Kennett & Anor v Mayrana Pty Ltd and Ors

MAYRANA PTY LTD (ACN 101 363 688) First Respondent

GARRATT'S LIMITED (ACN 000 003 725) Second Respondent

CHRISTOPHER CAMPBELL Third Respondent PARTIES: MICHAEL TRAYNOR Fourth Respondent

MATTER NUMBER IRC 3680 OF 2003 _________________________________

MAYRANA PTY LTD (ACN 101 363 688) First Respondent

GARRATT'S LIMITED (ACN 000 003 725) Second Respondent

CHRISTOPHER CAMPBELL Third Respondent

MICHAEL TRAYNOR Fourth Respondent

CATCHWORDS: Notices of motion - applications opposed - applicants sought leave to lead further evidence from the applicant, Mr Pak - application refused - injustice to respondents could not be precluded in circumstances - applicants sought leave to lead further evidence from accounting expert and three witnesses - application partially granted - expert witness no longer adhered to opinions expressed in reports in evidence - costs orders made to balance parties' interests - costs otherwise reserved

LEGISLATION CITED: Industrial Relations Act 1996

Cropper v Smith (1884) 26 Ch D 700 Kennett and anor v Mayrana Pty Ltd and ors & Myong Ho Pak v Mayrana Pty Ltd and anor [2005] NSWIRComm 134 CASES CITED: Kennett and Anor v Mayrana Pty Ltd and Ors and Myong Ho Pak v Mayrana Pty Ltd and Ors [2005] NSWIRComm 367 Kennett and Anor v Mayrana Pty Ltd and Ors (No 4) [2006] NSWIRComm 357 The State of Queensland and Anor v JL Holdings Pty Limited (1996) 189 CLR 146

HEARING DATES: 26 July 2007, 3 August 2007

APPLICANTS: Dr JP Berwick of counsel SOLICITORS: GH Healey & Co

FIRST AND SECOND RESPONDENTS: Mr AJ Bulley of counsel SOLICITORS: Gray & Perkins LEGAL REPRESENTATIVES: THIRD RESPONDENT: Mr BKB Cross of counsel SOLICITORS: Thomson Playford

FOURTH RESPONDENT: Mr PW Taylor SC with Mr PL Carr of counsel SOLICITORS: DLA Phillips Fox

Matter No IRC 3679 of 2003 KEITH FRANKLIN KENNETT AND ANOTHER v MAYRANA PTY LTD AND OTHERS Application under s.106 of the Industrial Relations Act 1996 Matter No IRC 3680 of 2003

MYONG HO PAK v MAYRANA PTY LTD AND OTHERS Application under s.106 of the Industrial Relations Act 1996

1 Professor Kennett and Mr Pak commenced these proceedings in 2003 pursuant to s 106 of the Industrial Relations Act 1996 ('the Act'). The proceedings have had an unfortunate history of applications to amend pleadings; failures to comply with the Court's directions; the late filing of evidence; adjournments and vacation of hearings and applications for the calling of further evidence. The hearing finally commenced before me in September 2006, when the applicants tendered their evidence in chief and, as the parties had agreed, various jurisdictional issues pressed by the respondents in motions which had earlier been listed for a hearing which had been vacated, were then heard and dealt with. Judgment on those jurisdictional issues was given in November 2006. (See Kennett and Anor v Mayrana Pty Ltd and Ors (No 4) [2006] NSWIRComm 357). 2 The hearing of the merits of the case then continued on 10 April 2007. The claims finally pressed in the applicants' second further amended summonses filed in Court on 10 April 2007, challenged the fairness of contracts, arrangements or collateral arrangements, under which it was claimed the applicants performed work at Excelsior College and for the sale of the College. The respondents denied that they had ever employed the applicants, that the applicants had performed any work for the College after the sale, or that any of the contracts, arrangements or collateral arrangements were unfair as claimed. 3 During the course of the hearing two further motions were filed by the applicants, one on 12 June and the other on 24 July 2007. The applicants sought leave to lead various further evidence from Mr Pak; the applicants' expert, Mr Prior; the applicants' accountant Mr Rogers; and two former employees of the College, Mrs Brash, the College's former book keeper, and Mr Brash, the College's former Registrar, whose affidavit evidence had already been received in the proceedings. Both applications were opposed. The application in respect of Mr Pak was refused. The motions in relation to the other witnesses was partially granted. I now give reasons for those decisions.

