Menzies v Paccar Financial Pty Ltd

HEADNOTE [This headnote is not to be read as part of the judgment] The appellants' company borrowed money from the respondent under deeds of loan and charge arrangements in order to purchase equipment. The appellants guaranteed and indemnified the respondent against loss resulting from default under the loan and charge. The company fell into arrears and was wound up. The respondent sought judgment against the appellants under the guarantee and indemnity for money owing, an order for the delivery of the equipment, and an order pursuant to s 568F of the Corporations Act 2001 (Cth) that the equipment vest in the respondent, the liquidator having disclaimed all interest in it. The appellants filed a cross-claim and claimed that Paccar had engaged in misleading and deceptive conduct, and that the guarantee and indemnity was void as an unjust contract pursuant to the Contracts Review Act 1980 (NSW). In separate proceedings that were also heard and determined by the primary judge, the appellants claimed damages from the respondent in respect of the respondent's conduct in prosecuting a creditor's petition against them, which they claimed amounted to an abuse of process. The hearing of these proceedings at first instance was set down for five days. On the first day, the appellants brought an application to adjourn, which the primary judge refused. The appellants did not appear on the second day and the hearing proceeded in their absence. On the day that the primary judge delivered judgment, the appellants appeared and, prior to the delivery of judgment, sought to reopen the hearing. The primary judge refused to reopen, and delivered judgment, finding in favour of the respondent. In her reasons, her Honour referred to an unsworn affidavit by the first appellant. The primary judge made orders that the appellants were to deliver the equipment to the respondent, pay $572,442.96 to the respondent and pay the respondent's costs on an indemnity basis. The primary judge dismissed the appellants' cross-claim, and the separate proceedings brought by them. The appellants filed a notice of appeal that challenged the refusal by the primary judge to grant the adjournment on the basis that the primary judge failed to take certain relevant matters into account. The appellants also challenged the refusal by the primary judge to grant a rehearing. The appellants challenged the orders made by the primary judge against them in respect of the monies owing and the delivery of the equipment on the basis that the primary judge had erred in accepting the respondent's unreliable and incomplete evidence, and in relying on an unsworn affidavit of the first appellant. At an interlocutory hearing concerning a stay of orders made by the primary judge, an amicus curiae appeared and made submissions on the effect of ss 568D and 568F of the Corporations Act. He submitted that it was arguable that the liquidator's disclaimer terminated the respondent's rights to the equipment as chargor; that ownership of the equipment vested in the Crown; and that in the circumstances, the Crown was a necessary party to proceedings. The respondent denied that its rights to the equipment were affected by the disclaimer by the liquidator. The Court held:

1. The primary judge did not err in the exercise of her discretion in refusing to adjourn the proceedings. The primary judge took into account each of the matters raised by the appellants on appeal. No error was demonstrated that would vitiate the exercise of her Honour's discretion: [57]-[64] House v The King [1936] HCA 40; 55 CLR 499; Aon Risk Services Australia Ltd v Australian National University [2009] HCA 27; 239 CLR 175; Hamod v State of New South Wales [2011] NSWCA 375; referred to.
2. The primary judge did not err in refusing leave to reopen the hearing. In doing so, her Honour acted on the correct principles and took into account the matters raised by the appellants. The appellants had been given ample opportunity to have their case ready for trial and her Honour was entitled to take the procedural history of the proceedings into account: [65]-[70] Autodesk Inc v Dyason (No 2) [1993] HCA 6; 176 CLR 300; referred to.
3. The primary judge did not err in relying on the respondent's unchallenged evidence, and indeed had little option but to do so given that the appellants did not appear: [91]
4. Although the unsworn affidavit referred to by the primary judge was not in evidence, her Honour did not rely on it to make any findings adverse to the appellants. The appellants' case failed before the primary judge because the primary judge accepted the uncontradicted evidence of the respondent, as her Honour was entitled to do: [86]-[87]
5. The Crown in the right of the States of Victoria and New South Wales should have the opportunity to indicate whether it has any interest in the equipment (the Commonwealth having already indicated it has no wish to be joined or heard in the proceedings) in order to afford natural justice: [101]-[105] News Ltd v Australian Rugby Football League Ltd (1996) 64 FCR 410; John Alexander's Clubs Pty Ltd v White City Tennis Club Ltd [2010] HCA 19; 241 CLR 1; Ross v Lane Cove Council [2014] NSWCA 50; applied. Sullivan v Energy Services International Pty Ltd (in liq) [2002] NSWSC 937; 43 ASCR 179; National Australia Bank Ltd v State of New South Wales [2009] FCA 1066; 260 ALR 115; Beck v LW Furniture Consolidated (Aust) Pty Ltd [2012] NSWCA 76; referred to.

Judgment 1THE COURT: The appellants (the Menzies) appeal against the decisions of the primary Judge (Harrison AsJ) in two sets of proceedings that her Honour heard together: Paccar Financial Pty Ltd v Menzies; Menzies v Paccar Financial Pty Ltd (No 5) [2013] NSWSC 772 (Substantive Judgment). As the Court shall explain, the hearing of the two matters took place in the absence of the Menzies after the primary Judge refused their application to adjourn the hearing: Paccar Financial Pty Ltd v Menzies; Menzies v Paccar Financial Pty Ltd (No 3) [2013] NSWSC 551 (Adjournment Judgment). The primary Judge also refused an application by the Menzies, made on the morning that her Honour delivered the Substantive Judgment, to reopen the hearing: Paccar Financial Pty Ltd v Menzies; Menzies v Paccar Financial Pty Ltd (No 4) [2013] NSWSC 743 (Rehearing Judgment). 2The Menzies challenge both the primary Judge's dismissal of their motion to adjourn the hearing and her Honour's rejection of the application to reopen the hearing. In addition, they challenge the orders made in the Substantive Judgment. Since the Menzies did not appear at the hearing once their adjournment application was dismissed, they face difficulties in challenging the substantive orders if their other grounds are unsuccessful.

