Randall v City of Canada Bay Council

Court of Appeal (NSW)|2016-12-01|Before: Basten JA, Simpson JA, Payne JA, Mr P, Kunc J, White J

Solicitors: Mills Oakley Lawyers (Respondent) File Number(s): 2016/72355 Decision under appeal Court or tribunal: Supreme Court Jurisdiction: Equity Division Citation: [2015] NSWSC 1759; [2015] NSWSC 1841; [2016] NSWSC 36 Date of Decision: 25 November, 2015; 3 December 2015; 8 February 2016 Before: Kunc J File Number(s): 2013/5606

[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]

Judgment

BASTEN JA: This appeal arises out of a dispute between a company which has since been de-registered, Phoenix Commercial Enterprises Pty Ltd ("Phoenix") and the present respondent, City of Canada Bay Council ("the Council"). [1] In 2003, Phoenix was the lessee of certain parcels of land owned by the Council on which, in accordance with the terms of two leases, it was entitled to erect outdoor advertising structures. [2] In June 2003 the Council terminated the leases for unpaid rent. The validity of those terminations was disputed in the first proceedings, brought by Phoenix. The Council cross-claimed for unpaid rent. [3]
Those proceedings were heard and disposed of by White J on 23 February 2009. [4] Phoenix was partly successful in its claim against the Council, but unsuccessful in resisting the Council's claim for unpaid rent. Its limited success allowed it a small set off against the Council, thus reducing its debt to the Council to a little under $1 million. Phoenix appealed from that judgment, as did the Council. Phoenix was unsuccessful, but the Council was successful in removing the set off, with the result that the Council's judgment against Phoenix was increased to more than $1.6 million. [5] There was a subsequent (unsuccessful) attempt by Phoenix to re-open the judgment of this Court, under r 36.15(1) of the Uniform Civil Procedure Rules 2005 (NSW) ("the UCPR"). [6]
Absent any application for special leave to appeal to the High Court, that should have been an end of the proceedings. It was not. On 7 January 2013 Carlene Randall, a former director and shareholder of Phoenix, commenced proceedings against the Council, seeking to reopen the judgments in this Court and the judgment at first instance in the Phoenix proceedings. As will be noted below, there were reasons why that proceeding should have been summarily dismissed. However, that did not happen and there was a further trial in the Equity Division, which ran for five days, together with three further occasions on which written submissions were filed. On 25 November 2015 Kunc J delivered a lengthy and comprehensive judgment dismissing the fresh proceeding. [7] The order dismissing the amended statement of claim was made on 3 December 2015. [8] On 17 December 2015, Ms Randall filed a notice of motion seeking to reopen the principal judgment, pursuant to UCPR, r 36.16(3A); that application was also dismissed. [9] The present appeal is brought from those judgments (and a separate costs judgment [10] ).

(a) whether leave required

Whether the principal judgment of Kunc J was final or interlocutory was not debated in this Court; if interlocutory, the matter could not have proceeded without leave, pursuant to s 101(2)(e) of the Supreme Court Act 1970 (NSW). That question was, in any event, moot, because the putative appellant did not file a notice of intention to appeal, nor a notice of appeal within the time prescribed by the rules. Rather, the appellant waited until after 8 February 2016, when Kunc J dismissed the re-opening motion.
On 7 March 2016 Ms Randall purported to file a notice of appeal seeking to appeal from the re-opening judgment and the principal judgment. So far as the appeal concerned the principal judgment, it was clearly out of time and required leave. So far as the appeal concerned the reopening judgment, it was brought from an interlocutory, rather than a final, judgment and required leave. (As with a leave application, one unsuccessful application does not, in theory, preclude another.) Further, many of the issues raised on the application to reopen sought to reagitate issues already addressed; the rest were discrete and fell within a limited compass.
For reasons which need not be explored, the matter proceeded to a hearing, as if leave were not required. The matter was heard as an appeal by this Court on 1 December 2016. By that stage, the appellant was relying on a second further amended notice of appeal, filed on 15 August 2016. Having now been heard it should be disposed of on that basis.

