Joubert v Campbell Street Theatre Pty Ltd

Judgment 1ALLSOP P: This is an appeal as of right concerning orders made by a judge of the Equity Division as to the costs of proceedings brought by the appellant as liquidator of Arena Management Pty Limited ("Arena Management") and by Arena Management in its own right. 2These reasons should be read together with the decision by this Court on the leave application (Arena Management Pty Ltd (Receiver & Manager Appointed) v Campbell St Theatre Pty Ltd [2011] NSWCA 128) and the primary judge's own reasons in the substantive hearing (Arena Management Pty Ltd (Admin App) (Rec & Mgrs App) v Campbell Street Theatre Pty Ltd [2010] NSWSC 957) and in the costs hearing (Arena Management Pty Ltd (Admin App) (Rec & Mgrs App) v Campbell Street Theatre Pty Ltd [2010] NSWSC 1230). 3Since the judgment in this Court earlier this year, Arena Management has been made a second respondent and is now controlled by a different liquidator to the appellant. Also since March, the first respondent, Campbell Street Theatre Pty Limited, has gone into liquidation. The Court has already today granted leave to continue these appeal proceedings against it. 4I do not repeat what Campbell JA has set out in his reasons in what I have referred to as the leave application. Without needing to be precise, it suffices to say that the primary judge made costs orders which had the effect of denying to the appellant a right to have access to the assets of Arena Management. In effect he was ordered to pay costs personally on an indemnity basis. 5The primary judge took that course refusing the appellant the opportunity of a hearing in court. Rather, his Honour dealt with the matter on the papers assisted only by written submissions. 6The circumstances as to how that occurred and the events after the substantive hearing are set out in Exhibit A in the appeal, being an agreed set of facts in correspondence between the solicitors in March of this year. I set out hereafter paras 1 to 10 in a letter from the appellant's solicitors, Pateman Legal & Corporate Services, to the solicitors of the first respondent, Piper Alderman Lawyers, contained in Exhibit A: "1. On 2 September 2010, after the Substantive Judgment was delivered, the proceedings were stood over for 7 days so that the parties could consider the Substantive Judgment and the parties were given leave to approach His Honour's Associate to indicate what their intentions were on costs. 2. On 3 September 2010, Piper Alderman wrote to us. This letter attached proposed short minutes of orders dealing with the costs of the Substantive Proceedings ('Costs'). The letter required a reply by 12 noon on 6 September 2010, or it advised that the proposed short minutes would be forwarded to Palmer J's Associate. 3. On 6 September 2010, we forwarded a facsimile message to Piper Alderman that stated our client did not consent to the orders in the short minutes being made and the matter should be relisted in accordance with the orders made on 2 September 2010. 4. On 7 September 2010, Piper Alderman wrote to us stating that the matter would have to be relisted for argument on Costs. Available dates were provided in this letter. 5. On 8 September 2010, Mr George agreed a timetable for the filing and service of written submissions on costs with Mr Barnett. Also on this date, Mr George sent an email to Palmer J's Associate (and a copy to Mr Barnett) that set out the proposed timetable and advised the Court the parties were to inform the Court whether they sought to augment their written submissions with oral argument. 6. On 9 September 2010, Palmer J's Associate advised the parties by email that [the] timetable proposed by them to file and serve submissions on Costs was suitable to the Court. 7. Between 13 September 2010 and 20 September 2010, the parties filed and served written submissions. 8. On 20 September 2010, in an email to Palmer J's Associate (copied to Mr Barnett) that attached the Plaintiffs' submissions on Costs in reply Mr George informed the Court that a short hearing would be required so that evidence could be tendered 'at a time and date suitable to the Court'. 9. On 24 September 2010, in an email to Palmer J's Associate (copied to Mr George), Mr Barnett advised the Court that he understood the documents to be tendered at a hearing on Costs were reports served by the Defendant and not read at the hearing, and their admissibility was objected to. This email also made a concession that the material in two of the reports was factually correct and objected to a hearing on Costs being held. 10. On 27 September 2010, in an email to Palmer J's Associate (copied to Mr Barnett), Mr George indicated that at a hearing on costs, he wished to tender two reports and to read a short affidavit sworn by Mr Joubert. The email requested the Court to list the matter for a short hearing." 7The only qualification to the agreement in these ten paragraphs was the last sentence of para 9. In that respect, the solicitors for the first respondent stated that a concession was made (as it had been made before the primary judge in correspondence) as to the facts in para 6(f) of the submissions of the appellant to his Honour. 8That concession meant that Campbell Street Theatre Pty Limited conceded, as it had conceded before the primary judge in submissions, the following matters: "In expert reports served on the plaintiffs on the defendant's behalf and prepared by Maurizio Zappacosta, not tendered at the hearing but which the plaintiffs will tender at a costs' hearing, it was stated that $920,258.82 was owed (report dated 1 October 2009) and then that $670,258.82 was owed (report dated 22 October 2009)." 