Kelly v Mina

Judgment - EX TEMPORE 1The parties presently before the court, prima facie, entered into an agreement (styled "Heads of Agreement" and dated 16 June 2011) for settlement of disputes arising out of a partnership between, or affecting, them. 2A dispute concerning the enforceability and construction of the Heads of Agreement was determined by his Honour Judge Kearns in a final judgment published (in proceedings numbered 2011/359354 in the District Court of New South Wales) on 29 August 2012. 3His Honour awarded judgment for one party in the principal proceedings before him and a lesser judgment for the other party on a cross-claim in the same proceedings. The balance of those awards favoured the party who, before this Court, is the first defendant. 4The party who, before this Court, is the plaintiff has appealed to the Court of Appeal (as of right) against the District Court judgment. She filed a notice of intention to appeal on 24 September 2012, and a notice of appeal on 29 November 2012, in proceedings numbered 2012/296910 in the Court of Appeal. 5The Court of Appeal proceedings have yet to be determined. 6In an interlocutory ruling at the trial of the District Court proceedings before him, Kearns DCJ refused an application by the present plaintiff (the defendant in the District Court) to amend her defence to raise questions going to the enforceability of the Heads of Agreement. His Honour recorded his decision to refuse leave to amend in reasons for judgment delivered on 9 August 2012. 7In her Court of Appeal proceedings the present plaintiff (the defendant in the District Court and the appellant in the Court of Appeal) has not, yet, included as a ground of appeal a challenge to the order made by Kearns DCJ refusing her leave to amend her defence. 8She has evidently proceeded on an assumption that, because his Honour's order was interlocutory in character, it cannot, following entry of judgment in the District Court proceedings, be made the subject of the appeal proceedings in the Court of Appeal. 9That assumption is incorrect. On an appeal from a final order an appellate court can correct any interlocutory order that was made in the court below and affected the final judgment under appeal: Gerlach v Clifton Bricks Pty Limited (2002) 209 CLR 478; [2002] HCA 22. 10On my understanding of the substantive questions in dispute between the parties in the District Court proceedings, the order made by Kearns DCJ refusing leave to amend the defence in the proceedings before him was one which, at least prima facie, could be said to have affected his Honour's final judgment. 11On that basis, a challenge to the correctness of his Honour's interlocutory order could - contrary to the assumption of the present plaintiff - be dealt with by the Court of Appeal in the pending Court of Appeal proceedings. 12Instead of challenging Kearns DCJ's interlocutory order in the pending Court of Appeal proceedings, the plaintiff has sought to re-agitate in the present Equity proceedings the very questions which she had sought to agitate in the District Court by an amendment of her defence. 13In a practical sense, the plaintiff seeks to challenge the outcome of the District Court proceedings by two means. The first is an appeal to the Court of Appeal against Kearns DCJ's final orders. The second is by the present proceedings, in the Equity Division, seeking declarations that the Heads of Agreement document is void or, at least, liable to be dealt with as having been entered into by mistake. 14By a notice of motion filed in these proceedings on 7 November 2012 the first defendant seeks summary relief, to the intent that the proceedings be dismissed, or made the subject of an order for a permanent stay, based upon the determination of the District Court proceedings. 15In my opinion, it is premature to consider the first defendant's application for summary relief (or a notice of motion filed by the plaintiff on 8 November 2012 seeking leave to amend the statement of claim) in circumstances in which the plaintiff might still, and one might think should, include in her Court of Appeal proceedings any challenge she seeks to make to Kearns DCJ's decision not to permit her to amend her defence. 16Accordingly, I propose to adjourn these Equity proceedings for about six months, with the intention that time should be allowed to the parties to agitate in the Court of Appeal any dispute they may have as to the correctness or otherwise of the orders made by Kearns DCJ, including his Honour's entry of judgment on 29 August 2012 and his refusal of leave to amend the defence on 9 August 2012. 17In referring to the "first defendant" by that designation I have implicitly acknowledged the participation in these Equity proceedings of another party, referred to in these proceedings as "the second defendant". 18The second defendant has filed an appearance in the proceedings and attended before the court at directions hearings. Nevertheless, there is a question as to whether or not he has been correctly joined in the proceedings. 19That question arises because no order for joinder of the second defendant appears ever to have been made by the court. The proceedings were commenced by a summons filed on 10 August 2012, and on 21 August 2012 the registrar made an order that the proceedings proceed by way of pleadings, with a direction that the plaintiff file and serve a statement of claim. The statement of claim, when filed, pleaded a case not only against the first defendant (named as the only defendant in the summons) but also a case against the second defendant. 20I mention this procedural history because, it seems to me, it bears upon the desirability of the proceedings generally being adjourned at this stage rather than merely the respective notices of motion of the plaintiff and the first defendant. The second defendant is not presently before the court, having taken the stance that the notices of motion listed for hearing today do not affect him. 21There is no connection between the first defendant on the one hand and the second defendant on the other. It might be that, even if the plaintiff's proceedings against the first defendant do not ultimately proceed, the plaintiff could seek to proceed against the second defendant. I make no comment about that except so far as is necessary to explain why it is that the proceedings generally are to be adjourned at the present time. 22Whether or not the plaintiff seeks to amend her notice of appeal in the Court of Appeal, to incorporate a challenge to Kearns DCJ's interlocutory order, is a matter for her and her legal advisers. However, whatever decision is taken on that topic could affect the course of the parties' present notices of motion and, it seems to me, I should allow the parties an opportunity to consult their own interests as to the future course of their litigation. 23For the record, I note that I do not regard myself as part-heard in dealing with the parties' respective notices of motion should it become necessary, in the fullness of time, for them to be dealt with to finality in a contested hearing. 24In these circumstances I make the following orders and notations: (1) Order, until further order, that, as between the plaintiff and the first defendant, these proceedings (numbered 2012/248928 in the Equity Division of the Court) be stayed pending the determination of the proceedings between the same parties (numbered 2012/296910) pending in the Court of Appeal. (2) Note that, subject to the operation of s 63 of the Civil Procedure Act 2005 (NSW), there is a question whether the second defendant has been correctly named as a party in the statement of claim filed on 5 September 2012 (in reliance upon an order made on 21 August 2012 for the proceedings to proceed by way of pleadings, absent an order expressly providing for joinder of the second defendant in the proceedings). (3) Order that the proceedings (including the notice of motion filed by the first defendant on 7 November 2012 and the notice of motion filed by the plaintiff on 8 November 2012) be adjourned, for directions, before the Registrar on 30 September 2013 at 9am. (4) Order that the plaintiff pay the first defendant's costs of today. (5) Order that the first defendant be granted leave to proceed forthwith to an assessment, and enforcement, of those costs. (6) Reserve all other questions of costs. (7) Direct that, on or before 22 March 2013, the solicitor for the plaintiff inform the solicitor for the second defendant, in writing, of these orders. (8) Reserve liberty to apply on three days notice. 25I make it plain, if it is not already clear, that the stay granted by order 1 is intended to be otherwise than final.