Gorman and anor v Parkinson and ors [2008] NSWIRComm 99 | Case summary

Gorman and anor v Parkinson and ors [2008] NSWIRComm 99 | Case summary | Zoe

Liberty to apply was granted on three days notice. 5 Correspondence made available to the Court indicates that counsel for the parties did attempt to reach agreement on a joint statement of issues but were unsuccessful. I note that a respondents' statement of issues was forwarded by the respondents' solicitor to the applicants' solicitor on 9 April 2008. On 28 April 2008, the respondents' solicitor referred to a telephone conversation with the applicants' solicitor in which he said that he would raise the status of the document with counsel on 29 April 2008. On 29 April 2008 a letter from the applicants' solicitor to the respondents' solicitor enclosed a statement of issues settled by the applicants' counsel. An amended version was forwarded by the respondents' solicitor to the applicants' solicitor on 30 April 2008. On the same day, in a separate letter, the respondents' solicitor raised with the applicants' solicitor the circumstances of the contract or arrangement referred to in claim number 4 which I have set out above, noting that the Institute was not and had never been "and cannot now be" a party to the proceedings. It was said that the Court would not have jurisdiction to deal with this part of the applicants' claim. On 2 May 2008, the respondents filed an amended reply to the amended summons for relief which, the applicants asserted, raised a number of issues for the first time which I do not currently need to consider. 6 When the proceedings came on for hearing on 5 May 2008, the first day of the ten days set aside for this purpose, the applicants' Senior Counsel, Mr J J E Fernon, made an application that the proceedings be adjourned. This was to enable the applicants to seek to have the Institute re-registered and to seek the consent of an appropriate court for the proceedings to be amended so as to join the Institute as an additional respondent. The application for an adjournment was opposed by Mr R Goot, Senior Counsel for the respondents, on the basis that the amendment sought was a futility. There were two principal grounds relied upon by Mr Goot. The first was that the failure to join the Institute as a respondent initially deprived the Court of the jurisdiction to avoid or vary the contract or arrangement with the Institute referred to in claim number 4 and thereby deprived the Court of any power to make any consequential orders for relief against any of the other named respondents. The second basis was that any attempt to join the Institute as an additional respondent to the proceedings would be defeated by the provisions of s 108B of the Act. 7 In order to determine these matters, it is first necessary to set out the provisions of s 106 of the Act which are in the following terms:

