Investa Properties Pty Ltd v Nankervis

Federal Court of Australia|2018-04-04|Before: Collier J

The hearing of: (a) the fourth respondent's cross-claim against the second respondent filed 10 December 2012; (b) the second respondent's cross-claim against the fourth respondent filed 15 December 2012; and (c) the second respondent's cross-claim against Vero Insurance Limited filed 15 December 2012 be adjourned to a date to be fixed.
The fourth respondent pay the second respondent's costs thrown away by the adjournment.
The parties notify the Associate to Justice Collier of the determination of the applications for transfer and strike-out in the Supreme Court of Queensland in Proceeding 3016/16 fixed for hearing on 24 May 2018, within seven days of such determination, whereupon the cross-claims may be relisted for case management. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Introduction 1 This is an interlocutory application by the fourth respondent in the primary proceedings for orders adjourning, to a date to be fixed referable to the hearing of certain interlocutory applications in the Supreme Court of Queensland in Proceeding 3016/16, the hearing in this Court of: the fourth respondent's cross-claim against the second respondent filed 10 December 2012; the second respondent's cross-claim against the fourth respondent filed 15 December 2012; and the second respondent's cross-claim against Vero Insurance Limited (Vero) filed 15 December 2012. 2 The fourth respondent seeks the adjournment for reasons including that two interlocutory applications in the Supreme Court of Queensland (Transfer Application and Strike-Out Application), which are on foot, are connected with the fourth respondent's proceeding against the second respondent in this Court. The Transfer Application and the Strike-Out Application are listed for hearing by the Supreme Court of Queensland on 24 May 2018. 3 The adjournment is opposed by the second respondent. Vero agrees that the adjournment application should be granted. As the applicants are unaffected, they take no position in relation to it. The first respondent has taken no part in these proceedings.

Background 4 Background facts to this application are set out in detail in Investa Properties Pty Ltd v Nankervis (No 7) [2015] FCA 1004; (2015) 333 ALR 193 and Oliver Hume South East Queensland Pty Ltd v Investa Residential Group Pty Ltd [2017] FCAFC 141; (2017) 348 ALR 385. 5 On 5 December 2017 I made a number of timetabling orders. 6 I also ordered that the proceedings be listed for hearing over two days commencing on 17 April 2018 in respect of the matters remitted by the Full Court. Outstanding matters include the three cross-claims in respect of which adjournment is sought and remedies of the applicants under the amended application filed on 17 October 2013. 7 Turning now to relevant litigation in the Supreme Court of Queensland, I note that the fourth respondent commenced Proceeding 3016/16 in the Supreme Court of Queensland on 22 March 2016 (QSC Proceeding). 8 The case as pleaded in a Seconded Further Amended Statement of Claim in the State jurisdiction has six elements: The first element concerns Lot 170 (which has been the subject of proceedings in this Court). The fourth respondent contends that: ○ the second respondent is liable to give an account of profits in relation to breaches of fiduciary duties owed to the fourth respondent, ○ Mrs Kim Barclay (the second respondent's wife) and Louvre Holdings Pty Ltd (Louvre Holdings) are liable in accordance with the second limb of Barnes v Addy (1874) LR 9 Ch App 244, and ○ Mrs Barclay holds four properties on constructive trust for the fourth respondent on the basis that these can be linked with the profits from the second respondent's breaches. The second and third elements are in respect of Lot 71 and Lot 246, respectively, and similarly allege breaches by the second respondent of fiduciary duties owed to the fourth respondent. The fourth, fifth and sixth elements are claims for compensation against the second respondent for: ○ a rise in the fourth respondent's professional indemnity premium as a result of conduct by the second respondent that had the consequence of the fourth respondent having to pay a deductible in connection with a claim of its insurance with Vero; ○ a lost opportunity to earn a commission from an identified customer as a result of conduct by the second respondent that caused the fourth respondent to lose business; and ○ loss by reason of the need to hire and pay additional staff to those which would have been engaged by the fourth respondent prior to the justifiable termination of the second respondent's employment contract.

