight can be placed on the evidence. If that is right, its admission is likely to result in an undue waste of time because it is likely that ARF would want to deal with it by cross-examining Mr Giannuzzi and calling its own evidence. On the other hand, if weight is likely to be placed on the evidence, it seems to me that ARF is unfairly prejudiced by it because ARF has no means of knowing what investigations it should undertake with a view to establishing that Mr Giannuzzi's belief is mistaken or should carry little weight.

Orders and costs 49I make the following orders in relation to ARF's motion filed on 30 June 2014: (1) Order pursuant to UCPR r 28.2 that the question as to the precise scope of the further hearing of this matter on remitter from the Court of Appeal as ordered by that Court on 30 April 2012 ([2012] NSWCA 107 order 6) (the further hearing), on the proper interpretation of that order, be determined separately to any other questions arising in the proceedings, and before the further hearing of the Summons and Cross-Claims listed on 18 August 2014. (2) Order pursuant to UCPR r 28.3 that, on the further hearing on remitter of ARF's claims against the defendants who are respondents to the motion, those defendants are, on the proper interpretation of the order for remitter of the Court of Appeal dated 30 April 2012, limited to raising as defences to ARF's Summons, first, the reinstated estoppel defences of Messrs Wardle and Giannuzzi as pleaded in paras 27-31 of their Further Amended Defences and as referred to in para 303 of the Court of Appeal's reasons of 26 April 2012 (the CA's reasons), secondly, the reinstated defences under the CRA pleaded in subpara 33(ba) of the Further Amended Defences and as referred to in paras 310 and 340 of the CA's reasons, and thirdly, the defensive Cross-Claims of those defendants limited to issues arising in respect of the prayers for relief made under the CRA as pleaded in subpara 33(ba) of the Cross-Claims and referred to in paras 310 and 340 of the CA's reasons. 50I will deal with the balance of the issues raised by the motion and hear the parties in relation to costs of the motion at a time convenient to the parties and the Court. 51I dismiss the 95th defendant's motion filed on 2 July 2014 with costs.

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: 18 July 2014