PCCEF Pty Ltd v Geelong Football Club Ltd [No 2]

PRACTICE AND PROCEDURE - Application for leave to appeal - Costs - Court's residual discretion to refuse leave even where appeal has real prospect of success - Whether possibility of substantial injustice - Appeals against costs exceptional - Etna v Arif [1999] VSCA 99; [1999] 2 VR 353, Kennedy v Shire of Campaspe [2015] VSCA 47, 24 Hour Fitness Pty Ltd v W & B Investment Group Pty Ltd [2015] VSCA 216, Molonglo Group (Australia) Pty Ltd v Cahill [2018] VSCA 147, Commissioner of the Australian Federal Police v Opal Storm Pty Ltd [2018] VSCA 301, applied.

1 The applicant, PCCEF Pty Ltd ('PCCEF'), seeks leave to appeal in respect of an order that it pay indemnity costs to the respondent, Geelong Football Club Ltd ('Geelong FC'), in relation to a summons dated 6 July 2017. That summons was issued by Geelong FC following the delivery of judgment and pronouncement of orders in a proceeding concerning the construction of a lease. Geelong FC is the tenant under that lease and PCCEF is the landlord. Geelong FC was the successful party in the proceeding.

2 The entity named as the plaintiff, Point Cook Community Entertainment Facility Pty Ltd ('Point Cook'), was found after orders had been pronounced not to have been the landlord, having been deregistered in 2010.[1]

3 A proposal by Geelong FC to regularise the position, either by substituting PCCEF as the correct plaintiff or by adding PCCEF as a party and declaring that the orders were binding upon it, was not accepted by PCCEF, and Geelong FC issued the summons in question seeking relief to that effect. The summons was adjourned pending resolution of the question whether Point Cook should be reinstated. After that had occurred (over the opposition of PCCEF), consent orders were made substituting PCCEF as plaintiff.

4 For the reasons that follow, leave to appeal should be refused.

5 It is necessary to say more about the way in which the matter unfolded.

6 Judgment in the proceeding was delivered on 9 June 2017 and orders in favour of Geelong FC were authenticated on 14 June 2017.[2] On 3 July 2017, Point Cook's solicitors wrote to Geelong FC's lawyers advising that Point Cook had been deregistered on 25 August 2010. The letter further advised that the firm no longer acted and that another firm had been appointed as solicitors for PCCEF. The letter stated that the firm could not act for Point Cook because it did not exist.

7 On 5 July 2017, Geelong FC's solicitors wrote to the new solicitors acting for PCCEF. The letter stated that it was apparent that the proceeding had been prosecuted by PCCEF as landlord and that the former solicitors had been acting on behalf of PCCEF. It asserted that the designation of the incorrect corporate entity as the plaintiff was the result of action taken by the solicitors and the 'controlling mind of PCCEF', Mr Michael Vickers-Willis. Geelong FC's solicitors sought the consent of PCCEF to orders being made for the substitution of PCCEF in place of Point Cook in the orders made by the trial judge. Alternatively they sought the joinder of PCCEF as a plaintiff to the proceeding and the making of supplemental orders to the effect that the orders made by the Court were binding upon PCCEF.

8 On 6 July 2017, the new solicitors for PCCEF wrote to Geelong FC's solicitors stating that PCCEF was not a party to the proceeding and reserving the right to contend that the proceeding was a nullity in circumstances where the plaintiff had been deregistered in 2010. The new solicitors advised that they had briefed senior and junior counsel and that PCCEF would not consent to the proposed orders in the meantime. The letter did not address the claims made by Geelong FC's solicitors that PCCEF had been the landlord or that the former solicitors had acted in the litigation on the instructions of PCCEF, through Mr Vickers-Willis.

9 Geelong FC subsequently served the relevant summons, dated 6 July 2017, on Point Cook and PCCEF seeking the orders it had foreshadowed.

10 The summons was the subject of a mention hearing before the trial judge on 7 July 2017. There is controversy between the parties as to the inferences to be drawn from submissions made on behalf of PCCEF at this hearing and as to the correctness of a finding subsequently made by the trial judge that the Court had been misled (not necessarily intentionally) as a result of submissions made by then senior counsel for PCCEF.[3]

11 At the hearing on 7 July 2017, counsel for Geelong FC foreshadowed making an application for the reinstatement of Point Cook in order to address the contention that the proceeding had been a nullity. For that reason, counsel for Geelong FC asked for the summons to be adjourned.