The fourth respondent's submissions 9 In seeking adjournment the fourth respondent primarily relies on its written submissions and affidavits sworn by Mr Grant Dearlove on 16 March 2018, and by Mr Patrick O'Shea on 5 March 2018 and 16 March 2018. 10 In relation to the two applications pending in the Supreme Court: In the Transfer Application the fourth respondent seeks to transfer to this Court its claims in the QSC Proceeding against the three defendants, pursuant to s 5 of the Jurisdiction of Courts (Cross-Vesting) Act 1987 (Cth). The fourth respondent submits in these proceedings that it will be submitting in the QSC Proceeding that it is appropriate that the QSC Proceeding be transferred to this Court because: ○ there is central common feature in the QSC Proceeding and the cross-claims in this Court as to whether the second respondent breached the fiduciary duties he owed to the fourth respondent, and ○ transferring the QSC Proceeding is the most appropriate and efficient way to proceed in the interests of justice. In the Strike-Out Application the defendants in the QSC Proceeding have applied to strike out the claims in relation to Lot 170 (element one) and for compensation against the second respondent (elements four, five and six) on the basis of an alleged cause of action estoppel, Anshun estoppel or abuse of process. 11 In light of these events, the fourth respondent submits, in summary, that: In the QSC Proceeding, the fourth respondent seeks relief in relation to Lot 170 against: ○ the second respondent, Mr Barclay (the first defendant in the QSC Proceeding); ○ Mrs Barclay (the second defendant); and ○ Louvre Holding (the third defendant). Remedies in respect of Lot 170 are the subject of litigation currently in this Court. In the event that the application for the adjournment is not granted and this Court proceeds to hear the cross-claims, the fourth respondent may be prejudiced in its ability to pursue its claims against the second respondent in the QSC Proceedings. Although the second respondent submits that the fourth respondent could have sought the relief currently the subject of the QSC Proceedings in the Federal Court litigation, the fourth respondent did not contemplate the availability of a claim to an account of profits as against the second respondent and third parties until a time after the delivery of the first instance judgment in this matter. The fourth respondent, therefore, did not make an intentional forensic choice to hold back the claims. The necessary information that would have enabled the fourth respondent to make an informed assessment of the value of any claims to an account of profits was not available to the fourth respondent until recently. Moreover, the fourth respondent does not have all material information, despite the production of documents on subpoena in the QSC Proceeding and the preparation of expert reports. Although adjournment would prejudice the second respondent in that it would prolong the cross-claims, the prejudice would be a temporary delay pending the determination of the appropriate approach to resolve all of the claims and cross-claims between the relevant parties. In particular: ○ if the Transfer Application is refused following the hearing on 24 May 2018, the cross-claims will be able to proceed expeditiously to hearing in this Court; or ○ if the Transfer Application is granted, this Court will then exercise discretion as to the appropriate way in which to entertain the transferred claims in this Court. In acknowledging that there will be some, although limited, prejudice caused by the delay, the fourth respondent has indicated that it will pay the second respondent's costs thrown away by the adjournment.

The second respondent's submissions 12 The second respondent opposes the adjournment of the hearing of the cross-claims on the basis that there has already been significant delay in this matter, which was commenced in 2011, and that the further delay of unknown duration as a result of the adjournment is inconsistent with the overarching purpose in s 37M of the Federal Court of Australia Act 1976 (Cth) (FCA Act). 13 In particular: The utility of granting the adjournment rests on various hypothetical scenarios in relation to the outcome of the Transfer Application and the Strike-Out Application, and, if the Transfer Application is granted, the way in which the case is managed in this Court. These hypotheticals are: ○ the Transfer Application is granted and the QSC Proceeding is transferred to this Court; ○ the Strike-Out Application is unsuccessful; ○ the QSC Proceeding, if transferred, is placed on my docket; ○ the QSC Proceeding, if transferred, is consolidated with this matter, despite the need to hear new evidence and to hear and determine interlocutory applications in relation to discovery and the amendment of pleadings; and ○ the fourth respondent is granted leave to re-open and advance a different case concerning its cross-claim against the second respondent in relation to Lot 170, despite the Full Court's remitter order. It would only be appropriate for the Court to grant the adjournment if I were minded to consolidate the QSC Proceeding with this matter in the event the Transfer Application is successful. Otherwise, the adjournment ought to be refused because: ○ The adjournment will result in a delay of an unknown duration which will prejudice the second respondent. ○ There has already been significant delay in the resolution of the cross-claims. ○ The adjournment will result in the splitting of the matter, in that the resolution of the applicants' claims and the second respondent's claim against the first respondent will be resolved separately from the cross-claims sought to be adjourned. ○ The fourth respondent has failed to give adequate explanation for the delay and its choices made in the conduct of litigation, including its delays in commencing the QSC Proceeding in 2016 when it had or ought to have had knowledge of the relevant matter as early as April 2011 and no later than October or November 2014, commencing and then seeking to transfer the QSC Proceeding to this Court, notifying this Court of its intention to seek to transfer the QSC Proceeding; and filing the Transfer Application. Any prejudice suffered by the fourth respondent if the adjournment is not granted will be entirely of its own making. The authorities on which the fourth respondent relies in seeking to transfer the proceedings are distinguishable from the present circumstances, meaning that it should not be assumed on the basis of these authorities that the QSC Proceeding will be transferred to this Court. Consistent with the decision of the High Court in Aon Risk Services Australia Ltd v Australian National University [2009] HCA 27; (2009) 239 CLR 175, an application for an amendment (and equally applicable to an adjournment, as is the case here) ought not be granted merely for the asking or payment of costs.