Mr Pak 4 This application was made in the motion of 12 June, but was not pressed until 15 June, when Mr Pak was called to give evidence. Mr Pak's evidence had been received at the September 2006 hearing. It comprised exhibit 7, an affidavit filed on 8 April 2005; exhibit 8, an affidavit filed on 20 April 2005; exhibit 9, an affidavit filed on 18 November 2005; exhibit 10, an affidavit filed on 7 April 2006; and exhibit 11, an affidavit filed on 13 September 2006. The respondents' evidence in reply to these affidavits had long been filed, but the applicants' case had not yet concluded, when the motion was filed. The matter had been heard on 10 to 13 April, when Professor Kennett was cross examined, and was listed for further hearing on 12 to 15 June, 18 and 19 June, 11 to 14 September and 17 to 21 September 2006. 5 It appeared that there had been heated correspondence between the parties, following upon the service of the affidavit, with the respondents objecting to the calling of any further evidence, at this stage of the hearing. This led to the filing of the motion. It had earlier been made clear to all parties, given the history of the matter, that no further affidavits should be filed in the proceedings, without leave first being sought by motion, as the Court's Rules contemplated. 6 That direction had been given, because the proceedings had had a very unfortunate history. They were commenced in 2003 and came before Kavanagh J for conciliation in December 2004. When no agreement was reached, her Honour gave directions for preparation of the matter for hearing. The directions were not complied with, which eventually led Marks J to make costs orders against the applicants in Kennett and anor v Mayrana Pty Ltd and ors & Myong Ho Pak v Mayrana Pty Ltd and anor [2005] NSWIRComm 134 , his Honour having observed at [1]:

These matters have been the subject of gross delay on the part of the applicants in prosecuting their claims. The summonses were originally issued in July 2003 and there has been a considerable delay since in the applicants determining whether the proceedings are to be amended. The material before the court indicates prevarication in this regard over a long period of time and the involvement of solicitors and counsel in determining the nature and extent of any amendment, and indeed as to whether any amendment to the proceedings was to be made. 7 Later in 2005, the Full Bench refused leave to appeal from that judgment in Kennett and Anor v Mayrana Pty Ltd and Ors and Myong Ho Pak v Mayrana Pty Ltd and Ors [2005] NSWIRComm 367, noting at [14] that:

The issues raised by the appeal do not go to questions of principle. They concern alleged errors in Marks J's exercise of the discretion to award costs, at an interlocutory stage of the proceedings, against a party in default of directions given by the Court as to the preparation of the matter for hearing. His Honour concluded in his decision that this had resulted in repeated appearances before him, which would have been unnecessary had the Court's directions been complied with. The transcript referred to by the appellant confirms that his Honour was directing his enquiries to what had occurred since the conciliation in December 2004.

8 Despite what had transpired, the applicants' failure to adhere to the Court's directions continued. Some of the further difficulties were dealt with in Kennett and Anor v Mayrana Pty Ltd and Ors (No 4), where I noted at [2]: When this hearing commenced, the claims pressed were contained in amended summonses filed on 21 April 2005. In September 2005, the respondents had filed a motion seeking that the proceedings be dismissed for want of jurisdiction. That motion was listed for hearing before Staunton J in January 2006, but the hearing did not proceed when the applicants filed further affidavits, shortly prior to the hearing. The parties later agreed, after all affidavit material had been filed, that the question of the Court's jurisdiction to entertain the claims advanced would be dealt with at the outset of the hearing of the proceedings.