12 Senior counsel for PCCEF submitted that there was authority in the Australian Capital Territory that said that a company could not be reinstated for the purpose of reinstating a proceeding 'which is otherwise a nullity'. Senior counsel said that PCCEF's 'current intention' was to issue a new proceeding.

13 The trial judge raised an issue that was 'troubling' him, being 'whether the proper plaintiff has had an opportunity to put its case in the trial that's happened'. He continued:

If we've got a situation where it's simply the wrong name of a party, that's quite simple to fix because if a trial is run in the wrong name but really by the same people who would be running the trial for the right name there's presumably no injustice done because arguments are put, it's the same entity really just there's a problem with the name. But you're saying to me it's more than that.

14 Senior counsel responded 'Yes'. He said it was 'very much so a different entity... the stakeholder is in a different entity - there are more stakeholders in the different entity.'

15 The judge then referred to another case where '[i]t was simply a mistake in a particular company and that was easily fixed' and said 'you're telling me it's not like that here'. Senior counsel for PCCEF said 'No'.

16 Senior counsel for PCCEF then took the judge to the decision of Crispin P in Stergiou v Citibank Savings Ltd,[4] which was the authority to which he had previously referred.

17 Counsel for Geelong FC addressed the issue the judge had raised and said the following:

Your Honour made an observation regarding a concern and quite a valid concern about whether the proper plaintiff has had an opportunity to put its case. Your Honour, the landlord ran his case. The named plaintiff didn't exist. To the extent that it's now being suggested that the landlord didn't prosecute this case, we will put that proposition to its proof and if that requires evidence from the solicitors about who they took instructions from then so be it.

That can be explored and will necessarily be explored in what we regard as the second phase under our proposed way of proceeding which is where we seek upon reinstatement if the company is reinstated, to press for supplemental orders and we say those orders can be made and should be made because they will be made without re-agitating issues previously argued and without varying the orders previously made. They'll be made to bind non-parties to that original proceeding and there's some authority given. I don't want to have the argument today about that either.

18 The judge adjourned the summons, as counsel for Geelong FC had requested.

19 On 21 July 2017, PCCEF's solicitors wrote to Geelong FC's solicitors advising that PCCEF intended to commence a proceeding against Geelong FC seeking relief including a declaration as to the proper construction of the lease. The letter advised that the proceeding would in the alternative seek relief by way of rectification. No such relief had been sought previously. The foreshadowed process was later filed but not served.

20 On 25 July 2017, Geelong FC filed and served an originating process seeking orders pursuant to s 601AH(2) of the Corporations Act 2001 (Cth) that the Australian Securities and Investments Commission reinstate the registration of Point Cook and a declaration pursuant to s 601AH(3)(c) that the issuing of the Supreme Court proceeding in the name of Point Cook be validated. The matter was heard by Randall AsJ on 13 September 2017. PCCEF resisted the application.

21 On 13 October 2017, Randall AsJ made an order that the registration of Point Cook be reinstated pursuant to s 601AH(2) and that PCCEF pay Geelong FC's costs of and incidental to the application on the standard basis. Randall AsJ indicated that, given the retrospective operation of s 601AH(5) of the Corporations Act, he did not consider it necessary to make any orders pursuant to sub-s (3).[5] Section 601AH(5) provides, among other things, that if a company is reinstated, it is taken to have continued in existence as if it had not been deregistered.