8 I first observe that I am only concerned in this aspect of these proceedings, with the claims brought by the applicants with respect to the contract or arrangement referred to in claim number 4, that is, the contract or arrangement to which the Institute was a party, albeit not a party to these proceedings. The claims for monetary compensation brought against the current respondents to the proceedings are made under s 106(5) and are brought under the well known principles described by the High Court of Australia in Brown v Rezitis (1970) 127 CLR 157. These principles allow the Court to make orders for the payment of compensation against persons who are not the parties to the contract which is found to be unfair and which is being varied or avoided by the Court. Such persons must, of course, have a relevant nexus with both the party to the contract and the circumstances of the unfairness found to have existed. They may, for example, be the directing or controlling minds of a corporation party to the contract. They may be the recipient of some profit derived by the corporate party to the contract as a result of or in connection with the unfairness so found. 9 The respondents submitted that the Court lacked jurisdiction to deal with these proceedings insofar as they concerned the contract with the Institute because the Institute was not a party to the proceedings. In these circumstances, it was submitted that the Court lacked jurisdiction to make any order varying or avoiding the contract and any such order was a precondition to the making of an order for monetary compensation against any of the named respondents, none of whom was a party to the contract with the Institute. 10 The starting point for a consideration of the respondents' submission is observations made by Handley AJA in the NSW Court of Appeal in Yim v Industrial Relations Commission of NSW (2007) 162 IR 62. At para [101], in discussing the jurisdiction of this Court in connection with proceedings brought under s 106 with respect to a contract, his Honour said: "If the Commission has jurisdiction over a particular contract etc and the parties to that contract are parties to the proceedings an order avoiding or varying that contract will have its intended effect. If the other party to the contract is not a party to the proceedings it will not be bound by any order of the Commission and a purported order avoiding or varying the contract will be ineffective. The other party will not be bound by the order, and the contract in its original form will remain in force." 11 I should add for completeness that Mason P agreed with the judgment of Handley AJA. 12 The observations of Handley AJA were made in the context of a claim based on a contract of employment which was not the subject of the s 106 proceedings. On this basis, Handley AJA was able to conclude that this Court had no jurisdiction to avoid or vary the employment contract because it was not the subject of any order sought in the proceedings. The comments of Handley AJA as set out in para [101] extracted above are, therefore, to be read in the context of proceedings which seek to avoid or vary a contract in circumstances where the other party to the contract is not a party to the proceedings. There is nothing in the observations made by his Honour that would deny, in my respectful opinion, jurisdiction to deal with the matter. The observations are directed to the effect of any order, described by his Honour as "a purported order", avoiding or varying the contract. 13 This conclusion is, in my opinion, consistent with the approach of the NSW Court of Appeal in Visalli v Southwell (1988) 12 NSWLR 502. In describing the jurisdiction of the predecessor of this Court, Kirby P said: "The jurisdiction of the Commission is posited upon the existence of a contract. It does not by the terms of the Act follow the normal common law principle which relies upon the presence before the court or tribunal of parties to ground the jurisdiction to make orders against them. It is the contract not the presence of particular parties to the contract which is the source of the Commission's jurisdiction.... Leaving aside the requirements of the rules of natural justice and the preconditions to enforceability of such an award against particular parties, the jurisdiction of the Commission to make an award in the first place does not depend upon notification to such parties or even service of process upon them. Accordingly, the joinder of the claimant as a party to the present proceedings is no more than a procedure designed to avoid arguments relating to the requirements of natural justice or the facilitation of ultimate recovery...." (at [510]). 14 McHugh JA agreed with his Honour's judgment in this regard. 15 There are two aspects to a consideration as to whether the proceedings, in that they are directed to the contract with the Institute, are a nullity. The first involves a consideration of what, at law, is regarded as constituting a nullity in the context of proceedings. This matter was considered by the NSW Court of Appeal in Deveigne v Askar [2007] NSWCA 45. Proceedings had been commenced in the District Court naming a person as a defendant who had died prior to the issue of the statement of claim. The NSW Court of Appeal was called upon to consider, inter alia, whether the proceedings were a nullity and whether the District Court was empowered to join an additional defendant. 16 In the course of a short judgment agreeing with orders proposed by the other members of the Court, Hodgson JA said: "It may be that proceedings (or applications) purportedly commenced by a non-existent person are a nullity; but I am doubtful if proceedings commenced against a non-existent person are truly a nullity. Certainly in my opinion, proceedings cannot become a nullity because they are not served. The question whether or not proceedings are a nullity is different from the question whether or not a purported order is a nullity, or is liable to be set aside as of right." (para [2]) 17 One of the matters considered by the NSW Court of Appeal was a costs order made by the District Court in favour of and on the application of the purported defendant who did not exist. In determining that the costs order could not stand, Giles JA observed that "a non-existent person cannot claim an order in proceedings purportedly brought against that person." (at para [12]). However, his Honour was not prepared to definitively characterise the costs judgment as being a case of true nullity or "an order and a consequential judgment improperly made and given and needing to be set aside." 18 The judgment of McColl JA contains an extensive and comprehensive review of the authorities dealing with this issue. The starting point for her Honour's discussion is the decision of the High Court of Australia in Berowra Holdings Pty Ltd v Gordon reported at (2006) 225 CLR 364. 19 I set out hereunder paras [82] to [84] of McColl JA's judgment in Deveigne because it extracts the relevant paragraphs of the High Court judgment in Berowra Holdings. [82] To describe a document or a court proceeding as a "nullity" states a conclusion, rather than the reason for reaching that conclusion: Adams v Lambert (2006) 225 ALR 396; 80 ALJR 679; [2006] HCA 10 at [25]; see also Bounds v R (2006) 228 ALR 190; 80 ALJR 1380; [2006] HCA 39 at [10]; Minister for Immigration and Multicultural Affairs v Bhardwaj (2002) 209 CLR 597 ; 187 ALR 117; 67 ALD 615 ; [2002] HCA 11 at [154] ( Bhardwaj ) per Hayne J. Such statements of conclusion, it has been said, "are not necessarily helpful in resolving the rights of parties", both in the context of administrative decisions and "in the context of proceedings in, and acts and orders of, courts": Berowra Holdings Pty Ltd v Gordon (2006) 225 CLR 364; 228 ALR 387; 80 ALJR 1214; [2006] HCA 32 ( Berowra ) at [10] per Gleeson CJ, Gummow, Hayne, Heydon and Crennan JJ; see also Bhardwaj at [46] .

[83] The joint judgment in Berowra contained the following observations (at [13] - [16]): [13] There also is a very real difficulty in characterising proceedings as "invalid". The institution of an action or other proceeding is the exercise by the litigant of the freedom to invoke the jurisdiction of the judicial arm of government to determine a dispute. That step engages the procedural law appurtenant to the relevant court, which in modern times is found primarily in the Rules. [14] Professor Jolowicz describes procedural law as creating choices or a sequence of choices in the sense that each procedural step taken by a litigant requires the other party or the court to take some action, so affecting the path which the proceedings take towards ultimate disposition.7 This is the case even where a procedural rule is expressed in mandatory form; if the party to whom it is addressed chooses to disregard it, the normal outcome is that a choice accrues to the other party either to do nothing or to seek an appropriate order from the court. [15] In the adversarial system of justice, choice rests primarily with the parties and it is generally the case that the court's power of decision or order is exercised upon the application of a party. Generally there is, in law, no restriction upon a person's right to start an action and to carry it to the point at which a choice is cast upon the defendant to make some response in order to avoid judgment in default. Once the procedural law has been engaged, all parties to the litigation are subject to it. [16] None of the above denies the possibility of a defendant denying the plaintiff's right to invoke the jurisdiction of the court, for example where the plaintiff's right is conditional upon there being an action cognisable within that jurisdiction. However, the material point is that that denial must be made within the structure of the relevantly engaged procedural law, and not outside it. Accordingly, the defendant may challenge at an interlocutory level the strength of the plaintiff's alleged case by seeking to have a plaintiff's action struck out for failure to disclose a reasonable cause of action, or dismissed as incompetent. Alternatively, the defendant may have recourse to judicial review by a superior court, challenging the right of an inferior court to adjudicate the plaintiff's claim and seeking orders to prevent the inferior court continuing to hear the claim. However, the invocation of jurisdiction ordinarily enlivens the authority of the court in question at least in the first instance to decide whether it has jurisdiction ( Re Macks; Ex p Saint (2000) 204 CLR 158; 176 ALR 545). [Emphasis added.]