9 The matter had been re-allocated to me for hearing in 2006. Despite some further difficulty, as I noted in the November 2006 judgment, it was finally agreed between the parties that the respondents' jurisdictional motions would be dealt with at the outset of the hearing. Despite the applicants then proceeding on the amended summonses filed in 2005, on the second day of the hearing in September 2006, the applicants further amended their summonses, albeit without objection from the respondents on that occasion. The summonses were again later amended in April 2007. The applicants tendered their affidavit evidence at the September hearing, without their witnesses being called for cross examination. The applicants' evidence was then taken at its highest and the question of jurisdiction was dealt with on the basis of that evidence, without the respondents' evidence being put on. 10 When the respondents' jurisdictional motions were dismissed, the hearing continued, with the cross examination of the applicants and their witnesses then commencing in April 2007, as programmed. 11 Despite this history, the applicants' motion of 12 June 2007 was deficient, because, as was explained by Dr Berwick, counsel for the applicants, it gave no grounds or reasons for the late application to call further evidence. The motion suggested that the reasons appeared in an affidavit in support of the motion sworn by one of the applicants' solicitors, Mr Healey, but Dr Berwick explained that what was said in the motion was inaccurate. Mr Healey's affidavit did not deal with that issue. At the hearing, Dr Berwick sought to rely on matters dealt with in Mr Pak's May affidavit, in relation to the health of his wife, to explain the time at which Mr Pak's affidavit had come forward. Mr Pak there said that his wife's illness had made it difficult for him to attend to these proceedings. 12 As to the substance of Mr Pak's new affidavit, he sought to revisit various matters with which he and others had already dealt, in the affidavits already in evidence and about which Professor Kennett had been cross examined. The affidavit annexed some tax returns and Mr Pak sought to give evidence about other matters, not dealt with in his earlier affidavits. There could be no doubt that these were all matters Mr Pak could and should have dealt with in his earlier affidavits, given the Court's earlier directions. 13 The judgment of the High Court in The State of Queensland and Anor v JL Holdings Pty Limited (1996) 189 CLR 146 at 154 was, however, relied upon, to support the leave application, the High Court having said:

It may be said at once that in the passage which we have cited from Sali v SPC Ltd Toohey and Gaudron JJ are not to be taken as sanctioning any departure from the principles established in Cropper v Smith and accepted in Clough and Rogers v Frog . Sali v SPC Ltd was a case concerning the refusal of an adjournment in relation to which the proper principles of case management may have a particular relevance. However, nothing in that case suggests that those principles might be employed, except perhaps in extreme circumstances, to shut a party out from litigating an issue which is fairly arguable. Case management is not an end in itself. It is an important and useful aid for ensuring the prompt and efficient disposal of litigation. But it ought always to be borne in mind, even in changing times, that the ultimate aim of a court is the attainment of justice and no principle of case management can be allowed to supplant that aim.

14 What was being sought in relation to Mr Pak, was, of course, not an opportunity to raise new issues in the proceedings, but to lead further evidence. The application was opposed on the basis that it would lead to injustice to the respondents which a costs order could not remedy. 15 In my view, the consideration which precluded the exercise of the discretion sought by Mr Pak at that point of the trial, was the circumstances in which the judgment on jurisdiction had already been given and the stage which the trial had reached. 16 In September 2006, the parties had joined the evidentiary contest, when the respondents' jurisdictional motion was dealt with. The jurisdictional points raised by the respondents were decided on the basis of the applicants' evidence in chief, taken at its highest, without the applicants' witnesses being cross examined, or the respondents' evidence being led. The judgment dealt with the question of whether the applicants had led evidence in the proceedings, which was capable of providing the basis for a finding that Professor Kennett and Mr Pak had performed work under the contracts or arrangements sought to be attacked in these proceedings, without consideration being given to the respondents' evidence about those matters. The contracts or arrangements the subject of the proceedings, were claimed to comprise a number of written documents, as well as oral representations and offers claimed to have been made by Mr Campbell, a director of Garratt's Limited ('Garratt's'), prior to the sale, which Professor Kennett and Mr Pak claimed they had accepted and relied upon. 17 Of necessity, the judgment analysed the evidence which the applicants had led and consequently highlighted both strengths and weaknesses of their evidentiary case. None of the sale documents relied upon evidenced any offer of employment having been made by Garratt's, to either Professor Kennett or Mr Pak, nor was there evidence that any other written offers had been made to Professor Kennett or Mr Pak, of the kind which they claimed they had received. There was, however, evidence that Professor Kennett, Mr Pak and Mr Campbell had discussed Professor Kennett and Mr Pak both working at the College after the sale and that they had both performed work at the College after the sale. On that evidence, I concluded that: 67 Taking the evidence at its highest, as it must be at this stage of the proceedings, it must be inferred that the work they each performed at the College after the sale was of benefit to Mayrana, as owner of the College, as well as to Garratt's, given that Mayrana was its wholly owned subsidiary. The evidence as it stands also permits the conclusion that the work was performed in accordance with oral agreements which Mr Kennett and Mr Pak had each reached with Mr Campbell, prior to the entry of the sale agreement, as to their ongoing employment in the College business after the sale.