22 In the reinstatement application, then senior counsel for PCCEF submitted that reinstatement of Point Cook would be futile because the proceeding before the trial judge had been a nullity as a result of having been commenced by a non-existent company. Randall AsJ carefully considered a number of authorities bearing on the question whether a judgment was a nullity on the basis of the non-existence of one of the parties to the relevant proceeding.[6] He held that Stergiou was distinguishable from the present case, because:

there is evidence to suggest (and both parties readily agree) that the proceedings were commenced with an error in the plaintiff's name. Therefore, the proceeding could equally be characterised as a misnomer or a mistaken identity which would be an irregularity rather than being a clear case of null and void. Having identified the issue, it is not appropriate for me to determine the point or say anything more.[7]

23 Randall AsJ concluded that 'in special circumstances, such as the present, it is not a clear case of stating that the proceedings are a nullity, and therefore all decisions based upon it, are also nullities'.[8] Randall AsJ further noted that, even if the orders of the trial judge were a nullity, an order of a superior court is 'never void, only voidable, and therefore the judgment stands until an order is made to annul it'.[9]

24 Point Cook was duly reinstated on or about 27 October 2017. On that day, PCCEF filed a notice of appeal from the judgment and orders of Randall AsJ.

25 The matter came back before the trial judge on 14 November 2017. On that occasion, senior counsel for Geelong FC referred to a draft summons seeking orders that Mr Vickers-Willis and four solicitors of the firm previously acting for Point Cook give evidence as to who gave instructions, who received advice and who the client was understood to be in respect of the construction proceeding. Senior counsel for PCCEF said:

I mean we don't cavil with the fact that there's been a mistake in the identification of the plaintiff and who the proper landlord was, it's clearly wrong. Mr Vickers-Willis is a director at both companies, he gave the instructions, there's no question about that ...

26 However, senior counsel for PCCEF sought to have the matter adjourned further pending the hearing of the appeal from the orders of Randall AsJ, on the basis that if the proceeding was a nullity then there would be no need for the trial judge to hear the applications before him (which also included an application to reopen the case so as to enable PCCEF to run a rectification argument).

27 In the result, on 14 November 2017, the matter was adjourned to 14 December 2017 with an indication given that enquiries would be made as to the appeal.

28 On 22 November 2017, PCCEF's solicitors wrote to the solicitors for Geelong FC noting a number of matters by reference to the draft summons seeking orders that Mr Vickers-Willis and the solicitors swear affidavits. Among other things, the letter confirmed that Mr Vickers-Willis had provided instructions in relation to the proceeding and that he considered that he had done so in his capacity as a director of PCCEF and not on behalf of Point Cook. The letter stated that Mr Vickers-Willis considered that it was by oversight that the incorrect entity had been named as plaintiff in the writ and that this error had not been identified at an earlier time.

29 The appeal against the orders of Randall AsJ was heard by Sifris J on 29 November 2017. The appeal was dismissed on 7 December 2017.[10] Sifris J did not determine the nullity question, which he described as 'vexed and complicated'.[11] He ordered that PCCEF pay Geelong FC's costs of the appeal on the standard basis.

30 Ultimately, on 18 December 2017 the trial judge ordered that the name of the plaintiff in the proceeding be amended to 'PCCEF Pty Ltd' and that the title of the proceeding be amended accordingly. Those orders were not opposed by PCCEF and Point Cook (now reinstated).

31 The trial judge stated that it was difficult to reconcile the comments of senior counsel for PCCEF at the directions hearing on 7 July 2017 with the contents of the letter of 22 November 2017. He said that, '[w]ithout casting any aspersions' on senior counsel, who may well have believed the position to be as he indicated, it was 'fair to conclude that the Court was misled'.[12] In any event, it had been 'incumbent on both parties and their practitioners to ensure that the Court was informed of the true position as soon as it was established'.[13] He further stated that, once it was accepted that PCCEF had conducted the proceeding from the beginning and that Point Cook had been named as plaintiff in error, 'reliance by PCCEF on the nullity point was entirely unjustifiable' and the error as to the name of the plaintiff was 'clearly within the scope of the "slip" rule'.[14] PCCEF was held to have breached the Civil Procedure Act 2010 by resisting the relief sought in the summons, causing 'undue prolongation of a case by the maintenance of groundless contentions'.[15] The judge said that, rather than remedying the 'slip' expeditiously as it was obliged to do, PCCEF had sought to render the judgment ineffective by a strategy that had no relation to the real issues in dispute between the parties.[16]

The critical consideration - once it is established that PCCEF was controlling the litigation from the beginning - is that PCCEF was prosecuting a technical legal point which was available only because of its own error and which had no relationship to the merits of its case, in the hope of gaining a collateral advantage in the proceeding. Such a course is mischievous to say the least, and invites the question - when exactly did the error in relation to the name of the Plaintiff become apparent, and further, when did that error become apparent to an officer of this Court? In the circumstances, it is unnecessary to consider these questions. Assuming that the mistake was discovered shortly before it was brought to the attention of the Court, PCCEF was nonetheless obliged by the CPA to consent to Orders in the form or similar to the form sought by the Defendant in its summons of 6 July 2017.[17]

33 PCCEF seeks leave to appeal on four proposed grounds. It is convenient to explain the grounds before turning to the question of leave to appeal.