[84] In Berowra , the majority concluded (at [36]) that proceedings commenced by a worker in contravention of s 151C of the Workers Compensation Act 1987 (NSW) (which required a 6-month delay before the commencement of court proceedings against an employer for damages) engaged the jurisdiction and procedural rules of the court in question. While the proceedings were vulnerable to an application by the defendant to strike out the initiating process or to move for summary dismissal, they were not a nullity. 20 Without traversing in any detail the extensive authorities referred to by McColl JA, there may be gleaned from them an underlying principle that proceedings will be characterised as a nullity and therefore of no effect where this is brought about by a fundamental defect. There is reference at para [94] of her Honour's judgment to categories of fundamental defects postulated by Upjohn LJ in re Pritchard (deceased) [1963] 1 Ch 502. These are proceedings which "are nullities because they have not been properly begun or served." 21 After again reviewing authorities, McColl JA determined that the District Court proceedings were a nullity and that any order made in them was "incurably bad" (see para [145]). However, after considering the relevant provisions of the Motor Accidents Act 1988 (NSW), her Honour concluded that the third party insurer of the purported deceased defendant was an appropriate defendant in the proceedings and noted further that the statement of claim had been served on the third party insurer pursuant to the Rules of the Court. On this basis, her Honour was able to conclude that the failure to name the third party insurer constituted an irregularity rather than a nullity and that the third party insurer was capable of being joined as a defendant in the proceedings. I shall return to this aspect later in these reasons for judgment. 22 The judgment of McColl JA also traverses the consequences of a characterisation of proceedings as a nullity and the power and jurisdiction of a court to deal with the proceedings in those circumstances, the effect of an order made by a court in such proceedings and whether any such order is of itself a nullity or whether it remains an order subject to being set aside or revoked, either by the court itself or another court on review. This discussion involves, in large measure, a consideration of whether the proceedings are brought in an inferior court or a superior court of record. These are matters which were considered by the High Court of Australia in re Macks ex parte Saint (2000) 204 CLR 158. In those proceedings, the High Court held that orders made by the Federal Court of Australia pursuant to jurisdiction purportedly conferred by certain federal legislation, were not nullities assuming that that legislation was invalid. The Court concluded that even if the Federal Court had made orders lacking jurisdiction to do so, such orders were final and binding unless set aside on appeal either within the Federal Court or in the High Court of Australia. (see, for example, Gaudron J at [54], Gummow J at [216], Kirby J at [257] and Hayne and Callinan JJ at [329] to [343]). 23 In WorkCover Authority of NSW v DHL Exel Supply Chain (Australia) Pty Ltd and ors (No 2) [2008] NSWIRComm 49 I expressed some reservations concerning the inherent powers of a superior court of record of limited jurisdiction, as is the case of this Court, and the possibility that there were conflicting observations about such inherent powers in the High Court of Australia and the NSW Court of Appeal. (see, for example, para [50]). 24 I have not received submissions from the parties in these proceedings with respect to this matter, nor did I seek such submissions. For reasons which I shall shortly refer to, it is a matter which I do not need to consider to resolve the current controversy between the parties. 25 The circumstances that apply to that discrete part of these proceedings which I am considering for the purpose of this interlocutory judgment are substantially different from those which were the subject of the proceedings in Deveigne. Here, there are named eight respondents against whom relief is sought with respect to the contract with the Institute. There may be a deficiency in the proceedings in that the Institute is not named as a respondent. However, there can be no question that the Institute was in existence as at the date that the amended summons and, presumably, the original summons were issued. 26 On the basis of the authorities and principles to which I have referred and, in particular, on the basis of the observations of the High Court of Australia in Berowra Holdings which are extracted within the judgment of McColl JA in Deveigne, it appears to me that the applicants have instituted the proceedings in such a way that the jurisdiction and power of this Court has been invoked in a regular manner. This would militate against a characterisation of the proceedings as a nullity. Furthermore, given the interlocutory nature of the application currently before the Court, I would need to be convinced to the appropriate standard that the applicants would not be entitled to any relief against the named respondents notwithstanding the failure to name the Institute as a respondent to the proceedings. The respondents' submissions in this regard rely heavily on the observations of Handley JA in Yim which I have previously set out. There may be circumstances in which a Court would be entitled to make an order in favour of one party to a contract if the other party to the contract was not made a party to the proceedings. There is a reference in the judgment of the Full Court of the Federal Court of Australia in News Limited v Australian Rugby Football League Limited (1996) 64 FCR 410 to a majority decision of the NSW Court of Appeal in Finance Corporation of Australia Limited v Bentley [1991] NSWCA 94. The Full Court said (at p 524): "The Court of Appeal heard and determined an appeal in the absence of a person who ordinarily would have been joined as a necessary and proper party. But the case was unusual, as the Court accepted assurances from counsel that the third party's interests would not be affected by the outcome of the appeal. In the special circumstances of that case, the majority of the Court held that it was appropriate to determine the appeal." 27 Of course, as is well established by authority, a Court should not make an order "which directly affects a third person's rights against or liabilities to a party....unless the person is also joined as a party." per Lockhart, von Daussa and Sackville JJ in News Limited at [524]. Nevertheless, I could not preclude, for the purpose of this interlocutory proceeding, that this Court would not make orders varying or avoiding the contract with the Institute despite the Institute not being joined as a party to the proceedings. The Court might need to consider arguments to the effect that the applicants would not seek to enforce any monetary order against the Institute and that the only persons who were shareholders in and the controlling mind of the Institute are otherwise named as respondents to the proceedings. Of course, I raise these matters merely by way of conjecture. 28 Furthermore, I observe that the application for the adjournment is made solely for the purpose of seeking to join the Institute into the proceedings as an additional respondent.

