Application to re-open claim for summary judgment immediately prior to handing down reserved decision - Application dismissed without reference to contents of affidavit sought to be tendered - Test to be applied - Materiality of the proposed evidence - Turns on own facts

Cross-appeal from the grant of unconditional leave to defend incompetent - Section 60(1)(b) of the Supreme Court Act

Supreme Court Act 1935 (WA), s 58, s 60, s 60(1)(b)

Betts v Whittingslowe (No 1) [1944] SASR 163

City of Subiaco v Heytesbury Properties Pty Ltd [2001] WASCA 140; (2001) 24 WAR 146

Dantal Pty Ltd v Independent Franchise Systems Pty Ltd [2001] VSC 139

Hope v RCA Photophone of Australia Pty Ltd [1937] HCA 90; (1937) 59 CLR 348

Ince Hall Rolling Mills Co Ltd v Douglas Forge Co (1882) 8 QBD 179

Johansen v City Mutual Life Assurance Society Ltd [1904] HCA 43; (1904) 2 CLR 186

Moscow Narodny Bank Ltd v Mosbert Finance (Aust) Pty Ltd [1976] WAR 109

National Carriers Ltd v Panalpina (Northern) Ltd [1980] UKHL 8; [1981] AC 675

National Mutual Royal Bank Limited v D J Ginges, unreported; SCt of NSW (Brownie J); Library No 74868; 15 March 1991

Norton v Taylor [1905] HCA 8; (1905) 2 CLR 291

PS Holdings Ltd v Verheggen [2000] WASC 31

Queensland v J L Holdings Pty Ltd [1997] HCA 1; (1997) 189 CLR 146

Raeside Pty Ltd v Jymcroe Valley Pty Ltd, unreported; FCt SCt of WA; Library No 7196; 18 July 1988

Re Juson Pty Ltd (1992) 8 WAR 13

Webster v Lampard [1993] HCA 57; (1993) 177 CLR 598

1 The appellant (defendant) appeals from a decision of Master Bredmeyer granting summary judgment in respect of part of the respondent's (plaintiff's) claim.

2 The plaintiff is in liquidation. In its statement of claim it seeks judgment in the sum of $1,508,775.20, being rent allegedly due and payable by the appellant to the respondent pursuant to three leases each dated 1 December 1999 ("the Leases"). The Leases are of Lots 22, 23 and 25 Southern Estuary Road, Lake Clifton respectively and are for a term of 10 years commencing on 1 December 1999.

3 The Master ordered that the appellant pay the respondent the sum of $46,412.88 for unpaid rental from 1 December 1999 to 17 December 1999 and gave the appellant leave to defend the balance of the claim. Leave to defend was given on the ground that it was arguable that the Leases were frustrated from 17 December 1999.

4 The respondent filed a cross-appeal seeking summary judgment for the balance of the amount claimed on the ground the Master erred in concluding that the Leases were arguably frustrated.

5 All of the grounds of appeal concern the Master's refusal to admit into evidence an affidavit of the appellant sworn on 27 March 2002 ("March affidavit"). It is said the Master erred in fact and in law in exercising his discretion to refuse to admit the evidence in that he failed to give any or any sufficient weight to:

(1) the consequences of the refusal, being that there was no evidence before him of a collateral agreement between the appellant and the respondent whereby in consideration of the appellant entering into the Leases, the respondent agreed to do all things necessary to provide a sublease of Lot 24 to the appellant, and no evidence of a breach of that collateral agreement;

(2) the explanation offered by the appellant for the late tender of the affidavit;

(3) the fact that the refusal to admit the affidavit was a denial of procedural fairness and natural justice.

6 The history of the matter is as follows. On 19 November 2001 the respondent's application for summary judgment and a supporting affidavit were filed and served.

7 On 28 November 2001 Master Bredmeyer adjourned the application to a special appointment and ordered that the appellant file and serve his affidavits in opposition to the application by 28 December 2001.

8 An affidavit sworn by the appellant on 11 January 2002 ("the January affidavit") was served on the respondent on 30 January 2002. The respondent filed an affidavit in reply.

9 The summary judgment application was heard by Master Bredmeyer on 8 March 2002. He reserved his decision until 28 March 2002.