68 The sale agreement later executed in August did not require that any offers of employment made be written. It contemplated that offers of employment would be made to the vendor's employees, prior to completion of the sale. That did not occur in the case of the College's employees who received offers after the sale. On the evidence, both Mr Kennett and Mr Pak had reached agreement on their future roles with Mr Campbell, before the sale deed was executed. The sale agreement contemplated such employment being agreed. It was expressly referred to in the restraint provision.

69 Employment agreements do not need to be evidenced in writing. On their evidence in each case, the applicants claim that without those agreements, they would not have sold the College.

70 It follows that on the current state of the evidence, the conclusion that work was not performed by Mr Kennett and Mr Pak pursuant to contracts sought to be attacked in the proceedings, is not open, given the way in which the claims advanced are framed and explained in the particulars. 18 The hearing then commenced with Professor Kennett's cross examination on 10 - 13 April. 19 Given the course which the litigation had taken, I concluded that the leave sought by motion in June 2007, to allow Mr Pak to revisit his evidence in chief, in an affidavit sworn in May, could not be granted, as a matter of justice between these parties. 20 It was argued that a costs order could be made against Mr Pak, in relation to the respondents' costs of meeting this late evidence and that no hardship would be caused thereby, because there was to be an adjournment of the hearing in any event, which would have given the respondents sufficient time to meet the case, so put. 21 I was satisfied that such a course could not remedy the unfairness which would flow. Injustice to the respondents could not be precluded, if that course were adopted, as had been discussed in Cropper v Smith (1884) 26 Ch D 700 at 710, to which the High Court had made reference in JL Holdings Pty Ltd, even if the respondents' witnesses were also then given a further opportunity to revisit their evidence. 22 The two applications are being heard together. It could not be overlooked that it was not until May 2007, that Mr Pak swore a further affidavit in chief, long after both the jurisdictional judgment had been given and while Professor Kennett was in cross examination, when no doubt, a further appreciation of difficulties in the case might have emerged. 23 In s 106 proceedings, this Court requires parties to put on their evidence in chief, in the form of an affidavit, before trial. That is of significant advantage to parties and to the administration of justice, because it gives parties and the witnesses they call, an opportunity, in their own time, outside of the courtroom atmosphere, to prepare their evidence. That process, no doubt, improves the quality of the evidence put before the Court. Witnesses who give their evidence in chief in an affidavit, have the opportunity to prepare their evidence using their own words about relevant matters, which may be complex, lengthy and have occurred a considerable time ago. Often they have the assistance of a lawyer to prepare the affidavit. This is a very different process to giving evidence in chief, orally at a trial. In my observation, very many witnesses find it difficult to give their evidence in that way. Not only are witnesses then in the unfamiliar situation of being involved in legal proceedings in a courtroom; they do not control how their evidence comes forward. They are usually confined to answering questions asked of them; and, as in this case, their evidence is often given long after the events in question, often also long after the affidavits have been prepared and sworn. 24 It follows that the opportunity to give affidavit evidence is a significant advantage, both to the witness and the party who calls the witness. It gives witnesses time for early reflection about their evidence and also permits them to use documents and records such as diaries, to assist them both in recollecting when relevant events occurred and what occurred. The assistance which the parties' legal advisers can properly provide in preparing an affidavit, also helps to ensure that the witnesses confine themselves to relevant evidence, which is put in admissible form. 25 What the opportunity to lead affidavit evidence may not properly permit, however, is for witnesses to be coached; to collude with other people about what evidence they should give; or to prepare their evidence by way of reference to evidence which other people might give, if they were called to give evidence in the proceedings. It is for that reason that applicants such as Mr Pak may not have regard to the affidavits sworn by other witnesses to be called in his case, when preparing his own affidavits. 26 Before Mr Pak was called to give evidence, Professor Kennett had already said in cross examination that he had read the affidavits of witnesses he was calling in his case. They had been provided to him by his legal advisers, he said 'as they became available'. Whether Mr Pak had similarly been provided with such affidavits before he swore his May affidavit, was not known. That he had access to the jurisdictional judgment, I had earlier given, however, could not be doubted. Mr Pak was entitled to have access to it as a party to the proceedings and, in any event, it was in the public domain. There, Mr Pak's evidence and the evidence of others called in his case had already been dealt with. 27 The motion filed for Mr Pak in June 2007, in which leave was sought for the filing of his May 2007 affidavit, gave no reasons as to why this further evidence only came forward at such a late stage. The reason was said to appear in an affidavit supporting the motion sworn by Mr Healey. Tellingly, Mr Healey's affidavit gave no explanation at all, as to why the affidavit had not been put on earlier, as the Court's directions had required. 28 In submissions, Dr Berwick was forced to rely on certain paragraphs of Mr Pak's affidavit itself, to support the application. They also provided no proper explanation from the time at which this further evidence came forward. That Mr Pak's wife has long been seriously ill is a most regrettable situation for which he must have sympathy, but it cannot explain the failure to put into one of the five of his earlier affidavits already in evidence, the matters which he sought to deal with in his May 2007 affidavit. 29 It followed that the application for leave came forward in a most unsatisfactory way. There was no proper explanation of the circumstances in which Mr Pak's affidavit had been sworn and why it had not been put on earlier, in accordance with the Court's directions. 30 Mr Pak had already received more than a proper opportunity to put on his evidence, given the number of affidavits he had filed and when he had filed them. Five of his affidavits were already in evidence. There he had set out his own version of relevant events, documents and conversations and had responded to what the respondents' witnesses had sworn in their affidavits, as to those matters. His further affidavit sought again to revisit the matters already dealt with and to raise additional matters. 31 On the material put before the Court, it seemed that there was a realisation, that Mr Pak's evidence could be 'further improved', in order to bolster his case. So it was that in May 2007, Mr Pak came to swear yet another affidavit, in which he sought to put forward a further account of relevant matters. In the circumstances, I was quite satisfied that this endeavour was not one which justice could permit. 32 It was earlier agreed that the respondents' jurisdictional argument would be dealt with on the basis of the evidence called by the applicants, taken at its highest. That was a course accepted by the Court; and a judgment was given accordingly. The hearing of the merits then continued, with the applicants and their witnesses then called for cross examination, commencing with Professor Kennett. 33 Mr Pak had thus succeeded in resisting the respondents' motions seeking the dismissal of his application. No doubt it was with the assistance of his legal advisers' later advice, that he came to the view that he should put on further evidence. That however, occurred after the views expressed in the judgment, as to the contest which had then long been joined by the parties and after Professor Kennett had been cross examined for a number of days. 34 It followed that to permit the calling of further evidence in chief at that time, about matters which Mr Pak could have dealt with either in one of his original affidavits in chief, or in his reply affidavits, could not, in fairness be permitted in those circumstances. 35 As Kirby J discussed in JL Holdings Pty Ltd, there are many reasons why an indulgence sought by a party might be granted or refused in a particular case. It is always a question of balance, which includes a consideration of questions of proper case management. The applicants' general conduct of this litigation did not put them into a position where any discretion could readily be exercised in their favour. As Kirby J observed at 171-2:

