MARONIS HOLDINGS LTD & ANOR v. NIPPON CREDIT AUSTRALIA LTD & ORS [2000] NSWSC 397

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

1946/94 MARONIS HOLDINGS LIMITED & ANOR v. NIPPON CREDIT AUSTRALIA LIMITED & ORS

JUDGMENT 1 HIS HONOUR: The first defendant's Notice of Motion of 28 April 2000 claims "2. That the issues raised by paras 7-12 and 13 of the first defendant's Defence be dealt with separately and before all other issues pursuant to Pt 31 r 2(a) of the Supreme Court Rules." 2 The issues are very complex, and there are many parties and a complex web of cross-claims. Since February 2000 I have sought to manage the proceedings in directions hearings with a view to trial of issues to commence on 10 July 2000. 3 The first defendant's Defence was filed on 13 September 1996. Because the Statement of Claim has recently been amended the first defendant has an opportunity, now expiring, to file an amended defence, but this application relates to issues which have already been pleaded. Paragraphs 7 to 12 plead Res Judicata arising out of decisions in proceedings 2023 of 1990 in which the only parties were the now first plaintiff and first defendant. Paragraph 13 is in these words: "Alternatively, the mortgage claims are so closely related to the subject matter of the 1990 proceedings that it was unreasonable for Maronis not to raise them in those proceedings." 4 After amendments para 1 of the Amended Summons dated 21 May 1990 in the 1990 proceedings claimed: "1. A declaration that the mortgage dated 1 June 1999 between the plaintiff and the defendant ('the mortgage') is void or unenforceable". Further and alternative relief was claimed. On 21 May 1990 McLelland J ordered that there be a separate hearing of the question: "Whether the mortgage dated 1 June 1989 between the plaintiff and the defendant (the mortgage) is void or unenforceable." After hearing the separate question Rogers CJ in CD gave judgment on 23 May 1990 and answered that question and another separate question in the negative, and on 25 May 1990 the Court made an order dismissing the summons. In doing the Court so carried out a provision of the order of 21 May. The order of dismissal did not set out the terms of the separate question and the answer given to it, but was based on the decision of Rogers CJ in CD and on the plaintiff's not pursuing any other claim in the 1990 proceedings. 5 In the Statement of Claim in the 1994 proceedings filed on 7 April 1994 the claims against the first defendant included: "A. A declaration that the securities are invalid and unenforceable". The securities referred to can be understood from para 18 and include a deed of guarantee and indemnity dated 1 June 1989 referred to as the Girvan NZ Guarantee and the first registered mortgage over the Crossroads property, which can only refer to the mortgage dealt with in the 1990 proceedings. The first defendant's counsel told me that if the first defendant were successful in a separate hearing of the issues relating to Res Judicata and Anshun estoppel the first defendant would not seek to enforce the guarantee. 6 In the 1994 proceedings the first defendant applied by the second amended Notice of Motion of 18 August 1994 for an order: "that the proceedings brought against it by the first plaintiff, in so far as they concern the Crossroads mortgage referred to in the statement of claim, be dismissed or permanently stayed." On 13 October 1994 Windeyer J made an order generally to that effect but his decision was varied on appeal, and on 21 February 1996 the Court of Appeal, by majority, substituted for it an order: "1. As between the first plaintiff and the first defendant the proceedings be permanently stayed in so far as they concern the validity of the Crossroads mortgage (as that term is defined in para 18(b) of the statement of claim)". 7 By that time the plaintiff had filed the amended statement of claim of 31 May 1995, which the first defendant sought to have stayed. McLelland CJ in Eq on 21 August 1996 granted leave to the plaintiffs further to amend the statement of claim. 8 There have been several further amendments since then, and the present form is the Fourth Further Amended Statement of Claim filed on 2 May 2000. The claims against the first defendant, so far as they relate to the mortgage, are in para 48. According to their literal terms those claims do not attack the validity or enforceability of the mortgage; it is claimed that the first defendant is liable to the first plaintiff as if it were a trustee of the mortgage, and that it would be unconscionable to claim any sum owing pursuant to the mortgage; and there are further related claims. These claims appear to assume that the mortgage is valid. 