10 On 28 March 2002 counsel for the appellant sought to tender the appellant's March affidavit. The Master refused the application on the basis that he was not satisfied that there were sufficient grounds for the receipt of fresh evidence. It is not in dispute that the Master refused to read or have regard to the contents of the affidavit.

11 The appellant's request to tender the March affidavit was in effect an application to re-open which was made immediately prior to the Master handing down his reasons and making the orders appealed from. It is unnecessary to decide whether or not the appeal is from an interlocutory order refusing leave to re-open because, for the reasons given by Heenan J, that decision can be challenged in the appeal as of right from the order for summary judgment.

12 There is some uncertainty as to the test to be applied to the exercise of the Court's discretion to permit the re-opening of a matter before orders are made. The High Court in Smith v New South Wales Bar Association [1992] HCA 36; (1992) 176 CLR 256 said at 266-267:

"If an application is made to re-open on the basis that new or additional evidence is available, it will be relevant, at that stage, to inquire why the evidence was not called at the hearing. If there was a deliberate decision not to call it, ordinarily that will tell decisively against the application. But assuming that that hurdle is passed, different considerations may apply depending on whether the case is simply one in which the hearing is complete, or one in which reasons for judgment have been delivered. It is difficult to see why, in the former situation, the primary consideration should not be that of embarrassment or prejudice to the other side. In the latter situation the appeal rules relating to fresh evidence may provide a useful guide as to the manner in which the discretion to re-open should be exercised."

13 The rules relating to fresh evidence on appeal are well known. The appellant would need to show that there was a real possibility that the further evidence would have produced a different result if it had been admitted and that the further evidence would not have been available at the original hearing by the exercise of reasonable diligence: Australian Electrical Electronics Foundry & Engineering Union (WA Branch) v Hamersley Iron Pty Ltd (1998) 19 WAR 145 at 160, 162, 163. A similar test was applied in Watson v Metropolitan (Perth) Passenger Transport Trust [1965] WAR 88 on an application to re-open before judgment.

14 It is to be expected that a less stringent test would apply when leave to re-open is sought before reasons are delivered and orders made because the policy in favour of finality does not have the same force. In this case there was no deliberate decision not to adduce the evidence in the March affidavit but it may have been available at the earlier hearing by the exercise of reasonable diligence. It is unnecessary for me to decide that question because I propose to apply the less stringent test referred to by the High Court in Smith (supra). Relevant factors in the exercise of the discretion include the materiality of the evidence and whether the interests of justice would be advanced by its admission: Joyce v GIO (NSW) reported in Ritchie's Supreme Court Procedure, New South Wales, vol 2 p 8551-8552 and cited with approval by the High Court in Smith (supra) (at 267).

15 It is clear from the Master's refusal to read or have regard to the contents of the March affidavit that he could not have exercised his discretion judicially and accordingly was in error. However, the appellant must persuade this Court that leave to re-open ought to have been granted. Further, in order to obtain the relief sought (namely, setting aside the order for summary judgment), the appellant must persuade the Court that he would have an arguable defence to all of the claim. For that purpose it is necessary to review the material before the Master in the summary judgment application and the March affidavit.

16 It was accepted that the appellant had not paid any rent under the Leases which were disclaimed in April 2001 when liquidators were appointed to the respondent. Thus, the respondent had established a prima facie case for summary judgment. Accordingly, the onus shifted to the appellant to raise a triable issue: Westwind Air Charter Pty Ltd v Hawker De Havilland Ltd (1990) 3 WAR 71.

17 The corporate history of the respondent is relevant. In August 1999 Mr Christopher Williamson and Mr Kimberley Strickland were appointed joint and several administrators of the respondent. In November 1999 creditors passed a resolution for the respondent to execute a Deed of Company Arrangement ("DOCA"). The DOCA is dated 25 November 1999. On 11 April 2001 the respondent's creditors resolved to terminate the DOCA and place the respondent into liquidation. Messrs Williamson and Strickland became joint and several liquidators.

18 Under the DOCA the rental for Lots 22, 23 and 25 Southern Estuary Road, Lake Clifton, which was $900,000 for the first three years of the lease term and thereafter $3,000 per annum for the balance of the lease term, was to be distributed to the creditors. Further, the DOCA contemplated that Lot 24 would be realised by the secured creditor who would account to the administrators for any surplus which would then be distributed to the creditors.