(b) standing of appellant

There is a further matter of background to which reference should be made. Phoenix, arguably the only proper party to the litigation, was the subject of liquidation proceedings which commenced in 2011. Although not referred to by the appellant in her chronology in this Court, Phoenix was subsequently wound up and was deregistered on 6 January 2013.
Had there been any basis for the proceedings before Kunc J, they should have been brought by the liquidator (proceedings being commenced prior to deregistration) or, once the deregistration had occurred, pursuant to an application to reinstate the company under s601AH(2) of the Corporations Act 2001 (Cth), a matter to which the Australian Securities and Investments Commission should have been a party. Neither step was taken. It is tolerably clear that Ms Randall had no standing to litigate on behalf of the company, in her own name.

Irregularity was mounted upon irregularity. Ms Randall was not represented in this Court by a lawyer, nor did she appear on her own behalf. Rather, she sought leave (through her husband, Ferdinando Agresta) that he be permitted to represent her on the appeal. Her application was based on two propositions, namely (1) that she was in poor health and not able to represent herself and (2) that her husband was more familiar with the subject matter of the proceedings than she was. What she did not reveal was that her husband had been bankrupted in 2010 and remains an undischarged bankrupt. He had also been a principal witness for the company in the proceedings before White J. Pursuant to an affidavit affirmed on 28 November 2016 in this Court, Ms Randall sought to call further evidence, which depended almost entirely on things done and things said by Mr Agresta. It is clear that he is the moving party behind this continued litigation, although Ms Randall is the only person at risk of an adverse costs order.
There is little doubt that these proceedings are now an abuse of process. Leniency appears to have been accorded to Ms Randall and Mr Agresta at all stages, probably on the assumption that neither the court nor a public authority should be diligent to apply procedural rules to litigants in person. However, there comes a point at which basic principles require that procedural breaches not be ignored. The result in this case has clearly been the incurring by the Council, a public authority, of excessive legal costs, in addition to a judgment which is probably unrecoverable. Undue resources of the courts have been expended on this litigation, which is not merely a cost to the public purse, but results in the determination of legitimate claims pursued by other litigants being delayed, with the inconvenience, cost and potential for injustice that attends such circumstances.

Application to appear for appellant

In this Court, Mr Agresta renewed his wife's application that he be permitted to appear for her. Although he had been granted leave to appear before the primary judge and the Registrar, it was by no means clear that leave should be granted by this Court. However, the appellant having been given no earlier notice that leave should be refused, the Court was minded to grant leave on a conditional basis, expressed in the following terms: "Mr Agresta, the Court is willing to give you a qualified right to present the appellant's case, qualified in the sense that we will reconsider your situation if it appears that what is being said is not of assistance to the Court. The reason for that is that non-legal representation is not usually permitted because it is often not of assistance to the Court, and the representative is not subject to the discipline of the Court in the same way that an admitted practitioner is, and that discipline would include the ability to make costs orders against a practitioner who had unnecessarily caused expenditure to the other party. Given that you are bankrupt, it's clear that no relevant costs order could be made if you were to run up unnecessary expenditure. Finally, the Court is by no means persuaded that you would be in a position to give useful assistance given the material that we've seen on the papers so far. We'll proceed on that basis, and we'll stop you if we think it necessary to do so."

Application to call further evidence

Even after manifest failure to achieve any legitimate forensic purpose over some six years, less than a week before the hearing in this Court the appellant filed (or claimed to have filed) a notice of motion supported by an affidavit from the appellant seeking leave to adduce further evidence. The affidavit ran to 79 paragraphs. The appellant was not available for cross-examination on her affidavit.
Pursuant to s 75A(8) of the Supreme Court Act, the Court shall not receive further evidence, on an appeal from a judgment after a trial, "except on special grounds." The grounds for the application, identified in the affidavit, included the proposition that the evidence could not have been obtained with reasonable diligence for use at the trial.
The application is best described as a charade. The first four documents were created between 16 June 2003 and 1 March 2007. Some of the documents were actually available at the trial before White J. The first document was a letter to Phoenix from a bank offering a loan, which Ms Randall affirmed Mr Agresta told her that he had misplaced. The only new document was an affidavit of a third party, Stephen Nixon dated 11 November 2016. Mr Nixon stated that he was available and present at the trial before Kunc J but was not called. That was because objection was taken by the Council to his evidence and the objection was upheld.
As the Court indicated in the course of the hearing, the application to adduce further evidence was refused. [11] The evidence was all material which was either available or should have been available to Phoenix at the trial before White J and before Kunc J. It failed to satisfy the test in s 75A(8).