The Proceedings 3In the first set of proceedings determined by the primary Judge, the respondent (Paccar) was the plaintiff and the Menzies were the defendants (Paccar Proceedings). In these proceedings, Paccar sought a judgment for moneys owing by the Menzies under a Guarantee and Indemnity executed by them, and an order that the Menzies deliver certain prime movers and trailers (the Vehicles) to Paccar. The Vehicles were purchased by Menzies Haulage Pty Ltd (Haulage), a company controlled by the Menzies, having borrowed money from Paccar under deeds of loan and charge agreements. In addition, Paccar sought an order pursuant to s 568F of the Corporations Act 2001 (Cth) that the Vehicles vest in Paccar. (The terms of s 568F are set out in [82] below.) On 3 September 2009, Haulage had been wound up by order of the Federal Court, and on 11 October 2010, the liquidator of Haulage had disclaimed all interest in the Vehicles. 4The Menzies filed a cross-claim in the Paccar Proceedings. They alleged that Paccar had engaged in misleading and deceptive conduct in contravention of the Competition and Consumer Act 2010 (Cth). They further alleged that the Guarantee and Indemnity was an "unjust contract" within the meaning of the Contracts Review Act 1980 (NSW). They sought orders, among others, restraining Paccar from enforcing the Guarantee and Indemnity and declaring it to be void. 5In the second set of proceedings, the Menzies were the plaintiffs and Paccar was the defendant (Menzies Proceedings). In these proceedings the Menzies claimed damages in respect of what were alleged to be Paccar's "groundless and unjustified" actions in prosecuting a creditor's petition against the Menzies, thereby constituting an abuse of process. 6The Menzies' principal complaint on the appeal is that the primary Judge erred in refusing to grant them an adjournment of the hearing of the Paccar and Menzies Proceedings. That hearing was listed to be heard over five days, commencing on 13 May 2013. When the hearing commenced, the first appellant (Mr Menzies) was permitted to represent himself and the second appellant (Mrs Menzies) for the purposes of the adjournment application. The hearing of that application occupied the entire first day of the hearing. 7At the conclusion of argument, the primary Judge refused the Menzies' adjournment application. Her Honour delivered the written Adjournment Judgment the following morning. The Menzies did not appear on the second day of the hearing and the trial proceeded in their absence. It concluded on that day and her Honour reserved judgment. 8The primary Judge delivered the Substantive Judgment on 13 June 2013. The Menzies appeared on that occasion and, prior to delivery of the judgment, sought to reopen the hearing. Her Honour refused the application and duly delivered the Substantive Judgment. She gave her reasons for refusing the application to reopen in the Rehearing Judgment. 9The primary Judge made the following orders in the Substantive Judgment: ● In the Paccar Proceedings: "(1) Paccar is entitled to possession of [the Vehicles]. (2) [The Menzies] are to deliver the property referred to in order (1) to Paccar within 14 days. (3) [The Menzies] are to pay [Paccar] the sum of $572,442.96. (4) The cross-claim is dismissed. (5) [The Menzies] are to pay [Paccar's] costs on an indemnity basis." ● In the Menzies Proceedings: "(1) These proceedings are dismissed. (2) [The Menzies] are to pay [Paccar's] costs as agreed or assessed."

Procedural History of the Appeal 10The Menzies filed a notice of appeal on 21 June 2013. The grounds of appeal challenged the orders made by the primary Judge in the Adjournment Judgment, the Rehearing Judgment and the Substantive Judgment. It is not easy to follow many of the grounds of appeal. However, Ground 1 reads as follows: "[The Menzies] did not have their Evidence in Chief prepared so as to be able to present their case properly. Because of the enormity of the task, distractions by [Paccar], Medical and physiological Problems." 11On 25 June 2013, Rothman J granted a limited stay of the money judgment and the costs order made against the Menzies in the Paccar Proceedings (the money orders) and directed that they receive pro bono assistance, should it be available. The possession orders against them were subsequently also stayed by consent until an interlocutory hearing took place before Leeming JA on 26 August 2013. 12Leeming JA stayed the money orders until 28 days after the determination of the appeal on terms that the Menzies were to prosecute their appeal with reasonable diligence: Menzies v Paccar Financial Pty Ltd [2013] NSWCA 283. His Honour also made the following orders in relation to the Vehicles: "(3) ... upon the undertaking by Paccar to the Court that, upon delivery to it of the equipment referred to in order 1 made on 13 June 2013, it will store and keep the equipment exercising care as would be required of a bailee of similar goods and that it will deliver the goods in accordance with the order of the Court, orders 1 and 2 made on 13 June 2013 are effective and may be enforced on and after 24 September 2013." 13Paccar duly gave the required undertaking. Thus the order requiring the Menzies to deliver up the equipment has been in force from 24 September 2013. Nonetheless, the Menzies have not complied with that order. 14At the hearing on 26 August 2013, Mr Kidd SC appeared as amicus, and made oral submissions on the effect of ss 568D and 568F of the Corporations Act, which were adopted by the Menzies: see [2013] NSWCA 283 at [9]-[13]. At the request of Paccar, his Honour made directions for the furnishing of further written submissions by Mr Kidd and counsel then appearing for Paccar, which were filed shortly thereafter. Paccar's response to the submissions on the Corporations Act was that the disclaimer by the liquidator of Haulage could not affect Paccar's charge over the Vehicles, which had been created by the deed of loan executed by Haulage. 15In his further written submissions dated 29 August 2013, Mr Kidd contended that: ● it was arguable that the liquidator's disclaimer terminated Paccar's rights as chargor to take possession of Haulage's interest in the Vehicles; ● since the effect of the liquidator's disclaimer was to vest ownership of the disclaimed property in the Crown (subject to the Court's power to make a vesting order pursuant to s 568F of the Corporations Act), the Crown was a necessary party to the proceedings; and ● the primary Judge may have erred by making orders for possession and a vesting order pursuant to s 568F in respect of the disclaimed property without the Crown being made a party to the proceedings or at least being given notice of them. 16Between 4 September 2013 and 20 November 2013, the Registrar made a series of directions relating to preparation of the appeal books, and the filing of submissions and evidence in anticipation of the hearing of the appeal, which had been listed for 10-11 February 2014. The Menzies failed to comply with any of these directions. 17On 16 December 2013, Leeming JA made further detailed directions by consent to enable the hearing to proceed on the scheduled dates. Among the orders made was a direction that a particular book produced by Paccar stand as the blue appeal book (containing the documents in evidence at the trial), with liberty for the Menzies to supplement the book if they wished. 18On 21 January 2014, Leeming JA heard a motion filed by the Menzies seeking orders vacating the hearing date for the appeal. The application was opposed by Paccar, which undertook to prepare the red and black appeal books necessary to enable the hearing to proceed. Leeming JA dismissed the Menzies' motion and made yet further directions to enable the hearing to take place: Menzies v Paccar Financial Pty Ltd (No 2) [2014] NSWCA 2. His Honour observed (at [6]) that the conduct of the appeal had been marked by the Menzies' "consistent non-compliance with orders and directions of the Court" and the delays brought about by their non-compliance. 19On 5 February 2014 the Menzies filed a motion seeking review of the decision of Leeming JA and an order vacating the hearing date. The motion was heard by the Court (Basten, Macfarlan and Barrett JJA) on 7 February 2014. The Court allowed the application and vacated the dates listed for the appeal: Menzies v Paccar Financial Pty Ltd (No 3) [2014] NSWCA 11. The principal basis on which the application was allowed appears to have been (at [24]) that Leeming JA had not been fully apprised of the extent to which the proposed blue book was likely to prove inadequate for the purposes of the orderly conduct of the appeal. 20The Court made a number of directions designed to ensure the systematic preparation of materials required for the appeal. The directions included the following: "(d) the [Menzies] file written submissions (not exceeding 20 pages) in lieu of any affidavits and submissions presently before the Court, identifying concisely and without discursive explanation, the documentary material in the Blue Appeal Books upon which reliance is placed and the purpose for which it is relied upon; (e) the [Menzies] to prepare a chronology setting out the dates of critical events to which they propose to refer in the course of the appeal; ..." 21The Menzies did not comply with the directions requiring them to prepare brief written submissions and a chronology. Thus when the appeal finally came on for hearing, the Court was presented with a vast amount of material in 21 "appeal books" comprising some 4,000 pages, which was not presented in any organised or systematic manner. While the Court had the advantage of written submissions and a chronology prepared by Mr Newton, counsel for Paccar, it did not have a clear or coherent outline of the arguments in which the Menzies wished to rely. The appeal books included a document of 121 pages entitled "Affidavit/Submissions", which incorporated responses by the Menzies to Mr Newton's submissions. That document contained a great deal of material not relevant to the appeal and some that was simply offensive. 22The commencement of the hearing of the appeal was delayed because, so the Court was informed, the Menzies' vehicle broke down en route to Sydney. At the hearing Mr Menzies spoke for himself and Mrs Menzies. Unfortunately, as Mr Menzies himself accepted, he had considerable difficulty in explaining the arguments he wished to advance. He had even greater difficulty in identifying in the voluminous appeal books documents that might set out his arguments or that might have been relevant to his contentions. The Court devoted a very considerable amount of time on the hearing of the appeal to attempting to understand the case the Menzies wished to present.