19 At all material times Sandhu Tanvanth Singh ("Mr Sandhu") was a director of the respondent. However, cl 11 of the DOCA provided that:

"Until the Termination Date the functions and powers of each Officer may not be performed by any person other than the Administrators except with the Administrators' written approval but this section does not remove an Officer from office."

20 At the summary judgment hearing the appellant relied on his January affidavit. The respondent objected to a number of paragraphs in the January affidavit. The Master ruled on those objections in his written reasons delivered on 28 March 2003. He struck out a number of paragraphs including a paragraph in which the appellant purported to state the terms of a collateral agreement between the appellant and the respondent. There is no challenge to the correctness of the rulings.

- the Leases were executed so that he could grow ginkgo, biloba and paulownia trees on Lots 22, 23 and 25 ("leased land");

- in order to use the leased land in the way intended and to give business efficacy to the enterprise he and the respondent entered into an oral collateral agreement or alternatively the Leases are subject to express verbal conditions;

- the oral agreement or verbal conditions were entered into after the execution of the DOCA and prior to signing the Leases on 1 December 1999;

- the discussions took place between the appellant and Mr Sandhu who he believed had authority as a director of the respondent to enter into the oral agreement or verbal conditions;

- access to a nursery on Lot 24 (also owned by the respondent) was crucial to the proposed enterprise on the leased land;

- on or about 17 December 1999 Mr Sandhu, along with his agent Mr Popazzi refused the appellant and his employees, agents and related parties access to the leased land and the land and nursery on Lot 24;

- Mr Sandhu had concerns about the appellant's agent stealing trees from the nursery on Lot 24 and that trees on Lots 24 and 25 were not being watered and appeared to be dying;

- the tree growing scheme did not proceed and, it is said, the appellant did not take actual physical possession of the leased land.

22 The Master gave no weight to the conclusionary statements of an oral collateral agreement or of express verbal conditions. In any event, it was clear that Mr Sandhu did not have authority to bind the respondent after the execution of the DOCA. However, on the basis of evidence from a Mr Popazzi that, on Mr Sandhu's instructions, he refused the appellant and his agents access to the leased land for two weeks from 17 December 1999 and also changed the locks on the gates to the leased land, the Master concluded that it was arguable the Leases had been frustrated. Further, he noted that as Mr Sandhu had no authority to act on behalf of the respondent, the frustration was occasioned by a non-party.

23 The March affidavit contains a significant amount of inadmissible submission, argument and comment. However, the inadmissible statements in the affidavit are made by reference to contemporaneous documents annexed to the affidavit and I confine my consideration to them.

24 Mr Colin Phillips of Hall Chadwick was assisting the respondent's administrators. The appellant wrote to Mr Phillips on 24 September 1999 seeking agreement in principle to arrangements reached between the respondent and a company called Ginkgo Management Pty Ltd. It appears Mr Sandhu was a director of Ginkgo Management. A heads of agreement between the respondent and Ginkgo Management was enclosed. It provided for the respondent to purchase ginkgo and other plants from Ginkgo Management, for Ginkgo Management to obtain a lease of Lot 24 from the respondent and for Ginkgo Management to sublease Lot 24 to the appellant or his nominee. Further, in his letter to Mr Phillips, the appellant sought assurances about adequate water being provided by the respondent or Ginkgo Management for the period of the lease of Lot 24.

25 Mr Williamson responded by letter dated 24 September 1999 confirming that the respondent would, subject to creditor's approval, enter into a lease for the use of the land, being a reference to Lot 24. He said that he would not be in a position to provide any undertakings in relation to the adequacy of the water supply and that is something the appellant would need to deal with Mr Sandhu about.

26 On 29 September 1999 Mr Phillips was provided with a copy of two signed agreements between the appellant and Ginkgo Management. The first was a heads of agreement for the sublease of Lot 24. It is in the following terms:

"Whereas Landpower Developments Pty Ltd and Ginkgo Management Pty Ltd have entered or will enter into a lease of Lot 24 for 10 years (sic) period with an option for a further 10 years (sic) period.

Ginkgo Management Pty Ltd subleases Lot 24 to R R T Osborne for a ten years (sic) period with an option for a further ten years (sic) period.