Justice will not necessarily require that a party should have multiple opportunities to plead and present its case. A court must accord justice to the particular litigant. But it must also maintain its responsible use of scarce public resources and consider, in a general way, the impact which its orders have on other litigants and on the public generally.

36 To permit Mr Pak to call further evidence in chief, which was always available to have been put on and which should have been put on in accordance with the Court's earlier directions, at that stage of the trial, could only be unjust, so far as the respondents were concerned. 37 The applicants' earlier failures to comply with the Court's directions only reinforced that conclusion. Had the application been granted, the result would have been that the Court's jurisdictional judgment would, in effect, have become an advice to the applicants on their evidence, given during the course of the hearing of their case. Such a course would be highly inappropriate and could only discourage respondents to proceedings before this Court, from bringing jurisdictional arguments properly available to be made at an appropriate stage of the proceedings. It would also discourage other applicants from properly complying with the Court's directions. Such a result would certainly not be in the public interest. 38 It was for these reasons that I refused the leave sought in relation to Mr Pak.

Mr Prior 39 Mr Prior was an accounting expert retained by the applicants. He had prepared various reports which were annexed to his affidavits, which were exhibit 14, filed on 7 April 2006; exhibit 16, filed on 8 September 2006 and exhibit 16, filed on 11 September 2006. The September affidavits responded to reports of the expert retained by the respondents, which had also been filed in the proceedings. 40 Mr Prior's evidence was not dealt with in the November 2006 jurisdictional judgment, nor had he yet been called for cross examination on his evidence. The motion of 12 June sought leave to rely on a further affidavit and report filed on 7 June 2007. A further motion of 24 July sought leave to rely on three further reports and affidavits sworn by Mr Prior and filed on 4 and 18 July 2007. Not only were there difficulties and delays with service of some of this material, again, neither motion explained why it was that this leave was being sought, even though the applicants were obliged to provide grounds and reasons for their application, in the motions. The motions asserted that the grounds and reasons for the application were set out in various of Mr Prior's affidavits and in affidavits sworn by the applicants' instructing solicitor, Mr Healey. Again, none of these affidavits in fact gave any such explanation. 41 The real reasons were finally revealed after extensive cross examination of Mr Prior and Mr Healey. 42 The cross examination of Mr Prior showed that after his earlier reports had been filed in 2006, Mr Prior continued to give consideration to his evidence. He was uneasy about the reliability of the Excelsior College records and had the view that a conference of experts would be useful. By February 2007, he had come to the realisation that he could no longer stand by what he had said in his earlier reports and, with the assistance of Mrs Brash and Mr Brash, he had commenced further investigations, which depended on him being provided with other information, including the College's 2001 price list. He explained that in March 2007 he was given access to an affidavit sworn by Mr Traynor which annexed his working papers. Mr Traynor had conducted a due diligence on the College during the sale process. Mr Prior had expressed opinions in his 2006 reports on what Mr Traynor had done. As a result of his consideration of this further material, Mr Prior had come to the conclusion that the Excelsior College records were completely unreliable. That conclusion led to further investigations, which led to the 2007 affidavits and reports. Mr Prior was also later instructed to prepare even a further report, as to his valuation of the College. This report was annexed to one of his 18 July affidavits. 43 It is unnecessary to outline Mr Prior's evidence given in cross examination, about various of the views expressed in his 2007 affidavits, when and how he came to those views, the deficiencies in the information with which he had earlier been provided and his views as to how the proceedings should have been conducted. In part, Mr Prior's views reflected adversely on the applicants, the applicants' legal advisers and their conduct of the case. 44 What was revealed by the cross examination of Mr Prior was that in March 2007, access to Mr Traynor's affidavit confirmed him in certain views which he had already reached in February, which departed from the views earlier expressed in his 2006 reports. The upshot of Mr Prior's further investigation, was a number of further reports, which came to quite different conclusions to those which he had reached in 2006. 