Procedural History at First Instance 23In order to understand her Honour's reasons for refusing the Menzies' adjournment application, it is necessary to recount some of the procedural history of the proceedings at first instance. For the most part, the account is drawn from the Adjournment Judgment and the Substantive Judgment, although the chronology prepared by Mr Newton has been very helpful in outlining the course of events. 24In 2009, Paccar commenced proceedings against the Menzies in the Supreme Court of Victoria. At about the same time, Paccar commenced proceedings in the Supreme Court of New South Wales against Haulage. It was common ground that the Menzies were the sole shareholders in Haulage. Paccar claimed possession of the Vehicles from Haulage by reason of its failure to comply with the terms of loan agreements between it and Paccar. Paccar also sought to recover moneys said to be due from the Menzies under a Guarantee and Indemnity executed by them. 25On the Menzies' application, the proceedings against them were cross-vested to the Supreme Court of New South Wales. Subsequently, these proceedings and the proceedings against Haulage were consolidated into Proceedings 2010/377702 (to which we have referred as the Paccar Proceedings). 26On 11 October 2010, the liquidator of Haulage disclaimed all interest in and to the Vehicles. 27On 29 July 2011, Paccar filed an amended statement of claim in the Paccar Proceedings. On 13 August 2011, the Menzies' then solicitors filed a detailed defence to the amended statement of claim. Relevantly for present purposes, the Menzies admitted that: ● Paccar lent moneys to Haulage to enable it to purchase the Vehicles; ● Haulage had been wound up by order of the Federal Court on 3 September 2009; ● on 11 October 2010, the liquidator of Haulage disclaimed all interest in the Vehicles pursuant to s 568A(1) of the Corporations Act; and ● the Menzies had retained possession of the Vehicles since December 2007. 28On 26 October 2011, the Menzies filed the cross-claim to which we have referred (at [4] above). They sought, among other orders, an injunction restraining Paccar from enforcing the Guarantee and Indemnity or from taking steps to recover the Vehicles. Paccar filed its defence to the cross-claim on 20 December 2011. 29On 20 January 2012, the Menzies filed an amended statement of claim in the Menzies Proceedings. They claimed damages on the ground that an application by Paccar in the Federal Magistrates Court seeking sequestration orders against each of them constituted an abuse of process and that as a result they had suffered losses for which Paccar was liable to compensate them. 30On 18 September 2012, the proceedings were listed for hearing on 18 February 2013 for five days. At this point, the Menzies were still legally represented, but Paccar had not filed all its affidavits. It appears that the last of the affidavits filed by Paccar as its evidence in chief was that of Mr Penter, dated 4 October 2012. 31On 7 November 2012, the matters came before Davies J. His Honour made a number of directions, including that the Menzies file all evidence on which they relied by 30 November 2012. Any evidence not filed by that date could not be relied on without leave. The Menzies were also directed, if they wished to apply for pro bono assistance, to file an affidavit setting out their financial position. 32On 14 December 2012, the matters again came before Davies J. His Honour granted the Menzies leave to file certain affidavits (which had been sworn after 30 November 2012), but required them to file an application seeking leave to file any further evidence on which they wished to rely. His Honour directed that any motion by the Menzies to vacate the hearing date be filed and served on or before 25 January 2013 and be made returnable on 1 February 2013. 33On 25 January 2013, the Menzies filed a notice of motion seeking an adjournment of the hearing listed for 18 February 2013. 34On 1 February 2013, Davies J vacated the hearing date of 18 February 2013 and listed the proceedings for hearing on 18 March 2013, with an estimate of five days. His Honour made further directions for the filing of evidence, including directions that the Menzies file their lay evidence by 8 February 2013 and any expert evidence by 27 February 2013. 35On 25 February 2013, the matter came before Garling J. His Honour made the following directions: "1. I order that by 4pm 4/3/13 Mr and Mrs Menzies are to serve on the [solicitors] for [Paccar] copies of all draft affidavits, although in incomplete form, upon which they propose to rely at any hearing of the proceedings. 2. I order that by 4pm 4/3/13 Mr and Mrs Menzies provide to the solicitors for [Paccar] a list, by deponent and date, of all affidavits upon which they wish to rely in addition to the draft affidavits at the hearing of the matter. 3. I grant leave to all parties to rely on sworn affidavits filed in proceedings between the parties but in other Courts. 4. I order that on or before 10am on 11/3/13 Mr and Mrs Menzies serve on the [solicitors] for [Paccar] all completed and sworn affidavits upon which they propose to rely and which have not been previously notified in their list of affidavits. 5. I order that if Mr and Mrs Menzies wish to apply to the court on 11/3/13 for an order that the hearing date be vacated, that they notify the solicitors for [Paccar] of any such application by 4pm 7/3/13 ... 6. I order that the Document Examination Experts retained or to be retained by each party ... are to meet jointly and prepare a joint expert report ... by 12 noon on 7/3/13. 7. I order that any joint report be filed with the Court by 4pm 8/3/13. ..." 36On 6 March 2013, the Menzies' solicitors ceased to act for them. On that date Mr Menzies swore an affidavit, which was filed and served on 11 March 2013. However, by the latter date the Menzies had not filed the other lay evidence on which they wished to rely. 37On 11 March 2013, the matter again came before Garling J. His Honour vacated the hearing date of 18 March 2013 and relisted the matter for hearing on 13 May 2013. 38Garling J held a further directions hearing on 22 March 2013. Mr Menzies appeared for himself and Mrs Menzies. Counsel for Paccar indicated to his Honour that there was a need for further directions regarding evidence as the Menzies had not complied with the earlier direction to file all their evidence by 11 March 2013. 39In the course of the discussion between Garling J, Counsel for Paccar and Mr Menzies, the following interchanges occurred: "HIS HONOUR: ... The second matter, Mr Menzies is this. Mr Rayment has drawn to my attention the fact that you have not complied with the orders of the Court about filing affidavits. MENZIES: That has been going on for a good while, as you know, your Honour, because of the fact of trying to get representation. You might remember I put in a huge great affidavit which rambled on-- HIS HONOUR: Mr Menzies, I recall vividly what is going on and the reason I made the orders was so that this case can finally come on for hearing in circumstances where the hearing date has been vacated twice and it is time that the Court requires you to put on all of your evidence. The last order was that you had to serve all of your evidence by 11 March. MENZIES: Yes, your Honour. HIS HONOUR: You clearly haven't done so. ... ... HIS HONOUR: Why wouldn't we do it this way, Mr Menzies. Why wouldn't I require you to email your affidavits to Mills Oakley [Paccar's solicitors] by, say, 15 April and then require you to file and serve the whole of them by 22nd of April? In other words, that would mean they have your story, although the annexures to the affidavits will turn up a week later, when you are in a position to serve them. Would that be acceptable to you? MENZIES: We can get that done, your Honour, if they leave us alone. ... HIS HONOUR: ... I have to juggle the tension between [Paccar's] rights, which I accept you are entitled to have the proper notice, and managing Mr and Mrs Menzies' position which, rightly or wrongly - and I make no judgment at all about that - is two people who are unqualified, doing their best to try and put some case before the Court which they say merits relief in their favour. I have to juggle that. The fact that we have