It is confirmed that Landpower Developments Pty Ltd has agreed that R R T Osborne has an absolute interest in Lot 24 to secure tenure for 500,000 ginkgo trees and that Landpower Developments Pty Ltd has or will obtain the consent of Mr And (sic) Mrs Biggs the charge holder on Lot 24.

It is also confirmed that there are two Bores on Lot 24 and that there is adequate water supply for the 500,000 ginkgo plants."

27 The next document in the sequence is a letter dated 22 October 1999 from the administrator to the appellant confirming that Ginkgo Management had a registered interest in Lot 24 which was secured by a caveat and that Ginkgo Management had equitable rights of tenancy over Lot 24 for access and management of the tree plantation located on the property.

28 There is nothing in the material to indicate whether there was a lease of Lot 24 to Ginkgo Management or a sublease from Ginkgo Management to the appellant and if not why not. More importantly, there is nothing in the material to suggest that the respondent had failed to comply with any of its obligations or undertakings in that regard.

29 In a letter dated 14 February 2000 to the appellant from Ginkgo Management Mr Sandhu states:

"... your colleagues indicated in October that they were concerned at my ability to deliver the required trees and accordingly, full control of the nursery and plantations was granted to your associated company Silviculture Pty Ltd. As you know, I was totally dissatisfied with the management of the nursery and plantations during the approximately six weeks of their occupation, to the point that they were in danger of destroying an extremely viable and thriving nursery."

30 All that can be gleaned from the exchange of correspondence in which the administrators were involved was that by late September 1999 they had given conditional approval of a lease of Lot 24 to Ginkgo Management and a sublease of Lot 24 to the appellant and were aware of negotiations between Ginkgo Management and the appellant in relation to the supply of trees. However, the arrangements thereafter between the appellant and Ginkgo Management appear to have altered although in precisely what way is unclear.

31 The appellant says that the documents annexed to the March affidavit support a claim of a collateral agreement between the appellant and the respondent to the effect that the Leases were conditional upon the respondent doing everything necessary to provide or facilitate a sublease

of Lot 24 to the appellant and that the respondent breached the collateral agreement. I note this claim differs from that deposed to in the appellant's January affidavit.

32 In my view the March affidavit does not materially advance the appellant's legal position. In particular, there is no evidence of an arguable contract arrangement or understanding between the appellant and the respondent which affects or alters the terms of the Leases or the performance of their terms in the way suggested by the appellant or at all. Further, there is no evidence of an arguable breach by the respondent of the alleged collateral agreement. The March affidavit does not provide a basis on which the appellant would be entitled to the relief sought, namely an order setting aside the partial summary judgment granted by Master Bredmeyer.

33 Having regard to the form and content of the March affidavit I have concluded that the interests of justice would not be advanced by its admission into evidence in opposition to the summary judgment application and that the appeal should be dismissed.

34 The cross-appeal is incompetent because it is an appeal from the grant of unconditional leave to defend. Section 60(1)(b) of the Supreme Court Act (WA) 1935 provides that there shall be no appeal to the Full Court from an order giving unconditional leave to defend an action. Thus, the cross-appeal will be dismissed. I make no comment on the merits of the cross-appeal in these reasons because that matter was not addressed by the parties at the hearing of the appeal.

35 In this action by a lessor for the recovery of unpaid rent and other moneys claimed due by the lessee under three leases of adjoining lots of rural land, Master Bredmeyer entered summary judgment for the respondent (plaintiff) for $46,412.88 on 28 March 2002. This amount was only for a portion of the respondent's claim of $1,508,775.20 plus interest alleged to be due by the appellant under the leases. It represented rent only for a short initial part of the lease terms namely from 1 December 1999 to 17 December 1999 plus interest. The terms of the leases were for 10 years commencing on 1 December 1999 and

terminating on 30 November 2009 each at an initial annual rate of $300,000.00 payable by equal monthly instalments in advance. Under cl 8 in each of the leases the rent was payable whether demanded or not, free of exchange without any deductions at all. No rent had ever been paid by the appellant.

36 Despite the 10 year term the respondent limited its claim to a period from the commencement of the leases on 1 December 1999 until 12 April 2001 plus interest on the arrears of rent and other moneys due from then until the date of judgment. The reason for this appears to be that, on 11 April 2001, the respondent, which had been operating under a deed of company arrangement with administrators appointed since 10 August 1999, was placed in liquidation and by notices dated 12 April 2001 the joint liquidators disclaimed the respondent's obligations under the lease pursuant to s 568 of the then Corporations Law. No point was ever raised about any significance of that disclaimer for the respondent's claim as advanced or otherwise.

