DERRAWEE PASTORAL COMPANY PTY LIMITED v McCONOCHIE [1995] NSWCA 123

Court of Appeal (NSW)|1995-02-24|Before: Handley JA, Bryson J, What Bryson J, Windeyer J, Mahoney JA

DERRAWEE PASTORAL COMPANY PTY LIMITED vy McCONOCHIE SUPREME COURT OF NEW SOUTH WALES - COURT OF APPEAL

Handley JA. On 2 November 1994 the claimants appealed as of right from orders of Bryson J made on 28 October 1994 and on 23 December they filed an amended notice of appeal. On 4 January 1995 they applied by notice of motion for orders that the judgment entered on 30 June 1994 and the orders made by Bryson J on 9 December 1994 be stayed pending the determination of the appeal.

What Bryson J described as 'the principal proceedings' were commenced on 4 October 1990. The plaintiffs, shareholders in the appellant company, claimed that it should be wound up or other relief granted on the ground that its affairs were being conducted in a manner which was oppressive, prejudicial or unfairly discriminatory. The proceedings were based on s 320 of the Companies Code then in force. The relief which the Court can grant in such proceedings includes (s 320(2)(e)) an order for the purchase of the shares of any member by another member.

On 22 October 1993 Windeyer J made orders in 'the principal proceedings' in terms of agreed short minutes. These noted an agreementthat the second defendant purchase the shares of the plaintiffs. Paragraph 2 directed that the price to be paid should be the value of the shares as determined by an accountant chosen by the parties. Paragraph 3 contained an order that the second defendant complete the purchase within 21 days of the accountant's report. Other paragraphs provided that there should be no order as to costs, that there should be liberty to apply on seven (7) days notice, and that the proceedings should be otherwise dismissed.

The valuer in his report dated 8 June 1994 valued the plaintiffs" shares as at 22 October 1993 at $316,772. The second defendant did not complete within 21 days. On 30 June the plaintiffs purported to enter judgment for $316,772. On 4 July they issued execution. On 28 July the company and the second defendant applied by notice of motion for orders setting aside the judgment and the writ of execution and a declaration that the valuation was invalid. The motion was heard by Bryson J and on 28 October he ordered that it be dismissed with costs.

His Honour considered that the Court should control completion of the sale as the orders of 22 October 1993 provided in substance for its specific performance. He indicated that he would, if necessary, conduct a directions hearing for this purpose. The appellants appealed against the dismissal of their motion. On 9 December on the application of the plaintiffs Bryson J made orders of a familiar kind to secure completion of the purchase on 27 January. The second defendant did not comply with those orders.

On 30 November the respondents applied by notice of motion to have the appeal struck out as incompetent on the ground that the order of 28 October was interlocutory. Supreme Court Act s 101(2)(e). The motion was returnable on 12 December but on that day senior counsel for the respondents informed Mahoney JA that he did not propose to press for that relief. Both parties joined

in seeking expedition of the appeal but his Honourdirected that this application be dealt with in private chambers in the usual way.

The notice of motion of 4 January came before me as a single Judge on 20 February. Mr Alexis for the appellants sought a stay to protect the utility of the appeal and to prevent irreversible action pursuant to the orders of Bryson J of 9 December, particularly those made pursuant to the charging order on the second defendant's shares under s 27(1) of the Judgment Creditors Remedies Act 1901. Mr Ashhurst, counsel for the respondents, opposed a stay on the ground that the appellants were in contempt of court. I declined to dismiss the motion on this basis. Mr Ashhurst also submitted that a stay should be refused because the appeal lacked merit. Having formed a tentative view that the appeal was incompetent without leave I raised this question with counsel. I considered that if the appeal was incompetent it would not be appropriate to grant a lengthy stay of proceedings, no summons for leave having been filed. Because of the pressure of other matters the notice of motion was adjourned to 21 February.

In further argument Mr Alexis relied on the attitude taken by the respondents on 12 December and submitted that the Court should treat the appeal as competent and allow it to proceed in the normal way. He pointed out that since 12 December further costs have been incurred by the appellants, the index has been settled and the appeal books are ready for printing. However, the restrictions on rights of appeal to this Court do not exist solely for the protection of respondents but are also there for the benefit of the Court itself and other litigants. Moreover respondents who fail to press objections to competency run the risk of being ordered to pay costs thrown away by appellants in prosecuting incompetent appeals. See RSC Pt 51 r 17A. I therefore decided to examine the question of competency for myself.

Mr Alexis submitted that Bryson J's order of 28 October was final. However it simply dismissed a notice of motion which had sought to set aside the judgment of 30 June and the writ of execution of 4 July. This would suggest that the order was interlocutory (see Carr v Finance Corporation of Australia (No 1) (1981) 147 CLR 246) as would the initiating process.