now arrived at this position is very simple. This case will go ahead on 13 May. There will be no adjournments. The time has long passed. The expert evidence will be available. As I have indicated, we will order a joint report to be prepared in respect of examinations thus far. ... HIS HONOUR: ... accepting that your client [Paccar] may have a degree of prejudice from the shortness of time, but doing my best to balance the remaining time and the need for the Court to have this matter heard on 13 May, I will make orders which enable the electronic service of such documents as are available earlier than the paper service, filing and service. ... HIS HONOUR: ... Is there any reason why you shouldn't send your documents electronically, those that can be done electronically, being your affidavits, to the other side by 16 April? MENZIES: No, we can do that, your Honour. HIS HONOUR: Mr Menzies, I want to make it plain that this is your last chance to get your evidence on. I have been more than accommodating to accommodate the difficulties that you have, but this case is going ahead on 13 May and it is time to make sure that, whatever evidence it is you wish to rely upon is filed in accordance with the directions I am about to give. Do you understand that? MENZIES: Yes, your Honour." (Emphasis added.) 40Garling J directed that the Menzies serve by email all affidavits (without annexures) on which they intended to rely by 16 April 2013 and that complete paper copies of the affidavits and annexures be served by 22 April 2013. The Menzies were not to be able to rely on evidence not served in accordance with the timetable, save with the leave of the Court. Paccar was directed to serve any evidence in reply by 6 May 2013. 41On 7 May 2013, the Menzies applied to the Registrar for further time in which to serve their evidence and for the hearing date to be vacated. The Registrar declined to make the orders sought by the Menzies. 42On 13 May 2013, the matters came on for hearing before the primary Judge. Mr Menzies indicated that he would speak for himself and Mrs Menzies who was not present. His Honour asked for email confirmation from Mrs Menzies that she was content for Mr Menzies to appear on her behalf. That confirmation was duly obtained. 43Mr Menzies informed the primary Judge that he intended to rely on three volumes of material, comprising two unsworn affidavits and exhibits including medical reports, in support of his adjournment application. Her Honour stood the matter down for one hour to enable Mr Menzies to swear the affidavits. In the meantime, Mr Rayment, counsel for Paccar, and her Honour were given copies of the unsworn affidavits and exhibits to read. 44When the hearing of the adjournment application resumed, the primary Judge dealt with Mr Rayment's objections to Mr Menzies' affidavits and rejected a good deal of the affidavits. The balance of the affidavits was read. Mr Rayment tendered some documents that were before the Registrar. 45When asked by her Honour to explain in summary form why he wanted an adjournment, Mr Menzies replied: "So we have more time for preparing our evidence. Simple as that. I have only evidence up to halfway through the Victorian Supreme Court case and we, it has been difficult to do because of our inexperience, the enormousness of the task." 46In a later exchange with Mr Rayment, the primary Judge observed that some material relied on by Mr Menzies had not been before the Registrar on 7 May 2013. Her Honour thought it was fairer to the Menzies to regard their application as a further application for an adjournment rather than an application to review of the Registrar's decision. Mr Menzies expressed agreement with that approach and Mr Rayment said he, too, was content. 47At the conclusion of argument on 13 May 2013, her Honour stated that she would refuse the adjournment: "HER HONOUR: No. And can I say, I'm going to give you some reasons tomorrow but I'm going to refuse the adjournment. So we're on for hearing tomorrow. Now, I don't know whether you want to turn up and get your affidavit sworn, the April one. That's a matter for you, or do you want to give evidence? You might want to be cross-examined, or they might run an argument that - I don't know, but you can't rely on that affidavit if you're not here. It's a matter for you want you want to do, but sorry I'm not going to grant the adjournment; I am going to proceed to the trial. As I said, now that I go off the bench I'll write my reasons and I'll give them to you in the morning. So the matter is listed for 10 o'clock tomorrow morning. MENZIES: So without any of our evidence or anything? HER HONOUR: Yes, that's right. I'm going to proceed. MENZIES: So what happens if we don't turn up? HER HONOUR: Well, I'll proceed in your absence."(Emphasis added.)

The Adjournment Judgment 48In the Adjournment Judgment, the primary Judge explained (at [1]-[8]) the nature of the proceedings. She then set out the provisions of ss 56-58 and 66 of the Civil Procedure Act 2005 (NSW) (Act). 49Section 56(1) states that the overriding purpose of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR) is "to facilitate the just, quick and cheap resolution of the real issues in the proceedings". Section 56(3) states that a party to civil proceedings is under a duty to assist the Court to further the overriding purpose and to comply with directions of the Court. Section 57(1) states that for the purpose of furthering the overriding purpose, proceedings are to be managed having regard to specified objects: the just determination of the proceedings; the efficient disposal of the business of the Court; the efficient use of available judicial and administrative resources; and the timely disposal of the proceedings at an affordable cost to the parties. 50Section 58(1) requires the Court to follow the "dictates of justice" in deciding whether to make an order, among others, to grant an adjournment of proceedings. For the purpose of determining what are the dictates of justice in a particular case, s 58(2) provides that the Court must have regard to the provisions of ss 56 and 57 and may have regard (among other matters) to the following: "(ii) the degree of expedition with which the respective parties have approached the proceedings, including the degree to which they have been timely in their interlocutory activities, (iii) the degree to which any lack of expedition in approaching the proceedings has arisen from circumstances beyond the control of the respective parties, (iv) the degree to which the respective parties have fulfilled their duties under section 56(3), ... (vi) the degree of injustice that would be suffered by the respective parties as a consequence of any order or direction, ..." Section 66 empowers the Court, subject to the rules, to adjourn any proceedings before it. 51Her Honour quoted extensively from the judgment of Beazley JA (Giles and Whealy JJA agreeing) in Hamod v State of New South Wales [2011] NSWCA 375. In that case, the Court of Appeal upheld the decision of the trial Judge not to grant an adjournment of part heard proceedings, notwithstanding that the effect was to require the plaintiff to resume the hearing without legal representation. Beazley JA explained the considerations relevant to an adjournment application in the light of ss 56-58 of the Act and the decision of the High Court in Aon Risk Services Australia Ltd v Australian National University [2009] HCA 27; 239 CLR 175. 52In particular, the primary Judge quoted (at [11]) a passage from Beazley JA's judgment in Hamod in which her Honour referred (at [139]-[140]) to two observations by French CJ in Aon (at [5], [30]): "[T]here is an irreparable element of unfair prejudice in unnecessarily delaying proceedings. Moreover, the time of the court is a publicly funded resource. Inefficiencies in the use of that resource, arising from the vacation or adjournment of trials, are to be taken into account. So too is the need to maintain public confidence in the judicial system. ... Also to be considered is the potential for loss of public confidence in the legal system which arises where a court is seen to accede to applications made without adequate explanation or justification, whether they be for adjournment, for amendments giving rise to adjournment, or for vacation of fixed trial dates resulting in the resetting of interlocutory processes." 53The primary Judge then set out the history of the proceedings, noting that both sets of proceedings had been before the Court on at least 18 occasions. Her Honour recorded (at [25]) that the Menzies' reasons for seeking an adjournment were that Mr Menzies: "... has been working hard on preparing he [sic] and his wife's evidence, he has not yet completed this task and requires more time, he and his wife suffer from medical conditions so they require more time to complete the preparation of their case. Mr Menzies also points out that as Paccar sought that an order for costs made against them be payable on an indemnity basis and payable forthwith in relation to the adjournment application before Garling J, his attention was diverted from preparing for the hearing to preparing submissions on costs. The reason for concentrating on his costs submission was because if a costs order was made payable forthwith, Paccar may commence further bankruptcy proceedings against them. Mr Menzies also requires at this late stage pro bono assistance to complete his affidavit evidence or appear at the hearing." 54The primary Judge recounted (at [26]) an extensive list of topics that Mr Menzies said he still needed to address in his affidavits. Her Honour observed (at [27]) that Mr Menzies' view of what needed to be done contrasted with the opinions expressed by his former solicitors, who had said that, as at 25 January 2013, the preparation of affidavits was 80 per cent complete. 55The primary Judge accepted (at [28]) that Mr Menzies found preparation of legal documents to be a difficult task. Her Honour quoted in full (at [29]) a medical report from a nephrologist and noted (at [30]) that Mr Menzies suffered from several medical conditions. However, she also noted (at [31]) that the medical evidence did not say that the Menzies were unable to prepare evidence or to attend court. Nor did the medical evidence suggest that any health problem would improve, should the hearing be adjourned (at [32]). 56The primary Judge expressed her conclusions as follows: "[33] Counsel for Paccar submitted that there was no assurance that if the hearing were adjourned the Menzies would be ready on the next occasion. This is the third application by the Menzies to vacate the hearing date. The difficulty I have is that if I were to grant an adjournment and vacate this hearing date, I am not persuaded that, if a further adjournment were granted, the Menzies would be ready for trial on the next occasion. On several occasions Mr Menzies has told the Court that he will be in a position to serve his evidence by various dates but he had not done so. [34] Paccar submitted that the trucks are still idle, the debt owed is around $370,000 plus interest and the amount of the debt exceeds the value of the trucks. Thus, if an adjournment was to be granted it would suffer a greater financial loss. Further, Paccar submitted that Mr Menzies is not legally represented and seeks pro bono assistance is unlikely it will be able to recover legal costs from the Menzies. [35] I accept that the Menzies are now not legally represented, and take into account their medical conditions. I also accept the evidence of their former solicitors that 80 percent of their affidavit evidence was prepared as at 25 January 2013. I take into account the hearing date has already been vacated twice and this is the third application to vacate the hearing date. I am not persuaded that if a further adjournment is granted the Menzies will be ready to proceed at a further hearing. I also accept Paccar is suffering prejudice even if it is successful at the hearing and recover and sell the trucks. Paccar may not be able to recover the amount owing to it and its costs that it has expended. There will be a shortfall. After taking all of these factors into account, I refuse to grant the Menzies a further adjournment. The hearing will proceed on the evidence I have before me."

The Primary Judge Did Not Err 57The primary Judge's decision to refuse to adjourn the proceedings involved an exercise of discretion. That decision can be set aside only if the primary Judge acted on a wrong principle, mistook the facts, took into account irrelevant considerations, failed to take into account relevant matters or committed another error of the kind identified in House v The King [1936] HCA 40; 55 CLR 499 at 505 (Dixon, Evatt and McTiernan JJ). 58Mr Menzies did not suggest that the primary Judge stated the relevant principles incorrectly. If such a submission had been made, it would have had no foundation. Her Honour referred both to the relevant provisions of the Act and the principles applicable to an adjournment application laid down by the High Court in Aon and this Court in Hamod. 59The complaints made by Mr Menzies appeared to be that the primary Judge failed to take into account several matters upon which he relied when seeking the adjournment. These were the following: ● the evidence that the Menzies needed more time to complete their affidavits; ● the medical evidence detailing the illnesses from which both Mr and Mrs Menzies suffered; ● Mr Menzies' difficulty in compiling the material required to present his case; and ● the Menzies' inability to obtain legal advice. 60The primary Judge summarised the argument advanced by the Menzies and took into account each of the matters identified by Mr Menzies on the appeal. Her Honour accepted that the Menzies required more time to gather and present the evidence on which they wished to rely. The major difficulty in granting the adjournment application was that the Menzies had been unable to complete their evidence over a considerable period of time, during which the hearing had been vacated on two occasions (18 February 2013 and 18 March 2013). Her Honour considered that in view of unfulfilled assurances previously given by the Menzies, she could have no confidence that if another adjournment was granted the case would be ready to proceed on the next allocated hearing date. 61Similarly, the primary Judge, contrary to Mr Menzies' submissions in this Court, not only referred to the medical evidence, but accepted that both Mr and Mrs Menzies had suffered from medical conditions. But her Honour correctly observed that the medical evidence did not go so far as to say that the Menzies were unable, by reason of poor health, to prepare their case for trial. Her Honour also correctly noted that the evidence did not suggest that an adjournment would be likely to improve the Menzies' health or to increase their ability to compile the evidence in support of their case. 62There was no dispute that Mr Menzies experienced difficulty in gathering and presenting material in a form appropriate for the hearing. That difficulty had been apparent for a considerable period prior to the adjournment application (and indeed was manifest on the hearing of the appeal). Once again, her Honour was not persuaded that an adjournment would overcome Mr Menzies' difficulties. She was also well aware that the Menzies were no longer legally represented, but was also aware that when they were legally represented they had failed to comply with directions designed to ready the proceedings for trial. 63The primary Judge had to take into account not only the matters relied on by the Menzies, but considerations that favoured a refusal of the adjournment. She found that a further adjournment would cause prejudice to Paccar because of its inability to recover costs from the Menzies and because it would be forced to endure yet further delays in having the matter resolved. Her Honour was entitled - indeed bound - to take into account that the Menzies had been responsible for vacating the two previous trial dates and that they had repeatedly failed to comply with directions made by the Court. 64In our opinion, the primary Judge's discretion did not miscarry. In particular, she did not commit any error of the kind identified in House v The King that would vitiate the exercise of her discretion. In our view, she was amply justified, on the material before her, in refusing the Menzies' application for a further adjournment. Her decision to refuse the Menzies' application therefore did not involve any appellable error.

The Rehearing Judgment 65The primary Judge accepted in the Rehearing Judgment (at [3]) that she had power to reopen the hearing, but observed that the issue was whether the Menzies should be granted leave to do so. She recorded (at [3]) that Mr Menzies had given three reasons for seeking a rehearing, namely: ● he had further evidence available including a box of original documents; ● he was at risk of losing his property, an event that would affect his family; and ● it would be better if the additional evidence could be considered. 66The primary Judge referred (at [5]) to the observations of Mason CJ in Autodesk Inc v Dyason (No 2) [1993] HCA 6; 176 CLR 300 at 301-302: "... The exercise of the jurisdiction to reopen a judgment and to grant a rehearing is not confined to circumstances in which the applicant can show that, by accident and without fault on the applicant's part, he or she has not been heard. It is true that the jurisdiction is to be exercised with great caution, having regard to the importance of the public interest in the finality of litigation. It is equally true, as this Court said in Wentworth v Woollahra Municipal Council [(1982) 149 CLR 672 at 684] that '[g]enerally speaking, it will not be exercised unless the applicant can show that by accident without fault on his part he has not been heard.' ... These examples indicate that the public interest in the finality of litigation will not preclude the exceptional step of reviewing or rehearing an issue when a court has good reason to consider that, in its earlier judgment, it has proceeded on a misapprehension as to the facts or the law." 67Her Honour referred (at [7]-[9]) to her reasons for refusing the Menzies' application for an adjournment and noted that they had been given more than ample opportunity to have their case ready for trial. To reopen the case at the point where judgment was about to be delivered would involve days of hearing and the recalling of witnesses, some of whom were interstate. The exercise would be costly and the Menzies were not in a position to pay any costs that would be thrown away by the reopening (at [12]). Even after the experience with his adjournment application, Mr Menzies had left it to the last minute to make his application and did so without prior notice to Paccar's legal representatives (at [13]). If the matter were reopened, Paccar would suffer unfair prejudice. The primary Judge therefore refused the application. 68The Menzies' written submissions (in the form of the affidavit to which the Court has previously referred) purport to answer Paccar's contentions supporting the primary Judge's rejection of the Menzies' application to reopen the hearing. However, the Menzies do not identify any error made by the primary Judge or advance any cogent argument as to why her Honour's decision should be set aside. 69In refusing to reopen the hearing, the primary Judge acted on the correct principles and took into account the matters advanced by the Menzies. Her Honour was also entitled to take into account (as she did) the procedural history of the matters, the Menzies' failure to take advantage of the opportunities previously afforded to them to prepare their case, their non-appearance at the hearing after the adjournment was refused and the prejudice that would be caused to Paccar if the proceedings were reopened just before the delivery of the final judgment. 70The challenge to the primary Judge's refusal to reopen the hearing must be dismissed.

The Substantive Judgment 71In the Substantive Judgment, the primary Judge addressed: ● Paccar's claims in the Paccar Proceedings; ● the Menzies' defence and cross-claim in the Paccar Proceedings; and ● the Menzies' claims in the Menzies Proceedings. 72Her Honour found (at [16]) that Mr and Mrs Menzies each owned half the shares in Haulage and that Haulage purchased the Vehicles for the total sum of $570,000.00. In order to finance the transaction, Haulage entered into a separate deed of loan and charge agreement with Paccar for each item of equipment (at [17]). 73The primary Judge recited the relevant terms of the agreements and of the deed of Guarantee and Indemnity upon which Paccar relied for its claims against the Menzies. Her Honour identified (at [28]) the primary question for determination on Paccar's claim as whether the Menzies executed the documents identified by Paccar in its pleadings. She then summarised the version of events given by Mr Penter, Paccar's Regional Finance Manager, in his affidavit. Mr Penter recounted that the Menzies had signed the documents in his presence and that he had witnessed their signatures. He also said that Mr Menzies had read the documentation before signing it. 74The primary Judge set out Mr Menzies' version of events on the basis of the contents of an unsworn affidavit he had prepared. Although the parties had referred to that document in argument on the adjournment application, it was never sworn and no part of it was admitted into evidence at the hearing on 14 May 2013. Thus it was not relevant to the disposition of the proceedings. Nonetheless, the primary Judge referred to the contents of the unsworn affidavit at some length in the Substantive Judgment. She apparently did this as a means of identifying the contentions advanced by the Menzies. For example, the Substantive Judgment recorded (at [42]) that Mr Menzies asserted in the unsworn affidavit that Mr Penter gave certain assurances prior to Mrs Menzies signing the loan documentation concerning the steps Paccar would take if the Vehicles broke down. 75Her Honour then summarised the dealings between Paccar on the one hand, and Haulage and the Menzies on the other, following the execution of the loan agreements. The dealings included amendments to the loan agreements in late 2006, as a means of refinancing Haulage's purchase of the Vehicles after it had fallen behind in its repayments. 76Haulage again defaulted in its obligations under the amended loan agreements. In August 2008 the Menzies and Paccar agreed on a repayment schedule, in consideration of which Paccar agreed to suspend repossession action. However, as her Honour found (at [70]), the Menzies failed to make payments in accordance with the agreed schedule. 77In March 2009, Paccar terminated the loan facilities, sought to repossess the Vehicles and demanded payment of the moneys due by Haulage under the loan facilities and by the Menzies under the Guarantee and Indemnity (at [76]). On 3 September 2009, Haulage was wound up by order of the Federal Court (at [77]). As has been noted above, on 11 October 2010, the liquidator of Haulage disclaimed all interest in and to the Vehicles (at [78]). 78The primary Judge also recounted (at [79]) a claim made by the Menzies that they had signed only loose pages when executing the documents and that terms and conditions of which they were unaware at the time of signing had subsequently been inserted into the documentation. Her Honour noted that the parties had obtained a joint expert report from forensic document examiners who had analysed the original counterparts signed by the parties to the loan agreement. The joint report, which had been tendered at the hearing, largely supported Mr Penter's account that the documents were bound together at the time of execution (at [80]). Her Honour therefore reached the following conclusion (at [99]): "As Mr Menzies elected not to be present at Court for the hearing, he could not be cross-examined. Had he appeared I would have permitted him to have his affidavit sworn and to have relied upon it in Court, but without his version of events being tested during cross examination, I prefer Mr Penter and the experts' evidence. Hence, I find that both Colleen and Ian Menzies reviewed and signed the four completed deeds of loan and charge, the guarantee and [other] documents." 79The primary Judge recorded (at [103]) the pleaded representations relied on by the Menzies as constituting misleading and deceptive conduct by Paccar. Her Honour found (at [104]) that the representations were not made out and thus the Menzies' claim failed. 80The primary Judge also recorded (at [108]) the pleaded allegations supporting the Menzies' claim for relief under the Contracts Review Act, although her Honour seems to have supplemented this account by reference to Mr Menzies' unsworn affidavit. Her Honour accepted in the Menzies' favour (at [110]) that Mr Penter did not advise them to seek independent legal or financial advice before signing the documents. However, she did not accept other claims made by the Menzies that were said to have rendered the loan agreements and the Guarantee and Indemnity unjust. Her Honour also rejected (at [111]) Mr Menzies' claim that he was an unsophisticated person who did not understand the documentation he was required to execute. In her Honour's view (at [112]), "Mr Menzies was a reasonably experienced businessman and did understand the terms of the documents he signed". So far as Mrs Menzies was concerned, her Honour found there was no evidence that established her claim under the Contracts Review Act (at [113]). 81The primary Judge concluded as follows (at [116]): "After considering the matters outlined in s 9(2) of the Act, it is my view that the contracts were not unjust, nor are the Menzies entitled to relief under the Contracts Review Act." 82Finally, her Honour dealt with the Paccar's claim for an order pursuant to s 568F of the Corporations Act that the Vehicles be vested in it. Section 568F provides as follows: "(1) The Court may order that disclaimed property vest in, or be delivered to: (a) a person entitled to the property; or (b) a person in or to whom it seems to the Court appropriate that the property be vested or delivered; or (c) a person as trustee for a person of a kind referred to in paragraph (a) or (b). (2) The Court may make an order under subsection (1): (a) on the application of a person who claims an interest in the property, or is under a liability in respect of the property that this Act has not discharged; and (b) after hearing such persons as it thinks appropriate. (3) Subject to subsection (4), where an order is made under subsection (1) vesting property, the property vests immediately, for the purposes of the order, without any conveyance, transfer or assignment. (4) Where: (a) a law of the Commonwealth or of a State or Territory requires the transfer of property vested by an order under subsection (1) to be registered; and (b) that law enables the order to be registered; the property vests in equity because of the order but does not vest at law until that law has been complied with." 83The primary Judge gave these reasons (at [119]) for making the orders sought by Paccar: "On 7 May 2009, Paccar served a statutory demand for payment of debt. On 3 September 2009, Menzies Haulage was placed into liquidation and wound up by order of the Federal Court. On 11 October 2010, the liquidator of Menzies Haulage disclaimed all interest in and to the equipment. As the liquidator of Menzies Haulage has disclaimed all interest in and to the equipment, namely the [Vehicles], I make an order that Paccar is entitled to that property pursuant to s 568F(1)(a)." 84It should be said that, strictly speaking, s 568F(1) does not empower the Court to make an order that a person "is entitled to" certain property. Rather, that subsection empowers the Court to order that property "vest in" or "be delivered to" a person, having made a finding in terms of paragraph (a) that the person is entitled to the property (or, alternatively, having made a finding in terms of paragraph (b) or (c)). The orders made by her Honour have been set out above (at [9]). For the reason just mentioned, order 1 made by her Honour is not one contemplated by s 568F(1). Order 2, however, is contemplated by that subsection.

The Menzies' Complaints About the Substantive Judgment 85The Menzies advanced two complaints about the Substantive Judgment: ● the primary Judge took into account Mr Menzies' unsworn affidavit, when it was not part of the evidence, and did so in a manner which prejudiced them; and ● the primary Judge relied on affidavits read in Paccar's case when the evidence was unreliable or incomplete. 86It is somewhat curious that the primary Judge referred in the Substantive Judgment to Mr Menzies' unsworn affidavit. As we have pointed out, the document did not form part of the evidence at the hearing. Her Honour appears to have relied on the unsworn affidavit in order to understand the Menzies' case, particularly in relation to their claims for relief under the Contracts Review Act, but also to obtain some uncontroversial information concerning their history. However, the important point for present purposes is that nothing in the unsworn affidavit was necessary to sustain any findings adverse to the Menzies. 87The Menzies' misrepresentation case failed because they adduced no evidence of the representations allegedly made by Paccar. The Menzies' claim that they did not sign the loan documentation in the form relied on by Paccar was rejected because the primary Judge accepted Mr Penter's uncontradicted evidence, which was supported by the joint report of the experts. Having neither appeared nor adduced any evidence at the hearing, the Menzies cannot now complain about the findings made by the primary Judge on these issues. 88The primary Judge could have rejected the Menzies' claim for relief under the Contracts Review Act on the simple ground that they had adduced no evidence to support their case. Her Honour did say that she did not accept the claims made by the Menzies in the cross-claim or in Mr Menzies' unsworn affidavit, no doubt because there was no evidence to support them. However, her Honour went on to make some additional findings. 89The only positive findings adverse to the Menzies' Contracts Review Act claim were that Mr Menzies was a reasonably experienced businessman and understood the documents he was signing. The first of these findings was justified by the Menzies' application for finance and the supporting information provided by them at the time, both of which were in evidence. That material indicated that the Menzies had three separate properties, each apparently unencumbered, worth approximately $1.77 million in total. In addition, a statement of their assets and liabilities identified numerous items of machinery (farm and non-farm), equipment and various kinds of vehicles said to have a total value of $771,000. In the absence of evidence from the Menzies, it was open to the primary Judge to infer from the Menzies' apparent success in accumulating assets that Mr Menzies had experience in business. The finding that Mr Menzies understood the documents he was signing was supported by Mr Penter's uncontradicted evidence that Mr Menzies spent some time reading and reviewing the documents before signing them in Mr Penter's presence. 90In any event, the Menzies' claim for relief under the Contracts Review Act was bound to fail in the absence of any affirmative evidence from them to support their case. As was repeatedly explained to Mr Menzies in argument in this Court, a party who elects not to appear at a hearing on the merits and who adduces no evidence in support of his or her pleaded case can hardly complain if the trial Judge concludes that the essential factual foundation for the pleaded case is not made out. 91There is no substance to the Menzies' complaint that the primary Judge should not have relied on the evidence adduced by Paccar because (as Mr Menzies alleged) that evidence was unreliable or incomplete. The Menzies had their opportunity to appear at the hearing and to test and, if appropriate, to contradict the evidence relied on by Paccar, including that of Mr Penter. The Menzies chose not to take this course. The primary Judge not only was entitled to rely on the uncontradicted evidence adduced on behalf of Paccar, she had little option but to do so.

Reasoning: Bias 92Mr Menzies contended that the decision of the primary Judge should be set aside because she had demonstrated bias in dealing with the Menzies' applications and in addressing the substantive issues in the case. Mr Menzies alleged, for example, that on the adjournment application the primary Judge did not read the evidence he submitted and that she spent her time striking out portions of the Menzies' affidavits in conjunction with Paccar's barrister. 93A reading of the transcript of 13 May 2013 indicates that her Honour took considerable care to understand the basis upon which the Menzies sought an adjournment. She addressed and dealt with the objections to the Menzies' affidavit evidence in an unexceptionable manner, giving brief but orthodox reasons for rejecting much of that evidence. There is nothing in the transcript to suggest that her Honour was doing anything other than diligently considering the issues that were presented to her for determination. 94The transcript of 14 May 2013 (when the Menzies did not appear) shows that the primary Judge was at pains to be fair to the Menzies. As we have noted, if anything her Honour went too far in that direction by taking account of Mr Menzies' unsworn affidavit. In any event, there is nothing that could be construed as demonstrating either actual bias or a reasonable apprehension of bias on her Honour's part.