37 In giving judgment for the respondent lessor, for rent and interest attributable only to the first 17 days of the lease terms, the learned Master noted the appellant's defence which alleged that he had been refused access to and locked out of the leased land, and an adjoining Lot 24, on 17 December 1999 by the actions of a Mr Sandhu and a Mr Popazzi, who was engaged by Mr Sandhu to change the locks on the gates of the properties for the purpose of preventing the appellant, his agents and employees from gaining access to the properties. Although Mr Sandhu was a director of the respondent at the time, all his powers were displaced by the scheme of arrangement then in operation. The scheme administrators had, so the respondent claimed, the sole authority to act on behalf of the respondent. Nevertheless, the learned Master concluded that this denial of access to the three lots on 17 December 1999 could amount to frustration of the leases and that that would be a defence to the respondent's claim. It was for that reason that leave to defend the balance of the claim for rent and other monies alleged to have accrued due after 17 December 1999 was granted.

Evidence Excluded on the Summary Judgment Application

38 The respondent's application for summary judgment was heard before the learned Master on 8 March 2002 and, at the completion of submissions, his decision was reserved. On 28 March 2002 the matter was re-listed for the learned Master to deliver his reasons and to give his decision on the application. On that occasion, and before the decision was given or reasons delivered, counsel for the appellant, applied for leave to adduce a further affidavit on behalf of the appellant in opposition to the respondent's application for summary judgment. This was an affidavit of the appellant himself sworn on 27 March 2002 which enlarged upon his allegations that each of the leases was subject to a separate collateral oral agreement made between the appellant and the respondent to the effect that the respondent would also grant to the appellant a lease over adjoining land, comprising Lot 24, which contained a water supply, the reticulation of which to the other three lots was essential for the tree growing activities which were intended to be conducted by the appellant on those three leased areas.

39 This collateral agreement was said to have been reached between the appellant and Mr Sandhu in or about September 1999 after the commencement of the scheme of arrangement and the appointment of administrators to control the affairs of the respondent. However, the examination of the correspondence and other documents annexed to the appellant's affidavit of 27 March 2002 shows that the negotiations which were occurring took place between the appellant and other parties associated with Mr Sandhu and contemplated a sublease of Lot 24 by another company, Ginkgo Management Pty Ltd, to the appellant. That company, Ginkgo Management Pty Ltd, was associated with Mr Sandhu, and was evidently to supply the appellant with trees in order to establish the proposed plantations on Lots 22, 23 and 25 which were the subject of the three leases. Indeed, the annexures to that affidavit include a document entitled "Heads of Agreement" dated 29 September 1991 between Ginkgo Management Pty Ltd, Sandhu and the appellant (all described as partners) which recited that the respondent, Landpower Developments Pty Ltd, and Ginkgo Management Pty Ltd had entered or would enter into a lease of Lot 24 for a 10 year period with an option for a further 10 year period and that Ginkgo Management Pty Ltd subleased Lot 24 to R R T Osborne for a 10 year term with an option for a further 10 year term.

40 Despite being named in that document, the respondent, Landpower Developments Pty Ltd, is not a party to the heads of agreement nor does that document purport to have been executed by or on behalf of the respondent. Certainly it was not executed by either of the respondent's administrators who had, by then, been appointed. There is also correspondence from one of the respondent's administrations indicating that, for the respondent, he would be prepared to agree in principle to the proposed lease of Lot 24 to Ginkgo Management Pty Ltd and to a sublease to the appellant but that the approval of a caveator who was entitled to a charge over Lot 24 would be needed. No actual commitment by the administrator or by the respondent to the proposed lease and sub-lease of Lot 24 was given. Consequently, the contemporary correspondence and records referred to in the appellant's affidavit of 27 March 2002 are inconsistent with the appellant's allegation that there was a collateral agreement between the parties to the action for the respondent to grant the appellant a lease, on comparable or any terms, over Lot 24. The evidence adduced points to a proposal for Ginkgo Management Pty Ltd to obtain a lease of Lot 24 and, in turn, for that company to sublease Lot 24 to the appellant. However, this evidence does not go as far as showing any lease or agreement to lease Lot 24 by the respondent. Further, at the time these negotiations were occurring, only the administrators of the respondent, and not Mr Sandhu, had power to commit the respondent. The readiness of one of the respondent's administrators to agree to such a proposal at a future stage when it was more developed, is not sufficient to establish any contractual obligation by the respondent qualifying the mutual obligations arising from the three leases.