Standing

The appellant appealed against the whole of the judgment of Kunc J, other than the finding that she had standing to bring the proceedings. The respondent Council did not challenge that finding. [12] Nevertheless, the matter is one of principle and the reasoning of the trial judge (in this respect alone) is evidently erroneous. It is important to note why that is so, though the outcome of the appeal cannot be affected and what follows is unassisted by submissions.
The points of objection raised by the Council were identified in the judgment in the following terms: "[70] First, relying on the ordinary principles of privity of contract, Council submitted that because the litigation arises out of the Leases, which were between the Council and Phoenix, Ms Randall did not have standing to sue on the Leases. [71] Second, Ms Randall does not have a sufficient interest to invoke r 36.15(1). She was not a party to the Leases nor to the proceedings before White J or the Court of Appeal. Nor could it be said that she was a person aggrieved by the judgments or orders of the Court of Appeal."
The first limb of the Council's case was accepted; the second limb was not. The judge treated r 36.15(1) as in effect an "open standing" provision, because there is no express indication within the rule as to the persons by whom an application can be brought. There being no limitation within the rule, any limitation on who may rely upon the rule must therefore be implied. [13] The judge held that no such implication should be accepted. Four reasons and two judgments were relied upon in support of that conclusion.
The first reason was that, by contrast with other related provisions, no express limitation was included in r 36.15(1). In particular, the contrast was said to flow from subr (2). [14] It is convenient to set out the rule in full: 36.15 General power to set aside judgment or order (1) A judgment or order of the court in any proceedings may, on sufficient cause being shown, be set aside by order of the court if the judgment was given or entered, or the order was made, irregularly, illegally or against good faith. (2) A judgment or order of the court in any proceedings may be set aside by order of the court if the parties to the proceedings consent.
Secondly, it was said that any implication was "unnecessary" because the power of the court was engaged in relation to any irregularity, illegality or lack of good faith, "on sufficient cause being shown". [15] That was seen to be a sufficient safeguard against abuse, although it appears not to relate to the identity of the applicant, but to the basis of the application.
Thirdly, it was said that the rule was designed to avoid an impropriety in the administration of justice and thus warranted a liberal, rather than a restrictive interpretation. [16] Fourthly, reliance was placed upon the requirement in s 56 of the Civil Procedure Act 2005 (NSW) that the Court must give effect to the overriding purpose of the Act and rules, namely to facilitate the just, quick and cheap resolution of the real issues in the proceedings. [17]
None of this reasoning is persuasive. So far as it concerns the absence of express identification as to who may invoke r 36.15, that rule does not stand in contrast to other rules, including r 36.16. The reference to "the parties" in r 36.15(2) is not by way of identifying who may apply, but rather identifying those who must consent. Similarly, r 36.17 (the so-called "slip rule") refers to a correction being made "on the application of any party or of its own motion", the purpose of which is to permit the court to act without an application by a party or, one may infer, any other person. There may be a question as to whether r 36.15(1) can be invoked by the court of its own motion, but that question did not arise.
Nor is it correct to say that r 36.15 should be given a liberal, rather than a restrictive reading. The rule is significant because it constitutes a limited exception to the overriding need for finality in litigation which has been the subject of a final judgment. It does not confer any general power to remedy impropriety in the administration of justice, over and above statutory rights of appeal and the limited supervisory jurisdiction of the Supreme Court.
Finally, the reference to s 56 is also inapt. The just, quick and cheap resolution of the real issues in proceedings is not promoted by allowing a third party to the proceedings to reopen a final judgment. In civil proceedings, the issues are determined by the parties, not by by-standers, officious or otherwise.
Two cases were referred to in the reasoning. First, it was said that a "similar problem" had confronted Jenkyn J in Nicholson v Nicholson". [18] In fact, the problem was quite dissimilar. The question arose in a case dealing with the predecessor, not of r 36.15, but of r 36.16(1); the application to vary was made, not by the absent respondent, but by the party who had sought and obtained the order.
Consideration of the meaning of the term "party" in r 36.16(2)(b) is to be found in the second case, being the decision of this Court in JP Morgan Chase Bank, National Association v Fletcher. [19] That case concerned an application by a party to a transaction with the company (then in liquidation) which was directly affected by an order of the court obtained by the liquidator, ex parte, permitting an extension of time which would render its transaction with the company voidable. The question was whether reference in the rule to an application made "in the absence of a party" was restricted to the absence of a party to the proceedings. The Court held that it was not. Although the decision of the Court was reversed by the High Court, [20] no issue was raised on the final appeal in relation to that aspect of the rule. In any event, the construction of a different rule, with a different purpose and in different circumstances, provides little assistance in relation to the question of standing under r 36.15(1).
As this matter is not dispositive of the appeal, it is neither necessary nor desirable to address the issue further. It is sufficient to note that the approach adopted by the primary judge was inconsistent in principle with the reasoning of the High Court in Re McBain; Ex parte Australian Catholic Bishops Conference, [21] the underlying principle of which was pithily expressed by Gleeson CJ in the following terms: [22] "This Court is asked, by people who were not parties to the action in the Federal Court, to quash the decision of Sundberg J on the ground that it was wrong. People who were not parties to litigation do not have a claim of right to have judicial decisions quashed because they are erroneous."