the practice, procedure or usage for the time being of the Supreme Court or, in the case of appeals, the practice, procedure or usage for the time being of the Court of Appeal or the Court of Criminal Appeal, as may be appropriate, is, as far as practicable, to regulate the practice, procedure or usage of the tribunal. 32 It was common ground between the parties that there are no Rules of this Court which deal with the joinder of parties and, in particular, the effect of misjoinder or non-joinder of parties. There are, however, Rules which apply to the Supreme Court, being the Uniform Civil Procedure Rules 2005. 33 Rule 6.23 provides as follows: "Proceedings are not defeated merely because of the misjoinder or nonjoinder of any person as a party to the proceedings." 34 In commentary upon this Rule, the learned authors of Ritchie's Uniform Civil Procedure NSW (published by Butterworths) state: "While the Rule does not detract from the proposition that all proper parties should normally be joined, it does authorise the determination of issues in proceedings, notwithstanding either the nonjoinder or misjoinder of parties." 35 There is reference to the judgment of the NSW Court of Appeal in Finance Corporation of Australia Limited v Bentley [1991] NSWCA 94 and in particular to the judgment of Mahoney JA with whom Handley JA agreed. The commentary continues that: "The statement in the Rule that the proceedings 'shall not be defeated' reinforces the powers of the Court under rr 6.22 and 6.23 (and also the power of amendment in r 19.2) to ensure that the proceedings are properly constituted and that all appropriate parties are joined. If a person who would have been an appropriate party has not been joined, the Court may proceed to determine the rights of the parties actually before the Court. However, a person who is not being joined as a party and is in fact affected by orders made in the proceedings, will be entitled to apply to have them set aside...." 36 In Finance Corporation, the Court at first instance and on appeal was, in essence, called upon to determine the circumstances under which the proceeds of the sale of land by way of mortgagee sale should be expended in circumstances where there were two guarantors with competing interests. One of the guarantors had not been made a party to the proceedings at first instance and was not a party to the proceedings on appeal. It appears from the judgment that no reason was afforded to the appellate Court, at least, as to the reason therefor. The appeal was conducted on the basis that the interests of that guarantor could "be put aside". 37 In the course of his judgment, Mahoney JA said: "It is open to the Court to determine issues in the absence of parties, at least in the circumstances contemplated in the Supreme Court Act : see s 81; and in the Rules: see Pt 8, rr 6,7,8. The Court has accepted that it is appropriate, in the circumstances of this case, so to do. It is not necessary to consider the effect of orders made in this proceeding upon parties not parties to the proceeding." 38 The ability of a court in appropriate circumstances to proceed to determine a matter in circumstances where a person having an interest in the outcome of the proceedings is not joined as a defendant is inconsistent, in my opinion, with any notion that the failure to join a particular person as a defendant renders the proceedings a nullity or as being tainted by some other form of invalidity. 39 The provisions of r 6.24 of the Uniform Civil Procedure Rules 2005 reinforce this conclusion. They are in the following terms:

108B Time for making application (1) An application for an order under this Division in relation to a contract that has been terminated must be made not later than 12 months after the termination of the contract. (2) The Commission does not have jurisdiction to extend the time for making any such application or, subject to subsection (3), to accept an application made after the time prescribed by subsection (1). (3) The Commission may accept an application made within 3 months after the time prescribed by subsection (1) if the applicant satisfies the Commission that there are exceptional circumstances justifying the making of the late application. 44 Put shortly, the respondents submitted that the joinder of the Institute as an additional respondent to the proceedings would constitute a fresh application which would be defeated by s 108B. In resisting this approach, the applicants submitted that the amended summons by which the proceedings are currently constituted is an application for an order as referred to in s 108B and that that application had been made within the time period limited by that section. 45 In making this submission, the applicants relied upon the approach of the NSW Court of Appeal in Visalli to which I have previously referred. That is, an application brought under s 106 of the Act is one which is directed to a particular contract. Here, it was said by the applicants, such an application had been made and the amended summons clearly sought to impugn the contract between the applicants and the Institute as being an unfair contract for the purpose of s 106 which would justify the making of consequential orders of the kind which I have earlier described. The amendment of the proceedings by the addition of the Institute as a respondent would, in these circumstances, not constitute a fresh application but merely an amendment to an existing application. This was said to be permissible in accordance with observations made both by the Full Bench of this Court and the NSW Court of Appeal. 46 The starting point for a consideration of these authorities is the decision of the Full Bench of this Court in Crowe v UCS Developments Pty Limited [2003] NSWIRComm 234. Those proceedings involved a summons for relief under s 106 of the Act to which s 108B had no application. The applicant sought to amend the proceedings by joining an additional respondent who was not a party to the contract of employment but who was said to be associated therewith under the Brown v Rezitis principles to which I have earlier referred. The Full Bench held that s 108B did not prevent the joinder of the additional respondent even though this occurred more than twelve months after the termination of the contract of employment. In reaching this conclusion, the Full Bench at paras [52] to [56] said: [52] Clearly, the original summons filed constitutes an application for an order under s 106(1) in respect of a particular contract or arrangement. It was filed well before the commencement of s 108B and the original summons and the orders sought therein are therefore not affected by the limitation period created by that section. What then, is the effect of the amendment sought to the summons? Does it constitute a separate application for an order under the Division or should it be characterised as being an amendment to an application for an order already made and with respect to which s 108B has no effect? Or, to put the matter in a slightly different way, does the amendment, in substance rather than in mere form, give rise to an application for an order declaring wholly or party void or to vary the same contract or arrangement as that identified in the original application, or does it amount to an application for an order in respect of a different contract or arrangement?