41 The learned Master declined to allow the affidavit to Mr Osborne of 27 March 2002 to be adduced in evidence on the summary judgment application and did not read the affidavit before giving his reasons for decision. The learned Master concluded that the affidavit was too late and that it was unreasonable of the appellant to expect it to be read after a reserved decision had been prepared even though that had not been given. The learned Master then entered judgment for part of the respondent's claim, as I have already recounted, and dismissed the appellant's application for summary dismissal of the respondent's claim under RSC O 16.

42 The appellant now appeals from the learned Master's decision granting summary judgment in the amount of $46,412.88 on the grounds that the learned Master erred in failing to allow the tender of the appellant's affidavit of 27 March 2002 and thereby failed to consider whether there was an arguable defence shown in relation to the alleged collateral agreement for a lease of Lot 24 upon which the three actual leases were claimed to be conditional.

43 The appellant submitted that this appeal was by leave granted by order of 16 January 2003, but an examination of that order reveals that it was simply an order extending time to appeal and not one granting leave. If successful, or partly successful, an application for summary judgment results in a final judgment, Hunt v Knabe (No 2) (1992) 8 WAR 96 on the merits, Langdale v Danby [1982] 1 WLR 1123 at 1132, and hence an appeal to the Full Court from such a final judgment lies as of right - Supreme Court Act, s 58 and s 60.

44 In addition, a cross-appeal has been instituted by the respondent from the decision of the learned Master granting leave to defend the balance of the lessor's claim for rent and moneys alleged to have accrued due after 17 December 1999. The notice of cross-appeal contends that the learned Master erred in finding that the leases were arguably frustrated by a non-party putting locks on the gates from 17 December 1999. The cross-appeal claims that the learned Master should have found that the leases were not arguably frustrated and therefore, should have entered judgment for the whole of the plaintiff's claim.

45 On this occasion it is unnecessary to examine the learned Master's conclusion that the refusal of access to the three lots of leased land on 17 December 1999 could amount to frustration of the leases by a third person. However, nothing in these reasons, should be taken to be an acceptance of that conclusion. That question remains in issue in the action and will require more detailed consideration when it eventually arises for final decision. The law relating to a liability of the landlord for a breach of a covenant of quiet enjoyment in a lease acknowledges that the covenant extends to interference by third parties but only where the interference occurs through the action of a person claiming through the landlord, Baynes & Co v Lloyd & Sons [1895] 2 QB 610 and where the obstruction is caused by the lawful acts of the person or persons so claiming through the landlord - Malzy v Eicholz [1916] 2 KB 308, because of the existence of remedies in tort available to the lessee against unlawful actions of third parties. It has also been held that a lessor may be liable for breach of the covenant of quiet enjoyment occurring through the actions of other parties who are other tenants of the same landlord and where the landlord could have prevented the offending activity by taking action or proceedings against the other tenant but has failed to do so - Aussie Traveller Pty Ltd v Marklea Pty Ltd [1998] 1 Qd R 1. These features do not appear to exist in this case on the evidence so far adduced.

46 The present case also raises issues of whether or not, because of the obligation to pay rent without deduction, the lessee was entitled to withhold payment of rent after 17 December 1999 and also, whether or not the exclusion from possession could have been overcome by readily practicable means and thus not jeopardise or frustrate the future enjoyment of the benefit of the leases by the appellant. However, as no appeal lies from a decision granting leave to defend on an application for summary judgment - Supreme Court Act, s 60(1)(b) this cross-appeal is incompetent and those issues remain for eventual consideration in the action.