Basis of challenge to first proceedings

As explained by the primary judge in his principal judgment, Ms Randall and Mr Agresta were shareholders and directors (with other family members) of Phoenix. The judge then set out the critical findings leading to his conclusion that the proceedings should be dismissed: [23] "(1) Ms Randall has standing under r 36.15 and the Court's inherent jurisdiction to bring these proceedings. (2) There were no fraudulent misrepresentations by the Council insofar as it had submitted to White J and the Court of Appeal that it had not acted as a consent authority for the purpose of clause 15(d) of the Leases. (3) There were no fraudulent misrepresentations by the Council insofar as it had submitted to White J and the Court of Appeal that it had validly terminated the Leases. (4) There is no basis to reinstate Phoenix under s 601AH(2) of the Corporations Act 2001 (Cth). (5) None of the various miscellaneous arguments raised by Ms Randall succeed. Even if they were correct, they would not justify the Court granting the relief sought by Ms Randall."
Kunc J effectively divided the matters raised before him into categories (setting aside the question of the reinstatement of Phoenix), namely what were alleged to be "fraudulent misrepresentations" by the Council in the first proceedings, and various "miscellaneous" arguments which did not invoke some concept of fraud.

Basis of appeal

The second further amended notice of appeal filed in this Court on 15 August 2016 contained some 17 pages of grounds, many divided into numerous sub-grounds. The basic premise appears to have been that the appellant could rerun in this Court all the matters (and more) that had been addressed before Kunc J. In fact, many had been raised in the first proceedings; others which had not been raised in the first proceedings, could have been.
An example of a matter falling within the latter category was the validity of the Council resolution terminating the leases. [24] It was treated by Mr Agresta as central to the appeal. Nevertheless, the Council, in its original cross-claim had sought a declaration that the leases had been validly terminated and orders were made by White J to that effect. The notice of appeal from that judgment challenged that finding. [25]
There were numerous other examples of issues which were raised, or could have been raised in the first proceedings. Accordingly, in this Court, Mr Agresta was asked to focus his attention upon the allegation in cl 2A of the amended statement of claim before Kunc J that: "The plaintiffs have discovered since the judgment/orders to [sic] Phoenix Commercial Enterprises Pty Ltd v City of Canada Bay Council fresh material facts which alone, or in combination with previously known facts, raise a serious question to be tried."
What appear to have been relied upon in that regard were matters identified in paragraphs 2B-2G. However, each of those paragraphs (with the possible exception of par 2F) simply alleged that certain steps taken by the Council, being its notice of breach of covenant, notice of termination, re-entry and termination of the leases, were all "false and known to be false by Council and its solicitor". Paragraph 2F alleged a consequential trespass resulting from the re-entry on 1 July 2003. (Paragraph 2G repeated the allegations in the earlier paragraphs.)
In the course of his submissions, Mr Agresta backtracked on the proposition that the validity of the notice of termination had not been raised by Phoenix, stating that it had and that was "the whole issue." [26] He explained how it had been raised before White J, asserting that White J had not addressed the issue. It was a point available to be taken in the Court of Appeal and apparently was taken. [27]
When pressed, Mr Agresta turned to the minutes of the Council for a period in 2003, at some point in which it was assumed that the decision to terminate the leases was made. The minutes, which were only produced before Kunc J, were said to constitute new evidence undermining the validity of the notice of termination, because they revealed no such decision by the Council. The significance of that absence was said to arise because the notice contained an implied representation that it had been made pursuant to a decision of Council under s 371 of the Local Government Act 1993 (NSW). [28]
As this matter appeared to be the high point of the case which Mr Agresta wished to pursue, it is proper that it be addressed in these reasons, although it was more fully and soundly disposed of by Kunc J. Shortly put, the point is lacking in merit for several, independent, reasons.
First, although the minutes were newly obtained, after the completion of the first proceedings, had they been seen to be relevant, they could have been obtained prior to the first trial. They were not, presumably because neither counsel then appearing for Phoenix, nor Mr Agresta nor others advising the company, considered them relevant. That was a forensic decision which certainly bound the company. The appellant cannot be in any better position than the company in this regard.