[56] There may be circumstances in which an amendment to an original application may be so substantial or its nature such as to warrant the conclusion that it could be characterised as an application for an order caught by s 108B. That is not the situation here. 47 Section 108B was considered by the NSW Court of Appeal in Unitedglobalcom, Inc v Industrial Relations Commission (NSW) (2005) 142 IR 204. Handley JA and Brownie AJA agreed with the judgment of Hodgson JA. Those proceedings involved an application to amend s 106 proceedings by adding an additional respondent which was not a party to the original contract of employment and which was said to be amenable to relief under the Brown v Rezitis principle. At para [29] of that judgment, Hodgson JA said: In my opinion also, the proceedings against New UGC are not affected by s 108B. In my opinion, the application in this case was brought when the proceedings were commenced, and the addition of New UGC as a party following on the re-structuring of the relevant group of companies was not an application for an order in relation to a contract within s 108B. This is supported by Visalli v Southwell (1988) 12 NSWLR 502, and Crowe v UCS Development Pty Ltd (2003) 130 IR 266. 48 The third authority to which I wish to refer is another judgment of the NSW Court of Appeal in BEA Systems Pty Limited v Industrial Relations Commission of NSW in Court Session (2005) 63 NSWLR 347. Those proceedings also involved the consideration of an application to join an additional party to the proceedings. It was held in the circumstances of those proceedings that the joinder of the additonal respondent would, in effect, be in relation to a contract which was different to the contract which was the subject of the proceedings as originally constituted and was thereby barred by s 108B. The principal judgment was that of Handley JA with whom Mason P and Giles JA agreed. 49 In the course of his judgment, Handley JA said: [13] The jurisdiction and power of the Commission to order that additional respondents be added by amendment after the 12 months limitation period in s 108B has expired was considered by the Full Bench in Crowe v UCS Developments Pty Ltd (2003) 130 IR 266 and by this Court in Unitedglobalcom Inc v Industrial Relations Commission (NSW) in Court Session (2005) 142 IR 204. These cases establish that s 108B does not prevent the Commission adding additional respondents outside the limitation periodwhere this is done for the sole purpose of obtaining orders against them under s 106(5).

[17] The applicant in the Commission does not seek to add the US parent for the sole purpose of obtaining consequential relief against it. The terms of the proposed further amended summons demonstrate that he seeks to initiate "a separate application for an order under the Division" ( Crowe (at 280 [52])). The Full Bench there said (at 280 [52]): "… the amendment, in substance …[would] amount to an application for an order in respect of a different contract or arrangement". 50 The judgment of Handley JA extracted above is capable of being read so as to preclude an amendment to existing proceedings brought under s 106 in circumstances where an additional proposed respondent was a party to the contract which was sought to be impugned in the proceedings as originally constituted. Such an understanding is predicated upon confining the application of the principles in Crowe and Unitedglobalcom to circumstances where a proposed additional respondent was to be added outside the limitation period solely for the purpose of obtaining orders under s 106(5) pursuant to the Brown v Rezitis principles. This reference in para [13] of his Honour's judgment is followed up in para [15]. In particular, the second sentence of para [15] might, arguably, be said to impact upon the determination of the application of s 108B to the circumstances of these proceedings. His Honour said: "There was no claim that the additional respondents were parties to the contract attacked in the original proceedings...." 51 If his Honour's observations made in the second sentence of para [15] are to be read as precluding an amendment to the proceedings by adding as an additional respondent a person who was a party to the contract sought to be attacked in the original proceedings so as to be affected by the provisions of s 108B, acceptance of such a provision would be fatal to the applicants in these proceedings. However, neither Crowe nor Unitedglobalcom were concerned with proceedings in which the additional respondents sought to be joined were in fact parties to the contract which was sought to be impugned in the original proceedings. The circumstances in BEA Systems were also relevantly different because Handley JA concluded that the subject of the amendment was a contract different from that which had been alleged in the original summons. On this basis, I would respectfully characterise what was said by Handley JA in the second sentence of para [15] as obiter. Certainly, there was no detailed consideration of why s 108B might apply in circumstances where the proposed additional respondent was a party to the contract attacked in the original proceedings. 52 In my opinion, the resolution of this matter involves the same approach to construction utilised by the Full Bench of this Court in Crowe. It is necessary to determine whether the addition of the proposed further respondent would itself constitute an application for an order under s 106 in respect of the particular contract with the Institute or whether it may be characterised as an amendment to the existing proceedings seeking to impugn the same contract. 53 There can be no doubt that the contract sought to be impugned in the foreshadowed amendment by adding the Institute as a party is the exact same contract which is the subject of the relief sought in these proceedings. There can be no doubt, also, that the proceedings as currently constituted seeks relief against a number of named respondents under the Brown v Rezitis principles. 54 The situation here is, in general terms, the reverse of that considered in the authorities to which I have referred. That is, the 'Brown v Rezitis' parties are already parties to the proceedings. What is lacking is the other party to the contract having been made a party to the proceedings. 55 In my opinion, it is not appropriate to consider at this stage of the proceedings whether the proposed amendment would constitute a new or fresh application for an order under s 106 or whether it may be characterised merely as an amendment of the current proceedings. To some extent, this will depend upon the relief sought in the proposed amended summons. No such summons has yet been formulated. If, for example, the amendment seeks to join the Institute into the proceedings merely for the purpose of enabling the finding of unfairness to be made and the contract, if appropriate to do so, varied or avoided with no other consequential relief sought against the Institute, this may militate towards a characterisation as being an amendment only. If, the applicants sought consequential orders of a different kind against the Institute if joined to the proceedings, depending on the nature and extent of the relief sought, this might arguably militate against a conclusion that the proceedings have been amended. To this extent, it would seem inappropriate in the absence of any final formulation of the proposed further amended summons, to come to any concluded view. I am of the view, however, that it cannot be concluded that the addition of the Institute as a further respondent to the proceedings, as I understand to be contemplated by the applicants, would be futilte in that the provisions of s 108B would be attracted. In applying the construction of the Full Bench of this Court in Crowe, in the manner in which I have indicated, no such conclusion can be made having regard to the interlocutory nature of these proceedings and the extent to which the Court would need to be satisfied that futility has been established. Conclusion