45 As it emerged, the upshot of these developments was that, in truth, while not revealed in the motions themselves, the applicants no longer wished to rely on the opinions expressed in Mr Prior's 2006 affidavits and reports in support of their claims, but wished to now advance their claims by reference to the opinions expressed in Mr Prior's 2007 affidavits, reports and valuations. The respondents, of course, had had no opportunity to have their expert consider, or respond to those new approaches. 46 Mr Healey's affidavit evidence and the answers which he gave in cross examination, showed that mistakes had been made in the information with which Mr Prior had been provided in 2006. Relevant annexures to Mr Pak's affidavit were not supplied, nor was Mr Prior given access to relevant documents, even though they had been produced in 2006, in answer to a summons issued for the applicants, at Mr Prior's request. So it was, that not until 2007, that Mr Prior had the opportunity to consider those documents, when he saw them as annexures to Mr Traynor's affidavit. 47 Mr Healey was not able to explain how this situation had come to arise, or even when it had first been appreciated, even in the affidavit which he swore on 2 August, on the day before he was cross examined. Indeed, why Mr Healey was called to explain these matters was not readily apparent, given his evidence that he was not the solicitor on the record and did not have carriage of the matter. Nevertheless, that this situation emerged as it did, only through the answers which he gave in cross examination, was most regrettable. Had it been revealed in the applicants' motions, as it should have been, considerable time would have been saved in unnecessary cross examination of Mr Healey and Mr Prior. 48 Again, the approach of the High Court in JL Holdings Pty Ltd was relied upon for the applicants, it being submitted that given what had transpired, to refuse the applicants leave to rely on Mr Prior's 2007 affidavits and reports, would be devastating to their case and that a costs order could properly balance any injustice to the respondents. 49 For the respondents, it was argued that the applicants had not been frank in their motions, because the real reasons for the further reports and affidavits which came forward in 2007 from Mr Prior had not been revealed, even in Mr Healey's affidavits. It was only in cross examination that the true position had emerged. It was relevant that the applications came forward after Professor Kennett's cross examination had concluded and when Mr Pak's cross examination was also substantially advanced. To grant the leave sought in those circumstances, even with a costs order against the applicants, would leave the respondents with real forensic difficulties, which the respondents should not have to confront, at this stage of the proceedings. 50 The problems with Mr Prior's further reports were also analysed, it being submitted that they could not provide a foundation for the orders sought, being made against the respondents. As to the valuation report, it was submitted that no explanation at all had been given as to the circumstances in which it had emerged so late in the proceedings and that it was, in any event, irrelevant, not being connected with any relief sought by the applicants in the proceedings. 51 I announced at the conclusion of the hearing that I proposed to grant the applicants' leave to rely on Mr Prior's further reports, other than in relation to the fourth affidavit, annexing the valuation report. 52 This valuation emerged from further instructions given to Mr Prior in July 2007. Why those instructions were given was not revealed. Indeed, there was no explanation given at all for the late production of that evidence. On the evidence, that report had no connection with the parties' transaction. Nor was the report connected with any of the relief sought in the applicants' second further amended summonses. The applicants' summonses did not seek a variation of the parties' arrangements to provide for such a valuation, and no money orders were sought by reference to such a concept. Nor had Mr Pak or Professor Kennett mentioned the idea of such a valuation in any of their evidence, as a basis for their claims. 53 It followed that the applicants had demonstrated no basis for the admission of that new evidence and so the leave sought to introduce that further evidence was refused. 54 As to Mr Prior's three other reports, I concluded that the leave sought had to be granted. The difference between this application and that made in relation to Mr Pak's further evidence, was that it was not simply a late attempt to bolster the case being advanced, by revisiting evidence already given, which was always available to have been called and which had been dealt with in the jurisdictional judgment. 55 The 2007 reports were entirely different to Mr Prior's 2006 reports, being based, at least in part, upon information which Mr Prior did not have in 2006. Those reports flowed from the conclusions which Mr Prior reached in 2007, as to the unreliability of the records which the applicants had maintained at Excelsior College. Those conclusions led him to a position where he no longer adhered to the views which he had expressed in his 2006 reports. The result was that Mr Prior's 2007 reports put the applicants' cases on quite a different basis to that which they had earlier advanced. 