34 First, PCCEF contends that the trial judge erred in failing to recognise that PCCEF could not immediately consent to the orders sought in the summons, until at least the reinstatement application was determined. It is said that, if the proceeding was a nullity as a result of being commenced by a non-existent party, then any orders made on the summons would also have been nullities. Crispin P held in Stergiou, among other things, that a step taken in a proceeding which was a nullity would itself be a nullity.[18] Mr Young QC, on behalf of PCCEF, relied on Deveigne v Askar,[19] as well as Stergiou. The reinstatement application, which Geelong FC proposed and prosecuted, was a necessary step to avoid this problem before orders on the summons could be made.

35 By the second proposed ground, PCCEF contends that the only cause of delay in the conduct of the summons was its opposition to the reinstatement application, which was not improper because it was sought to have the question of 'nullity' resolved. This proposed ground rests on the same foundation as the first, namely that the summons could not be dealt with while the 'nullity' issue was unresolved.

36 Thirdly, PCCEF contends that the judge erred in finding that the conduct of PCCEF caused material delay resulting in significant costs in respect of the summons. This proposed ground is linked with an argument that the costs of the reinstatement proceeding and appeal were separately dealt with. But again it depends on PCCEF's argument that it could not accede to the orders in the summons if the proceeding was a nullity.

37 Finally, PCCEF contends that the judge erred in finding that the Court had been misled. It is said that senior counsel and the judge were at cross-purposes at the directions hearing on 7 July 2017, because senior counsel, while referring to the two corporate entities having different 'stakeholders', was seeking to emphasise the nullity point as the reason why the case was not one of simple misnomer.

38 It has long been the case that appeals as to costs are exceptional. Section 17A(1)(b) of the Supreme Court Act 1986 formerly provided that an order made by the Trial Division constituted by a judge 'as to costs which are in the discretion of the Trial Division' was not subject to appeal except by leave. This provision was considered by the Court in Etna v Arif.[20] Batt JA, with whom Charles and Callaway JJA agreed, quoted with approval the following observations of Priestley JA in Wentworth v Rogers [No 3] in respect of the corresponding provision in New South Wales:

One of the purposes of this provision is to ensure that costs questions, important though they frequently are to litigants not only cannot be further litigated by a party as of right on appeal, but also may only be allowed to be further litigated by appeal if the Court of Appeal thinks there is some good reason, over and above the Court's own opinion of what would have been the best costs order in the particular circumstances, for doing so. In a great many cases, including the present, costs are in the discretion of the Court; they also seem to me to fall within the category of matters of practice and procedure.[21]

39 Batt JA went on to state that the appellant in that case had not succeeded in the 'difficult task of showing that leave should be granted'.[22] He elaborated by stating that no question of principle had been raised in what was a 'paradigm matter of practice and procedure', and that he saw 'no good reason, over and above whatever opinion this court might have as to the best costs order in the circumstances, for granting leave'.[23]

40 Although the Supreme Court Act no longer contains a specific requirement for leave to appeal in relation to a costs order, the above observations remain apposite to the general requirement for leave to appeal now found in s 14A. By virtue of s 14C, it is a necessary condition for the granting of leave to appeal that the appeal has 'a real prospect of success'. However, the Court retains a discretion whether or not to grant leave even when it is so satisfied.[24] The exercise of that discretion may be informed by considerations including the possibility of substantial injustice or the character of the matter as one of practice and procedure.[25] As in Etna v Arif, another consideration may be whether any point of principle is raised.