57 This leaves the consideration of two aspects concerning costs. The first is the costs of the adjournment application itself. The second relates to consequential costs orders following upon the adjournment. It is in this latter regard that the greatest controversy has arisen. 58 I have earlier set out the history of the consent directions which had been made covering the preparation of the proceedings for hearing and the chronology of events by which the parties sought to formulate the issues and the manifestation of the particular issue raised by the respondents concerning the failure to join the Institute as a party to the proceedings. 59 In essence, the applicants sought that the costs thrown away by the adjournment should be paid by the respondents because the respondents had failed to raise the issue at an appropriate time. The respondents submitted that the applicants should pay the costs thrown away by the adjournment because the applicants' amended summons was always potentially defective in not joining the Institute as a respondent to the proceedings. 60 I was referred to observations of Heydon JA (as his Honour then was) in the NSW Court of Appeal in Nowlan v Marson Transport Pty Limited (2001) 53 NSWLR 116. Mason P and Young CJ in Equity agreed in the judgment of Heydon JA. At paras [21] to [32] Heydon JA said: [21] The conduct of the application from which this appeal is brought and the conduct of the application from which the appeal heard at the same time, Malone v New South Wales National Parks and Wildlife Service [2000] NSWCA 345, together with the conduct of the two appeals themselves, suggest that a particular attitude to this kind of litigation prevails, even in the 21st century, among the profession and perhaps the bench. The attitude in question reflects the forensic system of an earlier age. It was described in Donaldson v Harris (1973) 4 SASR 299 at 302 by Wells J thus: "… the old common law … was based, with rigorous logic, upon the system of litigation by antagonists. By virtue of the underlying principles of that system, it was the treasured right of each litigant to store up, in secret, as many unpleasant surprises for his opponent as he could muster, and only reveal them at the last minute at the trial (or contest) in the presence of the judicial umpire: nemo tenetur armare adversarium suum contra se (1628) Co Litt 36a. As Wigmore has put it ( Evidence , 3rd ed (2001) 53 NSWLR 116 at 127 (1940), vol VI, page 376) the common law regarded 'the concealment of one's evidential resources and the preservation of the opponent's defenseless ignorance as a fair and irreproachable accompaniment of the game of litigation'."