In my opinion the final order in these proceedings was the order for the purchase of the plaintiffs" shares made by consent on 22 October 1993. This was the order which finally determined the rights of the parties in a principal cause pending between them. See Hall v Nominal Defendant (1966) 117 CLR 423 at 443 per Windeyer J. Subsequent orders have merely worked out the rights of the parties under that final order.

As far as I can determine the distinction drawn between interlocutory and final orders for the purposes of determining rights of appeal dates from the Judicature Act 1875 (Imp) and the Rules of Court made thereunder. Judgments for damages to be assessed have been treated as interlocutory until completed by the assessment. See Electricity Commission v Lapthorne (1971) 124 CLR 177. However after a period of uncertainty and some confusion in the authorities, it became established in England that judgments of a kind formerly granted in the Court of Chancery were final although further proceedings, even of an elaborate kind, were required for their working out. Thus in Smith v Davies [1886] 31 Ch D 595 an order nisi for foreclosure was held to be final although it directed accounts and inquiries in the Master's Office which would have to be completed before the order absolute could be made foreclosing the mortgagor. In Blakey v Latham [1889] 43 Ch D 23 at 25 Cotton LJ said:

URDERRAWEE PASTORAL COMPANY PTY LIMITED v McCONOCHIE (Handley JA) 3

Any order, in my opinion, which does not deal with the final rights of the parties, but merely directs how thedeclarations of right already given in the final judgment are to be worked out is interlocutory.

.. where a final judgment has been pronounced in an action, and subsequently an order has been obtained for the purpose of working out the rights given by the final judgment, that order has always been deemed, and rightly deemed, to be interlocutory.

See also In Re Herbert Reeves & Co [1902] 1 Ch 29, In Re Jerome [1907] 2 Ch 145 and Norton v Norton [1908] 99 LT 709.

These decisions of the Court of Appeal do not appear to have been considered by the High Court or by any other appellate court in Australia. However orders for specific performance were treated by the High Court as final when rights of appeal to that Court depended on the distinction between final and interlocutory judgments and orders. Compare Ballas v Theophilos (No 1) (1957) 97 CLR 186 and Ebert v Union Trustee Co (1957) 98 CLR 172. I see no reason why the English authorities which have stood for so long should not be followed by this Court. As has been pointed out the distinction between final and interlocutory orders is not entirely satisfactory, no golden thread of logic or principle runs through the cases, and it is futile looking for an entirely coherent system. See Southern Cross Exploration v Fire and All Risks Insurance (No 2) (1990) 21 NSWLR 200 at 206-207 per Kirby P and the cases there cited. There are therefore good reasons for following long established precedent in this area.

In my opinion, therefore, the present appeal is incompetent and the appellants require leave. However the parties have not been fully heard on this question, which has been raised by the Court itself. Accordingly I will not act of my own motion but will refer the matter to the Full Court. Theappellants do not, at first sight, appear to have a strong case. In these circumstances, the proper course is to grant the appellants a limited stay designed to preserve the status quo but protect the respondents until a Full Court is able to determine whether the appeal is competent, and if not whether leave should be granted.

Section 27(3) of the Judgment Creditors Remedies Act provides that no proceedings shall be taken to have the benefit of a charging order over shares until after the expiration of three months from the date of the order. The second appellant is therefore not at risk until after 9 March. That period cannot be extended by a court but in my view a court may restrain proceedings to enforce the order. Accordingly I will order that further proceedings on Orders 4 and 5 made by Bryson J on 9 December be stayed until one month after the determination of any proceedings in this Court challenging the orders of Bryson J of 28 October or the further order of the Court. This order is granted upon the second appellant by his counsel giving the following undertakings to the Court which are to continue until the determination of such proceedings or further order: -

That he will not encumber, dispose of or otherwise deal with his shares in the first appellant.

That as the holder of the management shares in the first appellant he will not cause or permit its borrowings from its bank or from any other bank, pastoral or finance company by way of overdraft or otherwise to exceed in total $200,000.

JOBNAME: No Job Name PAGE: 4 SESS: 1 OUTPUT: Mon Feb 25 18:12:07 2008

. That on or before Friday 3 March 1995 he will file and serve an affidavit

disclosing all accounts then held by the first appellant with any bank, and all loan accounts or other borrowings from any pastoral or finance company asat the date of the swearing of the affidavit, the credit or debit balances in such accounts and the branch or branches where such account or accounts is or are held.

. That he will cause his solicitors on the record in these proceedings to

promptly forward to the solicitors for the respondents copies of all bank statements and statements from any pastoral or finance company disclosed in his affidavit referred to in Undertaking 3 above received after 3 March 1995 and in any event within five business days of their receipt by him.

. That he will abide by such order the Court may see fit to make for the

payment of interest by him on the purchase money of $316,772 for the shares from 28 January 1995 until payment at a rate or rates not exceeding those prescribed for the purposes of s 94 of the Supreme Court Act.

. The respondents" notice of motion of 30 November be listed before a

. That the appellants have leave, if so advised, to file a summons for leave

. That the costs of this motion to date abide the further order of the Full

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