9There was read before this Court an affidavit of Mr Joubert (the appellant) of 23 March 2011 commencing at Blue Book p 216 as to what evidence he would have led at the hearing. The evidence concerned both the decision to challenge monies due under the charge and the question of the validity of the charge by reference to the solvency of Arena Management at the time of the giving of the charge. 10The provision of procedural fairness to a litigant is a fundamental incident of the judicial process. Here, a litigant sought, in somewhat informal correspondence with the judge's chambers, a hearing. The submissions that had come forward from the winning parties as to costs had been the first intimation that they sought both indemnity costs and an order that Mr Joubert pay the costs personally. Mr Joubert could have filed a notice of motion to re-open. If this course had been adopted, the primary judge would have been required to deal with the motion. In the circumstances of the implicit, if not explicit, invitation by the Court of informality of communication (no doubt to save costs) there was really no reason for the appellant to do more than was done to have the matter listed for a hearing. 11With the utmost respect to the learned primary judge, his Honour should not have denied Mr Joubert a hearing in circumstances where to find against him could only be done by findings either as to the competence or honesty of the conduct of his administration of the liquidation, and to do so was a denial of a species of property right. 12His Honour said the following at [25] and [26] of his costs judgment: "[25] What is a 'sufficient prospect' in the context of this question does not mean only 'fairly arguable' - that is a low threshold to surmount if one is resisting an application for summary dismissal of proceedings. However, a liquidator, like a trustee, is dealing with other people's money and he or she must look at the ultimate result of the proceedings, not merely whether it will survive an application for summary dismissal. [26] In his submissions as to costs, Mr George sought leave to tender on the question of costs experts' reports which he did not read in the trial. Mr McInerney objected to the tender. I do not see how evidence, going to a substantive issue in the proceedings, which has not been admitted at the trial can be tendered after judgment on the question of costs. To allow such evidence would be to invite reconsideration of the issue decided at the trial in the absence of the evidence now tendered. I decline to receive such evidence." 13There was a misconception in [26]. The material to be tendered was not evidence of the plaintiff or arranged by the plaintiff, but material of the defendant that had been served but not utilised. 14The first respondent meets these contentions head on by submitting that the Court should be persuaded that there could be no utility in the giving of a hearing to Mr Joubert to lead the evidence that he identifies because it could not possibly have affected the outcome: see Stead v State Government Insurance Commission [1986] HCA 54; CLR 141 at 145-147. This is not the occasion to discuss at any length the reach and content of Stead : see generally in the context of administrative law, M I Aronson et al, Judicial Review of Administrative Acts (4th Ed, 2004) pp 505-508 at [7.320], and its analogous extension to a context of the exercise of judicial power. It is sufficient to say that if a litigant has been denied a hearing by the court, a hearing which takes away a property right and which reflects upon the conduct of an office, the court would be extremely reluctant to engage in any fine balancing to identify the likely outcome of the denied hearing. This is particularly so when questions of fact, valuation and judgment are involved. 15Even if it be thought that the material Mr Joubert put forward may not have been particularly persuasive, it remains nevertheless that he was denied the opportunity to place that material before the primary judge. He may have been cross-examined. That may have weakened his position. That may, contrary to the cross-examiner's intent, have strengthened it. These are the vagaries of a hearing. 16Uniform Civil Procedure Rules 2005 (NSW), r 51.53 prohibits the court from ordering a new trial on any ground unless it appears to the court that some substantial wrong or miscarriage has been occasioned. Assuming the applicability of this provision, it does not prevent remitter here. A denial of procedural fairness is itself a miscarriage of justice except in the rare circumstances where it can be shown that the availability of the hearing could not possibly have led to a different result. Notwithstanding the careful and forthright submissions of Mr Barnett, I am not persuaded that this is the case here. In my view it would be wrong for this Court, in effect, to conduct an original hearing. 17This is not a re-hearing under s 75A, this is the undertaking of original jurisdiction, the appeal having been allowed because of a denial of procedural fairness. It is most regrettable that this is the outcome, nevertheless, in my view, it is the only course available. I will identify now the orders that I would make and make an explanation of one of them in a moment. 18The orders that I would make are: