MK & JA Roche Pty Limited & Ors v Metro Edgley Pty Limited & Anor

Mr V Kerr (Plaintiffs) COUNSEL : Mr CRC Newlinds SC, Ms R Francois (Defendants)

Lane & Lane (Plaintiffs) SOLICITORS : Clayton Utz (Defendants)

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION COMMERCIAL LIST

50069/04 MK & JA Roche Pty Limited & Ors v Metro Edgely Pty Limited & Anor

JUDGMENT 1 The judgment at first instance in these proceedings was delivered on 18 August 2004 [2004] NSWSC 744. The matter proceeded through an appeal, the judgments of the Court of Appeal being delivered on 3 May [2005] NSWCA 39 and on matters of costs and remission being delivered on 6 May 2005 [2005] NSWCA 146. 2 These judgments constitute the record and it is unnecessary to repeat the findings in or the orders made therein. 3 Metro Edgley is seeking Special Leave to appeal from the decision of the Court of Appeal to the High Court of Australia. 4 The issue presently raised before me concerns whether or not this Court should proceed to hear nominate issues notwithstanding the pendency of the Special Leave application or should simply stand the proceedings over until determination of the Special Leave application and, if successful, determination of the Appeal. 5 Metro Edgley contends that this Court should now make orders for the separate question of the issues remitted by the Court of Appeal, set the remitted issues down for hearing and give directions in relation to the matters sought to be raised by amended pleadings proposed to deal with what was described as the "ultimate" Sunset Date. 6 Counsel for the Roche parties has conveniently prepared a table (see below) setting out: · critical findings of the court of appeal; · matters remitted to this court for further factual findings; · contentions to be made by Metro Edgley on appeal, if special leave is granted. COURT OF APPEAL () MATTERS REMITTED () MATTERS ON SPECIAL LEAVE (**) Construction [47] Clause 2A(b) effects automatic termination without requiring notice (Suttor not fllwd) 2, 3Clause 2A(b) did not effect automatic termination [56] 21/5/04 letter was effective notice Election [62] Sargent v ASL sets out requirements for election [64]Was Roche aware of circumstances giving rise to right to terminate?8, 9Further factual findings unnecessary [63, 65]Did Roche exercise rights under contract? 8, 9Further factual findings unnecessary Estoppel [72] Conventional estoppel requires party estopped to have contributed to assumption [74]Did Roche play part in adoption of assumption? 4, 6Party estopped need not play part in adoption of assumption [72] Conventional estoppel requires detriment [74]Was Metro placed in position of significant disadvantage?5, 6Detriment is not necessary [78]Are guarantors bound by any estoppel? Operation of estoppel and election [76] Metro must prove election and estoppel: [76] a. estoppel precludes Roche from relying on cl 2A(b) but not on 21/5/04 letter 7Estoppel also precludes Roche relying on 21/5/04 letter [76] b. election precludes Roche relying on 21/5/04 letter

*Court of Appeal paragraph number **Draft Notice of Appeal paragraph number Metro Edgley submissions 7 The submissions addressed by the Metro Edgley parties include the following:

"Upon a proper analysis of the various possible results of the various potential stages of this litigation the following emerges: In the event this Court hears and determines the remitted issues and the issues dealing with the "ultimate sunset date" in favour of Metro Edgley then, subject only to appeals concerning those issues, there will be no need for Metro Edgley to pursue the High Court application because it will have won the litigation. The matters raised in the High Court application will be no more than an interesting academic exercise. They will have no utility, the case will be over.

In the event Metro Edgley is successful on the remitted issues but unsuccessful on the "ultimate sunset date" question then, subject to questions of appeal on those matters, there will be no need for it to pursue the High Court application because it will have lost the litigation.

In the event the High Court application and any appeal in the High Court is resolved in favour of Metro Edgley then there will remain in this Court the need to deal with the question of the "ultimate sunset date". If the remitted issues are resolved against Metro Edgley then, if the High Court Application is successful that position will be reversed. In that event the "ultimate sunset date" issues will remain extant requiring determination by this Court.

So it can be seen that almost every permutation has the possibility of this Court being required to hear a further aspect of the litigation. Further, on the basis of ordinary delays in the High Court and this Court one would expect this Court to have resolved all issues before it prior to the special leave application being heard.

Roche suggests that the High Court proceedings go first. It is submitted that this is inappropriate and not conducive to the just, quick and cheap resolution of the litigation overall. This is because there are only two possible results in the High Court. Metro Edgley will either win or it will lose. Either way there will be the need for this Court to consider the matter further. If Metro Edgley is unsuccessful in the High Court this Court will need to deal with the remitted questions and the "ultimate sunset date" issue. If Metro Edgley is successful in the High Court this Court will need to deal with the "ultimate sunset date" issue. On the other hand, if the matter proceeds in this Court there is the possibility, for the reasons outlined above, that the litigation will be brought to an end. If that be the result the High Court Application will fall away. Roche submissions 8 The submissions advanced before me by Roche parties include the following matters:

Nothing this Court decides on the remitted matters necessarily renders Metro's High Court application otiose. Even if this Court determines the remitted election and estoppel matters favourably to Metro, and thus determines that the contract remained on foot after 21 May 2004, Metro's appeal as to the effect of clause 2A(b) remains. [Metro may be able to avoid that difficulty by now undertaking to abandon the special leave application in the event the remitted matters are determined favourably to it.]

Conversely, the decision of the High Court may well render the remitted matters otiose. So much is not in issue between the parties. For example, if the High Court determines that clause 2A(b), either of itself or together with the 21 May letter, did not effect an automatic termination, then the contract remains on foot and the remitted election and estoppel findings need not be made. If the High Court determines that this Court made sufficient factual findings in respect of the election and estoppel matters then this Court need not embark on making further findings on remitter. Further, the High Court will proceed on the basis of the facts determined by this Court at first instance, and relied upon by the Court of Appeal. If this Court was, prior to the time the High Court dealt with the matter, to make additional factual findings on the remitted matters, then those additional findings might undercut the factual basis upon which the High Court is to proceed.

Finally, there is nothing this Court can now do which, on any basis, will not be wasted. Findings on the remitted issues will be unnecessary if the High Court determines either that clause 2A(b), either of itself or together with the 21 May letter, did not effect an automatic termination or that the Court of Appeal had sufficient factual findings upon which to determine the issues of estoppel and election. Findings on the "ultimate" Sunset Date question will be wasted if Metro's appeal fails on the automatic termination issue (so that the contract was terminated absent estoppel or election) but succeeds on the necessity for remitter issue (so that the Court of Appeal is required to determine estoppel or election on the findings already made) but ultimately fails in the Court of Appeal to establish estoppel and election (so that Roche can rely on the contractual termination). Responsive submissions of Metro Edgley 9 Metro Edgley in its responsive submissions has submitted as follows:

"A. (i) In paragraph 4(a) it is suggested that nothing that can happen in this Court will render Metro Edgley's High Court application otiose. This is wrong. If Metro Edgley is unsuccessful on the "ultimate sunset date" issue then there is no utility in pursuing the High Court application because, whatever the outcome in the High Court it will still lose the litigation. On the other hand, if Metro Edgley is successful on both the remitted issues and the "ultimate sunset date" issue it will have won the litigation rendering the High Court case otiose. (ii) In paragraph 4(b) Mr Kerr notes that if the decision of the High Court is favourable to Metro Edgley then that will render the remitted matters otiose. That is true, however, as has already been explained there will remain a need for this Court to deal with the "ultimate sunset date" issue.

(iii) In paragraph 7 Mr Kerr says that there is nothing this Court can now do which, on any basis, will not be wasted. This is also wrong. This Court's decision on the "ultimate sunset date" issue has absolutely nothing to do with the issues before the High Court. It will need to be decided in any event, and will not be wasted if decided prior to the High Court application.

B. There is nothing in the suggestion that if this Court makes further findings of fact that those findings will in some way infect the process of the High Court. The High Court will be dealing with an appeal from the decision of the Court of Appeal. Any factual findings made in this case between now and any High Court hearing will simply be irrelevant to the High Court.

C. The appropriate course is for this Court to hear the matter in the usual course of its business. The reasons in summary are: (i) That whatever occurs in the High Court this Court will need to hear the matter further. (ii) On the other hand, the result in this Court does have the prospect of bringing the litigation to an end. (iii) This is a very large and complicated piece of commercial litigation which in the ordinary course would be dealt with by this list in this Court expeditiously. There is no reason for the Court to depart from its usual approach to such matters." Decision 10 The matter is somewhat finely balanced. At a basic case management level, I am particularly concerned at the proposition which the Metro Edgley parties clearly acknowledge, namely that there is a real risk that if the remitted issues are dealt with separately to the "ultimate sunset date" issues, the evidence which is already before the Court and which must now be considered by the Court in connection with the remitter issues may become confused with the evidence yet to be adduced on the "ultimate sunset date" issues. 11 Ultimately as I see that there are simply too many uncertainties for a principled exercise of the Court's discretion in favour of the application is pursued by the Metro Edgley parties. 12 The principled exercise of that discretion is to decline to make further orders or to proceed further with the remitter issues pending a determination of the fate of the High Court of Australia application and if that be successful, pending the fate of the full appeal to that Court. 13 Both the Overriding Purpose Rule as well as S.63 of the Supreme Court Act 1970 speak to the need for avoidance of multiplicity of legal proceedings. Metro Edgley having elected to challenge the Court of Appeal decision must now be required to await the result of that challenge. The otherwise risk of altering the goal posts prior to the High Court determination of the Application/Appeal are too high to permit of any other exercise of the Court's discretion. Additionally the risk that to now proceed as sought by Metro Edgley may result in a waste of the Court's time bespeaks the need to dismiss the current application. As Roche has contended, one possibility is that the High Court may overturn the Court of Appeal's decision [in sending the matter back to this Court to make further findings on the remitter] and may hold that the Court of Appeal ought to have determined the appeal from the decision at first instance on the election and estoppel issues based upon the findings which I had made. 14 The parties should at least be required to await a decision by the High Court as to whether or not it will hear an appeal on the current factual findings. If the latter be the case, this Court may proceed to conclusion in terms of hearing the nominate issues pursued by Metro Edgley. 15 The application for a Part 31 Rule 2 order that the hearing of the issues remitted for determination by the Court of Appeal with respect to the election and conventional estoppel be heard as separate question requires to be stood over and may be re-listed as appropriate following the decision of the High Court referred to in the preceding paragraph. 16 Costs of the application dealt with in this Judgment are reserved.

I certify that paragraphs 1 - 16 are a true copy of the reasons for judgment herein of the Hon. Justice Einstein given on 11 July 2005

          Susan Piggott
          Associate

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