9 The defence of Res Judicata raised in paras 7-12 of the filed Defence could probably be addressed in a relatively short way; short, that is, in contrast with the time which the trial may be expected to take. The evidence, if it were not appropriate to limit it exactly to the terms of the Amended Summons and the Court's orders in the 1990 proceedings, would be relatively narrow and would relate to documents which show what issue was decided. There would be little point in addressing that issue unless at the same time the Anshun estoppel defence in para 13 were decided. This defence and the implied traverse of it raise a range of factual matters relating to decisions about the conduct of the 1990 proceedings and the issues which should have been raised in them, and the circumstances of those decisions. It is reasonable to expect that the examination of those issues would not be short, and would involve the evidence of persons whose evidence is also involved in the allegations relating to a constructive trust of the Crossroads mortgage and unconscionability of claims under it. It seems likely that some persons who were at the centre of the first plaintiff's affairs at the time of the mortgage and the 1990 proceedings would give evidence of facts relating to the Anshun issue as well as broader issues in the proceedings. 10 As I see the matter now, it is on the whole unlikely that a decision on the Anshun issue would dispose of all issues in which the first defendant is involved, as there are also allegations relating to the guarantee, and there are allegations in at least one cross-claim (and there are many cross-claims so I do not speak categorically) which may also raise much the same issues as between the first defendant and solicitors who could not be regarded as privy to the 1990 proceedings and the decisions in them. 11 Cross-claimants whose cross-claims against the first defendant may be adversely affected by a decision of the separate question could well seek to involve themselves in the hearing, which would not necessarily be limited to the cases of the first plaintiff and the first defendant only. 12 Plaintiff's counsel pointed out, in my view correctly, that there are possibilities of further procedural complexities arising out of hearing separate questions, examples being the reconstitution of the court if there should be some finding relating to credit of a person who is to give evidence on other issues, and interlocutory appeals. A great deal of attention including a successful appeal was given to the effect of the 1990 proceedings on the present proceedings, at an earlier stage, and the result produced, while significant was not conclusive. In terms of expediency, questions of this kind appear to me already to have had sufficient interlocutory attention. 13 At a trial of the separate questions it can be expected that there may be questions whether some relevant facts are established by issue estoppels, having regard to statements of fact in the judgment of Sheller JA, who formed part of the majority in the Court of Appeal. This would involve considering whether the decision of the Court of Appeal was final in character and gave rise to issue estoppels. 14 Judicial experience favours separate determination of questions only when the separate question is relatively narrowly confined, with little intersection with other issues, and there are high prospects of producing finality. I was referred to the decision of Rolfe J in ABB v. Freight Rail [1999] NSWSC 1037, particularly at para 15 where his Honour illustrated inconveniences if a witness gives evidence and is under challenge in two different parts of the same case. I fear that there may be difficulties of this kind in the present case. In Century Medical v. THLE [2000] NSWSC 5 at paras 28-31 Rolfe J again referred to difficulties raised by such application, and gave references to appellate decisions which emphasise that such applications should be approached cautiously and with a clear view of the importance of achieving finality. 15 The trial will be very complex and the issues now under consideration will take a relatively small place among many others. I would wish to reduce the complexity of the trial if were reasonably practicable to do so, but for reasons which I have sought to indicate I do not favour a trial of separate issues as a means of attempting to achieve that. The history of the 1990 proceedings and the earlier history of these proceedings do not offer encouragement for attempting to resolve this controversy by determining separate issues. I have decided that in the exercise of the discretion in Pt 31 r 2 I should refuse the application. 16 Order:

(1) The first defendant's Notice of Motion of 28 April 2000 relating to separate determination is dismissed.

(2) Order that the first defendant pay the plaintiffs' costs of that Notice of Motion.

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