56 I accepted that proper criticism could be directed to the applicants, for this late and marked change in course, given the stage the proceedings had reached, when this development came forward. 57 On Mr Prior's evidence in cross examination, it seemed that there was no reason why the conclusions which he reached in 2007, could not have been reached in 2005 and 2006, when the applicants were obliged to put on their evidence. Mr Prior always had access to the applicants, Mr Rogers, Mr Brash and Mrs Brash. Had Mr Prior been provided with the information which he required at the proper time, there is no reason to think the exercise he undertook in 2007, could not have been undertaken before he provided his first report in April 2006. These proceedings were commenced in 2003. Provision of the relevant documents, such as a 2001 price list and Mr Traynor's working papers, depended on the applicants providing them, or obtaining access to them, in so far as that material was not in their hands. 58 Providing Mr Prior with the information which he required, in order to provide a report about the adequacy of the due diligence exercise conducted by Mr Traynor in 2002 and the profitability or otherwise of the College in that year, did not depend on any conference of experts, to which Mr Prior repeatedly referred in his evidence. 59 It appeared that the necessary information was forthcoming in 2007, in part from Professor Kennett, Mrs Brash and Mr Brash and in part from the documents attached to Mr Traynor's affidavits. Those documents had already been produced to the Court in 2006, in answer to a summons issued for the applicants. The failure to provide those documents to Mr Prior earlier, plainly did not rest with the respondents. 60 Mr Prior's final opinions rested on the view which he reached in 2007, as to the unreliability of the records maintained by the applicants, prior to the sale of the College. On the evidence, there was no reason to think that the information on which that opinion finally rested, could not have been provided earlier, prior to Mr Prior preparing his 2006 reports, if the matter had been given proper attention by the applicants and their advisers at the necessary time. 61 In those circumstances, the question of whether any discretion should be exercised in favour of the applicants, to permit them to recast their case, at this late stage of the proceedings was not an easy one, particularly given the time already directed to aspects of the basis of the opinions expressed by Mr Prior in 2006, during the cross examination of Professor Kennett and Mr Pak in April and June. This was particularly so, because it appeared that this cross examination occurred at a time when, on Mr Prior's evidence, he had long held the view that he could not adhere to his 2006 opinions, but that had not been revealed to the respondents, as it should have been, once it was appreciated. 62 What could not be overlooked however, it seemed to me, was that Mr Prior's evidence was relevant both to the claimed unfairness of the parties' contracts and arrangements and the money orders sought. On the evidence as it stood at the conclusion of Mr Prior's cross examination, it was quite apparent that if the leave sought were not granted, the applicants' cases would in all likelihood fail, because Mr Prior had resiled from his 2006 opinions, thereby removing what appeared to be an important plank in the applicants' case. I accept Dr Berwick's submission that in those circumstances, to refuse the leave would have been devastating for the applicants' cases. 63 In all of the circumstances, I concluded that this was a situation where a discretion had to be exercised in favour of the applicants and, as was conceded for them, a costs order made against them, in relation to all of the costs thrown away in the respondents meeting Mr Prior's 2006 evidence. This includes any time spent in cross examining Professor Kennett and Mr Pak about matters relevant to those reports, which are no longer relevant to the claims advanced, given the receipt of Mr Prior's 2007 reports. 64 I accept, as the respondents explained, that the granting of this leave may present difficult forensic challenges for the respondents, which will have to be met. Nevertheless, I came to the conclusion that I am bound by the observations of the High Court, that an applicant ought not to be shut out from litigating an issue which is fairly arguable. I am satisfied that would be the practical effect of now precluding receipt of Mr Prior's 2007 reports, he having resiled from his 2006 opinions. The errors seemingly made by the applicants' advisers, put this situation into a category of the kind discussed by Kirby J in JL Holdings Pty Ltd at [169] - [180]. Undoubtedly, the new evidence is of considerable importance to the applicants; the evidence suggested that the new evidence has come forward as the result of fault on the part of the applicants' advisers and human error; there is sufficient time for the respondents' expert to reply to these reports and a costs order may be made, to rebalance the parties' competing claims as to justice. Mr Rogers, Mrs Brash, Mr Brash