[28] Allsop J has valuably expounded the appropriate approach to commercial litigation in the Federal Court in White v Overland [2001] FCA 1333 at [4]: "… However, by way of general principle I would simply like to make perfectly plain my view that in the efficient and proper conduct of civil litigation, even civil litigation hard fought between parties, it should always be recognised that in the propounding of issues for trial the parties should take steps to ensure that all relevant parties to the dispute are cognisant of what the issues are. Any practice of quietly leaving footprints in correspondence or directions hearings to be uncovered some time later in an attempt to reveal that a matter was always in issue should be discouraged firmly. Even if something has been said, where it is evident, or indeed suspected, that the other side is proceeding on the basis of a misconception or has not appreciated something, as a general rule, efficiency, common sense and an appreciation of the costs and resources (both public and private) likely to be wasted by confusion in litigation will mandate that a party through his or her representative ensure that the other is not proceeding on a misconception or that the other does appreciate something that has been said. Litigation is not a game. It is a costly and stressful, though necessary, evil. To paraphrase Roscoe Pound from 'The Causes of Popular Dissatisfaction with the Administration of Justice' (1906) 29 ABA Rep 395, 404 - 406, the 'sporting theory of justice' and any behavioural manifestation of it should be seen as a survival, or better, a relic, of the days when a lawsuit was a fight between two clans: cf Jackamarra v Krakouer (1998) 195 CLR 516 at 526-527 per Gummow J and Hayne J. Representatives do not owe duties to the other side's client. They owe duties to their own client. But no one's interests are advanced by litigation proceeding on assumptions which are seen or suspected to be false. This is very much the case when an issue, if it is to be propounded, might endanger the instructions of those acting for the other side. In saying this I need make no reference to the well-known responsibility of the Crown and emanations of the Crown to act at all times as model litigants beyond referring to what was said by the Full Court of this Court in Scott v Handley [1999] FCA 404 at [43] ff. I would expect no less than that which I have indicated of bitterly competitive commercial parties in the hardest fought of cases. In the long run, the only consequence of keeping issues hidden or not clearly identifying them is to disrupt the business of the court leading to the waste of valuable public resources and to lead to the incurring of unnecessary costs by the parties, costs which ultimately have to be borne by someone."

[32] If respondents to this kind of proceeding cannot behave in the manner just indicated as desirable, it may be necessary for the relevant authorities, if they think fit, to amend the rules of court or issue some practice direction in a way which will cause this type of controversy to be resolved without undue expense. 61 I should immediately observe that proceedings brought under s 106 of the Act before this Court ought not to be conducted on the basis discussed by Heydon JA and criticised by his Honour. Indeed, the directions which I made for the creation of a statement of issues is part of the orders which are habitually made by judges of this Court and are intended to govern proceedings of this kind. For completeness, I note that proceedings are not allocated to a judge of this Court for hearing unless and until the applicant' s solicitor has certified that the proceedings are ready for allocation to a judge for that purpose. 62 To some extent, the history of these proceedings indicates that the parties, through their legal practitioners, have failed to identify the potential defect in the amended summons until a time which was too late to prevent the proceedings from being adjourned. I was informed by Senior Counsel for the applicants that a period of no more than two weeks would be required to seek a reinstatement of the corporation and to seek the consent of an appropriate court for the proceedings to continue notwithstanding the status of the Institute as a corporation in liquidation. All of this could have been attended to if the issue had been identified within two weeks of the date fixed for the commencement of the ten day hearing. Notwithstanding this apparent failure by either side to identify the deficiency, the fact remains that the applicants always had a potential problem in failing to join the Institute as a respondent to the proceedings. Whether or not this was a course that was taken deliberately or was a matter of inadvertance is unknown. Whatever the reason, the fact is that there has always been a potential problem constituted by the manner in which the proceedings were instituted and that, ultimately, the necessity to seek the amendment was the result of this potential defect. (I should make it clear, in this regard, that the applicants did not formally concede that it was necessary to seek to have the Institute joined as an additional respondent, but desired to do so in order to remove any potential argument in this regard). 63 In all the circumstances, having regard to the manner in which the proceedings were initially framed and the failure of the applicants to join the Institute as an additional respondent, I am of the opinion that the applicants should pay the costs of the respondents thrown away by reason of the adjournment. However, it may be appropriate to ask the legal practitioners to show cause why those costs should be borne by the parties having regard to the apparent failure to comply with the consent orders made by the Court for the preparation of the statements of issues. This is a matter that would require submissions to be made by the legal practitioners and it is appropriate that this matter be considered by the Court at a stage when the proceedings are otherwise before the Court, so as to minimise the unnecessary incurring of further costs in the proceedings. Accordingly, I shall reserve these costs. 64 It is inappropriate to make any determination concerning the costs thrown away by reason of any amendment to the proceedings until any such amendment is either made or sought to be made. Any such costs will therefore be determined at an appropriate stage absent sensible agreement being reached by the parties. Orders (1) The application made by the applicants for the adjournment of the proceedings is granted;

Gorman and anor v Parkinson and ors

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Judgment (61 paragraphs)

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