Secondly, they were only relevant if the notice of termination included an implied representation that there had been a decision of the full Council, pursuant to s 371 of the Local Government Act. If that argument were available, it was based upon the termination notice, which was at all relevant times in the hands of the company.
Thirdly, such a representation was not reasonably available. The notices referred to the land, the leases, the covenant to pay rent and the failure to pay rent and then gave notice that "the Council terminates the leases effective immediately." The document was said to be executed by the Council and was signed by the general manager. If the notice contained any representation, it was a representation of the authority of the general manager, no doubt as a delegate or agent of the Council. The decision was of an operational nature which the Mayor also had delegated authority to make. There was evidence that he in fact made the decision and the general manager gave effect to it by signing the notice. There was simply no basis to find a representation of the kind sought to be invoked by the appellant in order to prove it false and allege that it was known by Council to be so.
Fourthly, the appellant's contention that there had, in some way, been a reversal of the onus of proof in circumstances where it was the Council that had sought a declaration as to the validity of the termination of the leases was also misconceived. As Kunc J pointed out, [29] the validity of the termination and subsequent re-entry were very much in issue in the earlier proceedings. However, Phoenix's case as to invalidity was based not upon any irregularity in the execution of the notice, but on the supposition that there had been no default in payment of rent. Factually, that defence failed, as appeared from the ultimate conclusion of the Court of Appeal that Phoenix had been in default at the termination of the lease and still owed an amount, by way of rent and interest thereon, exceeding $1.6 million.
It is convenient, having regard to these findings, to note a proposition put forward by the Council and accepted by Kunc J as a complete answer to the appellant's claim in any event: [30] "The Council submitted that Ms Randall had failed to demonstrate that even if the judgments and orders were set aside and Phoenix was reinstated, Phoenix would have been able to repay the very large debt it undeniably owed to the Council of $1,626,612.01 in respect of the rent it was bound to pay. In the absence of such proof, there was not 'sufficient cause' under r 36.15 to grant relief even if the balance of the rule were satisfied. That submission is correct and is the first reason why the Court concludes that Ms Randall's claim must fail."
Although Mr Agresta seemed at points to take issue with that finding, he did not raise any basis for challenging the conclusion. The amount payable under the lease was a matter of construction of that document; the amount paid by the company was a fact which was in evidence in the earlier proceedings. White J had noted that there was no evidence before him that the company was in a position to pay the outstanding rent. [31] Nor did any of the allegations about fresh material, even if accepted, demonstrate a basis for disturbing that finding. Accordingly Kunc J was correct in concluding that, even if some fresh evidence demonstrated fraud or misconduct, it would nevertheless not be appropriate to reopen the judgments in the first proceedings.
Once the notice to adduce further evidence in this Court is rejected, the submissions of the appellant were, perforce, focused on the supposed error in the reasoning and findings of the primary judge. That there was an arguable error with respect to standing which was favourable to the appellant did not assist.
That which was alleged to be fresh material, unavailable prior to the first trial, did not qualify as such. The points which could have been raised, including as to the validity of the notice of termination, could have been raised at the first trial. The suggestion that the minutes of the Council demonstrated some basis for challenging the notice of termination was a contrivance and involved arguments which were flawed at almost every step. So much was powerfully demonstrated in the reasons of Kunc J. Although Mr Agresta complained about purported omissions in the reasoning of the primary judge, those submissions were misconceived. Further, although many of the submissions related to the reasoning of the judge under the heading "No valid termination - resolution" (commencing at [164]), it should also be noted that the judge set out the submissions of the parties in great detail - from [113]-[156] - and made further observations at [157]-[163] under the heading "preliminary to resolution", which addressed points which were said by Mr Agresta not to have been addressed.
No purpose is to be served by repeating the reasoning of the primary judge. Points which did not merit detailed consideration were carefully addressed. The conclusion that the proceedings should be dismissed was undoubtedly correct; the reasoning was comprehensive.