47 I agree, with respect, with the reasons of McLure J that the appellant's counsel's request to tender the affidavit of 27 March 2002 before the decision on the summary judgment application was given on 28 March 2002, should be treated as an application to re-open the hearing on the grounds that the appellant (defendant) had only recently obtained access to materials believed to be relevant to the cause and which he wished to have considered by the court in any evaluation of the merits of his defence. The refusal of the learned Master to allow that evidence to be adduced may be raised as a ground of appeal as of right on the judgment later entered notwithstanding that the decision to refuse leave to re-open and admit further evidence was a decision made in the proceedings as a step before the final decision to enter judgment. Even if the refusal to allow that affidavit to be adduced was merely an interlocutory decision, it can still be challenged in any appeal as a right from a final judgment in the proceedings notwithstanding that the final judgment may have been entered later: Crowley v Glissan [1905] HCA 13; (1905) 2 CLR 402; Bunning v Cross [1978] HCA 22; (1978) 141 CLR 54 at 64 and 82 and Smith v Tabain (1987) 10 NSWLR 562 at 564 and 566.

48 I respectfully agree with the conclusion of McLure J that the test to be satisfied in order to determine whether or not the application to re-open and adduce further evidence for the appellant should be granted is that formulated in Smith v New South Wales Bar Association [1992] HCA 36; (1992) 176 CLR 256 at 266-267 and that no such test was applied by the learned Master in this case. Accordingly, I have reached the conclusion that the learned Master was in error in failing to consider and admit into evidence the appellant's affidavit of 27 March 2002. This could readily have been done in the circumstances even if, in the result, such a course would have necessitated an adjournment to allow the respondent to consider the contents of the affidavit and, possibly, a further hearing to take additional submissions about its significance. However, the refusal to allow the appellant's case to be re-opened and the affidavit to be adduced, while an error, will not result in the judgment which was entered being set aside or varied unless, on all the evidence which was or should have been before the learned Master on the summary judgment application, an arguable defence on the merits to the balance of the respondent's claim is shown.

49 For reasons which I have already set out, I am satisfied that there is nothing in the appellant's affidavit of 27 March 2002 which shows any arguable support for the existence of a collateral oral agreement between the respondent and the appellant for the grant of a lease to the appellant of Lot 24 being a condition upon which the obligations under the three leases depended. The asserted modifying effect of the alleged collateral agreement upon the validity and effect of the three leases is inconsistent with the express terms of the leases themselves. This inconsistency is of itself, a ground for rejecting the attempt to set up the alleged collateral contract: Hoyt's Pty Ltd v Spencer [1919] HCA 64; (1919) 27 CLR 133; Maybury v Atlantic Union Oil Co [1953] HCA 89; (1953) 89 CLR 507; Gates v City Mutual Life Assurance Society Ltd (1986) 160 CLR 1. Further, as previously noted, the additional evidence discloses that, at the most, there was an agreement between Mr Sandhu and Ginkgo Management Pty Ltd for the latter company to sublease Lot 24 to the respondent and no evidence that the administrators of Landpower Developments Pty Ltd, then the only persons authorised to commit the respondent to any such obligation, ever, finally or unconditionally, agreed to such an arrangement. Indeed, the evidence is against the existence of any collateral agreement such as alleged by the appellant and does not, in my respectful opinion, show any cause against the entry of judgment for the lessor.

50 The learned Master found that the appellant was "technically in possession" of the leased land from 1 December 1999 to 17 December 1999. This finding was not challenged on the appeal, notwithstanding the appellant's assertion that "neither I nor my representatives or agents ever took actual physical possession of Lots 22, 23 or 25 ---". The leases each granted a term commencing on 1 December 1999 together with the right of possession and use of the leased land from that date. Indeed, the right of exclusive possession is the hallmark of the estate and interest conferred upon a lessee by the grant of a lease, Radaich v Smith [1959] HCA 45; (1959) 101 CLR 209; Dampier Mining Co Ltd v Federal Commissioner of Taxation [1981] HCA 29; (1981) 147 CLR 408 at 428 and Street v Mountford [1985] UKHL 4; [1985] AC 809. The learned Master was clearly correct in finding that the appellant was in possession for the period in respect of which the claim for rent and other moneys was upheld.

51 For these reasons I consider that, notwithstanding that the appellant's affidavit of 27 March 2002 was wrongly excluded from consideration, there is nothing contained in that affidavit which should have resulted in the appellant being granted leave to defend that part of the respondent's claim for which judgment was entered. Accordingly, in my view, this appeal should be dismissed. I have already explained why I consider that the cross-appeal should also be dismissed.