Consideration 14 As has been noted on many occasions the proper exercise of the discretion to adjourn entails a balancing exercise taking into account relevant considerations (Director of Public Prosecutions (NSW) v Chaouk [2010] NSWSC 1418 at [54] per Johnson J, SZRBN v Minister for Immigration and Citizenship [2012] FCA 984 at [13] per Flick J). 15 One of those considerations involves reference to the overarching purpose of the civil practice and procedure provisions of the FCA Act. Sections 37M(1) and (2) provide: (1) The overarching purpose of the civil practice and procedure provisions is to facilitate the just resolution of disputes: (a) according to law; and (b) as quickly, inexpensively and efficiently as possible. (2) Without limiting the generality of subsection (1), the overarching purpose includes the following objectives: (a) the just determination of all proceedings before the Court; (b) the efficient use of the judicial and administrative resources available for the purposes of the Court; (c) the efficient disposal of the Court's overall caseload; (d) the disposal of all proceedings in a timely manner; (e) the resolution of disputes at a cost that is proportionate to the importance and complexity of the matters in dispute. 16 As French CJ observed in Aon [2009] HCA 27; (2009) 239 CLR 175 at [5], it is also relevant for the Court to consider: whether there is an irreparable element of unfair prejudice to any party to the proceedings in unnecessarily delaying proceedings; the effect, if any, on public confidence in the judicial system of adjournment (or failure to adjourn); the existence, or otherwise, of a satisfactory explanation for seeking adjournment; the nature of the adjournment and the extent of the proposed delay in resumption of the hearing; the surrounding circumstances including the choices of the parties in the litigation; and costs associated with the adjournment. 17 Taking all of these factors into account I consider, on balance, that the appropriate order is to grant the adjournments sought by the fourth respondent in respect of the relevant cross-claims. 18 I have formed this view for the following reasons. 19 First, the litigation between the fourth respondent and the defendants in the QSC Proceeding is of several years standing. There is no suggestion before me that that litigation was instituted to, in any manner, frustrate the proceedings in this Court, or that it constitutes an abuse of process. The remedies sought by the fourth respondent in the QSC Proceeding are tangible and valuable. 20 Second, there are common elements between the proceedings in this Court and the QSC Proceeding. I accept there is currently a risk that findings by this Court in respect of the cross-claims could prejudice the remedies the fourth respondent could pursue in the Supreme Court matter. Taking into consideration the desirability of resolving litigation as efficiently and expeditiously as possible, I am satisfied that unnecessary duplication of litigation in this and the Supreme Court of Queensland should, if possible, be avoided. This is not to pre-empt either the outcomes in the QSC Proceeding or future case management decisions in this Court. Rather, in the context of the present adjournment application and surrounding circumstances it is appropriate to adjourn the hearing of the relevant cross-claims in this Court pending the outcome of the Transfer Application and the Strike-Out Application. 21 Third, it follows that the proposed adjournment is not open-ended. It will await the delivery of interlocutory decisions referable to the Transfer Application and the Strike-Out Application, rather than the outcome of a trial of substance in the State jurisdiction. Importantly, it is not in dispute that the Transfer Application and the Strike-Out Application are currently listed for hearing in the Supreme Court of Queensland in the relatively near future, namely on 24 May 2018. 22 Fourth, no prejudice of substance has been identified by the second respondent other than that of delay. While delay can significantly prejudice a party, and I note that the primary proceedings were commenced in 2011, I also note that the proceedings were - and remain - complicated, with numerous interlocutory judgments required, a lengthy primary judgment delivered, and a lengthy appellate judgment delivered. The final orders of the Full Court were published on 10 November 2017, only four months ago, and the matter promptly relisted before me. While adjournment of the hearing of the relevant cross-claims will cause some prejudice to the second respondent, I am not satisfied that the prejudice is unfair or irreparable in the circumstances of this case. 23 Fifth, I consider that the explanation advanced by the fourth respondent for its delay and choices in the litigation (and to which Mr Dearlove deposed in his affidavit) is adequate, at this interlocutory level, to warrant the orders it has sought in this Court. 24 Sixth, the adjournment of the relevant cross-claims does not detrimentally affect the applicants or the first respondent in the primary proceedings, or Vero. 25 Finally, while an offer by a party seeking adjournment to pay the costs of another party thrown away by an adjournment is not decisive, it is nonetheless relevant. In this case I note that the application for adjournment was not filed until 14 March 2018, only a month before the resumption of the trial in this Court, and three months after case management orders were made by me in December 2017 after seeking submissions from all parties. The fourth respondent could have raised the issue of adjournment before March 2018. It is likely that the second respondent has already incurred costs which will be thrown away by an adjournment. It is appropriate that the fourth respondent pay such costs of the second respondent. We certify that the preceding twenty-five (25) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Collier.

Federal Court of Australia Act 1976(Cth)ss 37M, 37M(1), 37M(2)

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