Conclusion

The points sought to be made by Mr Agresta being unarguable, and no point being taken about the absence of leave to appeal or the appellant's standing, the Court should make the following orders: 1. To the extent necessary, grant the appellant leave to appeal. 2. Dismiss the appeal. 3. Order that the appellant pay the Council's costs in this Court.
SIMPSON JA: I agree with Basten JA.
PAYNE JA: I agree with the orders proposed by Basten JA and with his Honour's reasons. I share the serious doubts expressed by his Honour about the standing of the appellant to challenge orders made against a de-registered company.

Endnotes

The judgment under appeal is Carlene Randall v City of Canada Bay Council (No 4) [2015] NSWSC 1759 ("Randall") (Kunc J).
Randall at [2].
Randall at [3].
Phoenix Commercial Enterprises Pty Ltd v City of Canada Bay Council [2009] NSWSC 17; 14 BPR 27,565 ("Phoenix").
Phoenix Commercial Enterprises Pty Ltd v City of Canada Bay Council [2010] NSWCA 64.
Phoenix Commercial Enterprises Pty Ltd v City of Canada Bay Council [2010] NSWCA 205.
See fn 1.
Carlene Randall v City of Canada Bay Council (No 5) [2015] NSWSC 1841.
Carlene Randall v City of Canada Bay Council (No 6) [2016] NSWSC 36.
See fn 8.
Tcpt, 01/12/2016, p 8(10).
Respondent's amended outline of submissions, 2 November 2016, at par 20.
Randall at [78].
Randall at [84].
Randall at [85].
Randall at [86].
Randall at [87].
(1974) 2 NSWLR 59 at 64-65; Randall at [75].
(2014) 85 NSWLR 644; [2014] NSWCA 31.
Grant Samuel Corporate Finance Pty Ltd v Fletcher (2015) 254 CLR 477; [2015] HCA 8.
(2002) 209 CLR 372; [2002] HCA 16.
McBain at [23].
Randall at [7].
Tcpt, 01/12/16, p 10(25).
Notice of appeal, matter no 40113/09, par 13.
Tcpt, p 11(11).
Tcpt, p 13(15)-(30).
Tcpt, p 20(3).
Randall at [160].
Randall at [90].
Phoenix at [99].

Amendments 01 February 2017 - [3] - inserting "have" between "should have" and "summarily dismissed". [32] - inserting "since" after "discovered" in quote. 01 February 2017 - [3] - inserted "been" not "have". 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 February 2017

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