65 The further affidavits sworn by these witnesses broadly dealt with two matters. Firstly, what they had done by way of assistance to Mr Prior, in preparing his 2007 reports. Secondly, by revisiting matters earlier dealt with in their affidavit evidence in chief, or which ought to have been dealt with there. Their evidence comprised exhibits 12, 13, 15, 19 and 20. 66 At the conclusion of the hearing, I indicated that I would grant leave to call the first part of their further evidence, but not the second. 67 For the reasons given in relation to the application made in respect of Mr Pak, I concluded that it would be to visit an injustice on the respondents to permit further evidence to be led from these witnesses at this stage of the proceedings, revisiting their earlier evidence and seeking to improve it. I was also satisfied that a costs order could not remedy that injustice. 68 For the reasons given in relation to Mr Prior's three further affidavits in respect of which leave was given, I concluded that leave should also be given to adduce this evidence from these witnesses, as to the assistance they had provided to Mr Prior in that exercise. Costs 69 The respondents sought their costs of the motion. I have concluded that apart from the orders as to the costs thrown away in dealing with Mr Prior's 2006 reports, which the granting of the leave necessitated, that the question of costs of the motion should await the conclusion of the hearing, given the questions which that application raises. Orders

70 For the reasons given, I make the following orders:

1 . The motions are refused, other than as to Mr Prior's affidavits of 7 June, 4 July and 18 July 2007 (exhibit M7) and those parts of the affidavits of Mr Rogers, Mr Brash and Mrs Brash, which explain the assistance provided to Mr Prior in preparing his 2007 reports, annexed to the affidavits in respect of which leave has been granted.

2 . The applicants are to bear the respondents' costs thrown away as the result of the granting of such leave. 3. Costs of the motions are reserved.

AMENDMENTS HISTORY: 13/09/2007 - Typographical error in Order 1. Exhibit M6 should read Exhibit M7. - Paragraph(s) 70

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