41 It follows that the leave question may sometimes be approached by first considering discretionary considerations aside from the proposed appeal's prospects of success. In that context, appeals against costs orders have continued to be recognised as exceptional.[26]

42 Mr Young QC submitted that leave should be granted because the trial judge had made serious errors of fact and principle. The error of fact lay in the manner in which the judge found that the Court had been misled. The error of principle was the judge's conclusion that, once it became apparent that the proceeding had been brought and conducted by PCCEF but in the name of Point Cook, the error could and should have been repaired by resort to the slip rule.

43 There is force in PCCEF's submissions in respect of both these matters. Although the judge couched his finding that the Court had been misled in careful language, we do not think it can safely be concluded that anything said by senior counsel on 7 July 2017 was misleading. It seems to us that multiple considerations were being addressed simultaneously, at times rather indirectly. The exchanges between senior counsel and the judge, over quite a short period, canvassed: the 'stakeholders' in the two companies (the shareholders of which, we were told without objection, were different); whether the landlord had been able to put its case; whether the landlord should be allowed to bring a claim in rectification; whether the proceeding was a nullity; and whether the case was simply one of misnomer.

44 But even putting aside the question whether the Court was misled on 7 July 2017, the judge's 'critical' finding was that PCCEF was obliged to inform the Court once it became clear to its new legal advisers that Mr Vickers-Willis had instructed the former lawyers in the proceeding on behalf of PCCEF and not Point Cook.[27] We therefore do not think that the costs decision turned on the impugned finding as to the Court being misled. As a result, we would not grant leave in order to challenge that finding.

45 The judge's conclusion that the case attracted the slip rule was, however, fundamental. By deciding that the case could have been dealt with under the slip rule, the judge implicitly rejected the proposition that it was necessary to reinstate Point Cook, and the proposition that, failing that step, the proceeding was a nullity. In an appropriate case, that would be a question of principle warranting the grant of leave to appeal, even an appeal only as to costs. But for the reasons that follow, we do not think that this is such a case.

46 The question whether the construction proceeding was a nullity was recognised as one of difficulty and complexity by Randall AsJ and Sifris J, neither of whom resolved it. The point effectively went away once Point Cook was reinstated. This Court is therefore being asked to address a large and difficult legal issue, which did not need to be resolved in the subject proceeding or proceedings related to it but arose only as a matter bearing upon the costs discretion. In that context, the issue was not addressed in terms by the trial judge, who did not deal with the authorities, but can be taken as having regarded them as distinguishable.[28] The first full consideration of the point, if leave were to be granted, would therefore be by this Court in an appeal directed only to the re-exercise of the costs discretion regarding this particular summons.

47 More fundamentally, the question need not be decided as part of the proposed appeal in any event. The substance of the judge's decision can be reduced to a finding that significant costs and delay were incurred as a result of PCCEF's failure to bring promptly to the Court's attention that it had been the true plaintiff with responsibility for the conduct of the proceeding. On the judge's findings, had that matter been known, the reinstatement proceedings would have been unnecessary. Whether that is because, as the judge held, the slip rule could be employed by consent, or because, as we are inclined to think, the availability of that rule would then have fallen for argument and determination by the trial judge, is ultimately unimportant. On either view, the lack of timely disclosure that PCCEF had, through Mr Vickers-Willis, conducted the proceeding lay at the heart of the delay in dealing with the summons. For this reason, the case does not squarely present the 'nullity' question for determination. Instead, the issue only arises indirectly in the course of considering hypothetical scenarios that might have played out, had the true position been fully disclosed when it ought to have been.

48 We are also conscious that the question of costs in this matter is not a large one. The issue is not who should pay the costs, but whether costs should be on the standard or indemnity basis. This amounts to no more than a difference in the onus of proof as to the reasonableness of the incurring of the costs.[29] The amount in issue is unlikely to be substantial and any error in the reasons of the trial judge is not likely to be the cause of substantial injustice.

49 Finally, it cannot be escaped that, even if the judge's conclusion as to the slip rule was shown to be in error, it would be significant in re-exercising the costs discretion that the whole issue arose only as a result of the error made by PCCEF or its advisers in the conduct of the proceeding. While not distinctly advanced, it seems, as a basis for indemnity costs below, we would not see that consideration as being foreclosed if the discretion were to be re-exercised. In that connection, we note that the judge accepted that the conduct of PCCEF 'necessitated' the filing of the summons.[30]

50 In the circumstances, the case is not appropriate for the determination of the question of principle advanced by PCCEF.