Should the Crown be Joined? 95In the course of argument on the appeal, the Court raised with Mr Newton whether the Crown (the Commonwealth, the State or both) should have been joined as a party to the Paccar Proceedings. The query was prompted by the written submissions of counsel acting as amicus curiae, to which reference has already been made (at [15] above). These submissions suggested that, by reason of the liquidator's disclaimer of any interest in the Vehicles, title to the Vehicles may have vested in the Crown (subject to Paccar's security interest). On this basis, the amicus submitted that the Crown was a necessary party to the Paccar Proceedings, given that Paccar was seeking orders for delivery up of the Vehicles. 96At the conclusion of the argument in this Court, Mr Newton stated that his instructing solicitor had already notified the Crown Solicitors of both the Commonwealth and the State of New South Wales of the liquidator's disclaimer. He sought and was granted leave to file evidence of the notifications and brief submissions on the question of joinder. 97Mr Newton subsequently filed written submissions, supported by an affidavit sworn by Mr Brown, Paccar's solicitor. The affidavit shows that Paccar gave notice on 5 June 2014 of the liquidator's disclaimer to the Australian Securities and Investments Commission (ASIC) and to the Attorneys General of the Commonwealth, New South Wales and Victoria. There has been no explanation as to why it has been considered necessary to notify the State of Victoria, although the notification may have been made out of an abundance of caution (the winding up order having been made in Victoria). That step having been taken, however, we shall assume that it is unclear whether, if the Commonwealth has no interest in the Equipment, the effect of the disclaimer (assuming the Crown has a claim at all) is to vest title in the Equipment in the Crown in right of New South Wales or Victoria. 98ASIC promptly replied to Paccar's solicitors stating that where a liquidator disclaims the property of a company pursuant to the Corporations Act, the property does not vest in ASIC or the Commonwealth, but in the Crown in right of the (relevant) State. At the date Mr Brown swore his affidavit, no substantive reply had been received from either the Attorney General of New South Wales or the Attorney General of Victoria. 99Mr Newton submitted that the Court should proceed to determine the appeal without joining the Crown in any of its capacities. He contended that this course is permissible as the Crown will not be bound by any determination made by the Court. Mr Newton gave four reasons why this is so: (i)the evidence adduced at the trial shows that if the Equipment is sold to satisfy Paccar's security interest, there will be a shortfall; (ii)there is uncertainty as to whether a disclaimer of property by a liquidator under the Corporations Act has the effect of vesting the disclaimed property in the Crown and, if so, whether the property is vested in the Crown in right of the Commonwealth or the State (citing National Australia Bank Ltd v State of New South Wales [2009] FCA 1066; 260 ALR 115 at [23]-[25], [27] (Rares J); (iii)the primary Judge made an order pursuant to s 568F(1)(a) of the Corporations Act that Paccar is entitled to the Equipment; and (iv)ASIC has indicated, on behalf of itself and the Commonwealth, that it does not assert any interest in the Equipment. 100Mr Menzies also filed written submissions after the hearing. Not surprisingly, these did not address the technical legal issues presented by the question of joinder. However, Mr Menzies appeared to submit that no final orders should be made on the appeal until responses were received from the States which had been notified of the liquidator's disclaimer. 101A person should be joined as a party to proceedings if that person's rights against or liabilities to any party in respect of the subject matter of the action will be directly affected by any order made in the action: News Ltd v Australian Rugby Football League Ltd (1996) 64 FCR 410 at 524-525 (per curiam); John Alexander's Clubs Pty Ltd v White City Tennis Club Ltd [2010] HCA 19; 241 CLR 1 at [131] (per curiam); Ross v Lane Cove Council [2014] NSWCA 50 at [51]-[58] (Leeming JA, Meagher JA and Tobias AJA agreeing). It is at the very least arguable that the effect of a disclaimer of personal property by a liquidator is that the property vests in the Crown (whether in right of the Commonwealth or the State) as bona vacantia. It is for this reason that the conventional view is that the relevant manifestation of the Crown should be joined in any application affecting title or the right to possession of the disclaimed property: see Sullivan v Energy Services International Pty Ltd (in liq) [2002] NSWSC 937; 43 ASCR 179 at [24], [33] (Young CJ in Eq); Beck v LW Furniture Consolidated (Aust) Pty Ltd [2012] NSWCA 76 at [213] (Campbell JA). The doubts expressed by Rares J in National Australia Bank Ltd v State of New South Wales as to whether the doctrine of escheat applies to an estate in land which is disclaimed by a liquidator do not necessarily apply to the question of whether a liquidator's disclaimer of personal property attracts the principle of bona vacantia. 102The "default position", to use Leeming JA's phrase in Ross v Lane Cove Council at [54], is that joinder of the person whose rights or liabilities are affected, not mere notice, is required. It is not to the point that the nature of those rights or liabilities may be attended by doubt or, in the case of property subject to a security interest, that the value of the property is unlikely to exceed the amount required to discharge the security (as appears to be the case with the Equipment, which is subject to Paccar's security interest). The order that Paccar is entitled to the Equipment adversely affects the legal rights of the Crown (assuming it can rely on the doctrine of bona vacantia), because the order appears to be intended to extinguish its rights as owner of the Equipment. 103In Ross v Lane Cove Council, Leeming JA observed (at [61]) that the concern underlying the default position is to ensure that natural justice is done. If natural justice can be afforded without joining a person whose rights may be affected, joinder is not always necessary. His Honour pointed out that Uniform Civil Procedure Rules 2005 (NSW) r 6.23, which states that proceedings are not to be defeated merely because of the non-joinder of any person as a party, is merely a modern formulation of the Chancery practice, which did not insist on joinder if there was no prejudice. Leeming JA gave as an example (at [62]) a case where an owners corporation under a strata scheme was directly affected by proposed orders for the demolition of a staircase, but the practical impact on the owners corporation was low and it not only knew of the proposed orders but had passed a resolution supporting them: Woollahra Municipal Council v Sahade [2012] NSWLEC 76. 104In the present case, the Crown in right of the Commonwealth has been notified of the proceedings and of the liquidator's disclaimer of any interest in the Equipment. Through ASIC, the Commonwealth has stated that it has no interest in the Equipment. It can be inferred from ASIC's letter that the Commonwealth has no wish to be joined to the proceedings or to be heard or any issue arising in the proceedings. In these circumstances, natural justice has been accorded to the Commonwealth and the Menzies' appeal can proceed to finality without the Commonwealth being joined as a party. 105 If the Attorneys General of New South Wales and Victoria, having been notified of the disclaimer and of the proceedings, also state that they have no interest in the Equipment and that they do not wish to be heard, the Court should take the same approach to their non-joinder. If, however, they do not adopt this stance or, alternatively, do not respond to the notification within a reasonable period, the default position applies. In these circumstances, if Paccar wishes to uphold the order made in its favour by the primary Judge under s 568F(1)(a) of the Corporations Act, it will need to take steps to join the States of New South Wales and Victoria to the appeal and give them an opportunity to be heard.

Orders 106For the reasons that have been given, subject to the question of joinder of the States of New South Wales and Victoria being resolved, the Menzies' appeal should be dismissed. However, in order to allow further time for the Attorney General of each State to respond to the notification given by Paccar's solicitors, at this stage the appeal should be stood over for 28 days. 107If in the meantime, one or both responses have been received from New South Wales and Victoria, Paccar should have liberty to file an affidavit annexing the response or responses. Depending on the content of the responses, the Court may make an order dismissing the appeal without the need for a further hearing. If that is done, an order should also be made that the Menzies pay Paccar's costs of the appeal. If no order is made by the Court before the expiration of 28 days, the matter will be relisted before a single judge to determine the future course of the appeal. 108Thus the orders of the Court are: 1.Stand the matter over until 9:30 am on 30 August 2014 before a Judge of the Court. 2.Grant liberty to Paccar to file and serve an affidavit annexing the responses of the Attorney General of New South Wales and the Attorney General of Victoria (or of their officers or agents) to Paccar's notification of the liquidator's disclaimer and of these proceedings. 3.The Court notes that if such an affidavit is filed and served by Paccar before the expiration of 28 days from the date of these orders, and the affidavit shows that neither New South Wales nor Victoria wishes to be joined to the proceedings or to be heard on any issue in the proceedings, the Court will vacate Order 1 above and order without a further hearing that the Menzies' appeal be dismissed and that they pay Paccar's costs of the appeal.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 01 July 2014