51 While not formally within its proposed grounds of appeal, PCCEF put its argument also on the basis that, whether or not it was correct in law to have regarded the proceeding as a nullity, the issue was plainly one which could legitimately be advanced, supported by the authorities on which PCCEF relied in this Court. We accept that is so. However, of itself that would not suffice to displace the exercise of the trial judge's discretion as to costs. If the point was nonetheless bad, as the judge regarded it, then his finding that consent should have been given to the orders in the summons earlier would still stand. So much is clear from the judge's observation that it was not 'of any import that there may have been interesting and arguable legal points before Randall AsJ and Sifris J'.[31] If the point was good, as we have already said,[32] the lack of timely disclosure still lay at the heart of the delay. The fact that the nullity point was properly arguable therefore does not advance the case for granting leave to appeal.

[1] In fact, although the proceeding was commenced in that name, the true name of the deregistered entity was Pt Cook Community Entertainment Facility Pty Ltd. Nothing turns on the difference.

[2] Point Cook Community Entertainment Facility Pty Ltd v Geelong Football Club Ltd [2017] VSC 313 (Croft J).

[3] Not senior counsel who appeared on this application for leave to appeal.

[4] [2005] ACTCA 15 ('Stergiou').

[5] Re Pt Cook Community Entertainment Facility Pty Ltd [2017] VSC 633 [63].

[10] Re Pt Cook Community Entertainment Facility Pty Ltd [2017] VSC 727.

[12] PCCEF Pty Ltd v Geelong Football Club Ltd [2018] VSC 258 [62] ('Reasons').

[17] Ibid [65] (emphasis in original).

[18] Stergiou [2005] ACTCA 15 [27].

[19] [2007] NSWCA 45; (2007) 69 NSWLR 327, 332 [12]-[13] (Giles JA), 349-50 [106]-[107], 351-2 [113]-[114], 357-9 [123]-[128] (McColl JA, with Hodgson JA agreeing).

[20] [1999] VSCA 99; [1999] 2 VR 353.

[21] Ibid 378 quoting Wentworth v Rogers [No 3] (1986) 6 NSWLR 642, 651.

[24] Kennedy v Shire of Campaspe [2015] VSCA 47 [14] (Whelan and Ferguson JJA); Northern Health v Kuipers [2015] VSCA 172 [11] (Kyrou and McLeish JJA); Burgoyne Real Estate Pty Ltd v Dutt [2017] VSCA 372 [65]-[68] (Beach and Ashley JJA).

[25] Molonglo Group (Australia) Pty Ltd v Cahill [2018] VSCA 147 [96] (Maxwell ACJ, Whelan and Kyrou JJA); Cargill Australia Ltd v Viterra Malt Pty Ltd [2018] VSCA 260 [111]-[113] (Kyrou and McLeish JJA); Commissioner of the Australian Federal Police v Opal Storm Pty Ltd [2018] VSCA 301 [25]-[27] (Priest, Ashley and Weinberg JJA).

[26] 24 Hour Fitness Pty Ltd v W & B Investment Group Pty Ltd [2015] VSCA 216 [53] (Hansen, Ferguson and McLeish JJA); AJH Lawyers v Mathieson Nominees Pty Ltd [2015] VSCA 227 [89]- [90] (Hansen and McLeish JJA, with Robson AJA agreeing); Bodycorp Repairers Pty Ltd v GDG Legal Pty Ltd [2018] VSCA 32 [19] (Ferguson CJ, Whelan and McLeish JJA).

[27] See [32] above.

[28] Both Stergiou and Deveigne v Askar were mentioned in a footnote to PCCEF's written submissions as to costs but were not the subject of oral argument.

[29] Supreme Court (General Civil Procedure) Rules 2015, rr 63.30, 63.30.1.

[30] Reasons [67(c)]. It is not entirely clear which conduct the judge had in mind. It may be significant that he omitted the limiting words 'since the identification of the error in the description of the named plaintiff' that had appeared in the corresponding submission of the plaintiff (which he referred to in a footnote).

[32] See [47] above.