Redmond Family Holdings Pty Ltd v GC Access Pty Ltd & Ors

Supreme Court of NSW|2016-10-26|Before: Black J

todians Ltd v Geagea (No 4) [2016] NSWSC 934 - Redmond Family Holdings v GC Access Pty Ltd [2016] NSWSC 796 - Smith v NSW Bar Association [1992] HCA 36; (1992) 176 CLR 256 - Wentworth v Rogers [2002] NSWSC 921 - Wentworth v Wentworth [1999] NSWSC 638 Category: Procedural and other rulings Parties: Redmond Family Holdings Pty Limited (Plaintiff) GC Access Pty Limited (First Defendant) Fullham Hall Pty Limited (Second Defendant) H Ridge Investments Pty Limited (Third Defendant) Patrick Charles Oliver Stone (Fourth Defendant) Mark Henry Skinner (Fifth Defendant) Nicholas Simon Collins (Sixth Defendant) Representation: Counsel: M Bennett (Plaintiff) J J Loofs SC (Fifth Defendant)

Judgment

On 16 June 2016 I delivered judgment ([2016] NSWSC 796) ("Judgment") in these proceedings. I found that a claim for misleading and deceptive conduct, by non-disclosure of a right to capitalise certain loans without the consent of the Plaintiff, was established against each of the Fourth Defendant, Mr Stone and the Fifth Defendant, Mr Skinner. I made directions for the parties to bring in agreed short minutes of order to give effect to my judgment and, if there was no agreement between them, their respective draft orders and submissions, indicating whether an oral hearing was requested. At the parties' request, I subsequently extended the time for delivery of such draft orders and submissions to 31 August 2016. I was ultimately provided with submissions as to orders by the Plaintiff and by the Second, Third, Fourth and Sixth Defendants. The Court was advised that the Fifth Defendant, Mr Skinner, who had shared representation with the other Defendants at the hearing, had retained separate representation and he did not comply with the directions in respect of the filing of draft orders and submissions.
On 30 September 2016, Mr Skinner filed a motion which sought orders that, relevantly, paragraphs 165 and 167 of the Judgment be recalled and that he be granted leave to reopen his case to put further submissions in relation to those paragraphs. Mr Skinner also sought an order that he be granted leave to file a Second Further Amended Defence to the Amended Statement of Claim, by amending paragraph 38 of the Further Amended Defence to the Amended Statement of Claim by replacing a proportionate liability defence based on Part 4 of the Civil Liability Act 2002 (NSW) with a proportionate liability defence based on sections 1041L-1041N of the Corporations Act 2001 (Cth). That motion was supported by an affidavit of Mr Skinner sworn the same date. I heard that motion on 26 October 2016, when Mr Skinner was represented by Mr Loofs and the Plaintiff by Mr Bennett. The other Defendants were excused from appearing on that occasion.

The findings of liability for non-disclosure

Mr Skinner applies, first, to reopen in respect of the finding that he was liability for non-disclosure. I should refer to the way in which this issue arose against Mr Skinner at the hearing, and the manner in which it was addressed in the Judgment, before returning to that application.
I referred to Mr Bennett's opening submissions as to the claim for non-disclosure (Judgment [149]) and observed that: "In opening submissions, Mr Bennett identifies the third basis of Holdings' case as a claim for non-disclosure that two loans owed to the entities associated with Messrs Stone and Skinner allowed them to call for repayment on seven days' notice and direct that repayment be effected by conversion of the loans to shares at the last issue price, the effect of which would be to dilute Holdings' shareholding in GCA (T8-T9). Mr Bennett initially characterised Holdings' primary case as being that the loan agreements did not exist. Mr Bennett then amended Holdings' position in opening to contend that the loan agreements had existed and not been disclosed was its primary position (T31)." I noted (Judgment [150]) that: "This claim is pleaded in a convoluted manner, reflecting the fact that Holdings' primary position had, for much of the case, been that the loan agreements on which Fullham and H Ridge relied to convert their loans to equity were not genuine." I then referred to the pleading of the non-disclosure claim and particularly paragraphs 50 and 52-53 of the Amended Statement of Claim.
I then set out (in Judgment [152]-[153]) the principles that are applicable to dealing with an allegation of misleading and deceptive conduct, by non-disclosure, and observed that misleading or deceptive conduct could be established, in respect of a failure to qualify a statement or by non-disclosure, if that failure or non-disclosure was misleading or deceptive in fact, including where it allowed the other party to infer from silence that the relevant fact did not exist. I referred (at Judgment [153]ff) to the decisions in, inter alia, Miller & Associates Insurance Broking Pty Ltd v BMW Australia Finance Ltd [2010] HCA 31; (2010) 241 CLR 357 and Fabcot Pty Ltd v Port Macquarie-Hastings Council [2011] NSWCA 167 at [209], including the observations of Sackville AJA that: "(iii) The question in a case of alleged misleading or deceptive conduct as a result of non-disclosure is whether in the light of all relevant circumstances, there has been conduct which is misleading or deceptive - While the circumstances in which silence can be characterised as misleading or deceptive cannot be exhaustively defined, unless they give rise to a reasonable expectation that if some relevant fact exists it will be disclosed, mere silence will not support the inference that the fact does exist. (iv) In commercial dealings between individual entities, the characterisation of conduct must be undertaken by reference to circumstances and context … The relevant circumstances include the knowledge of the person who claims to have been misled and any common assumptions or practices established between the parties or in the particular activity or business in which they are engaged. (v) The language of reasonable expectation is not statutory but is an aid to characterising non-disclosure as misleading or deceptive. The judgment as to whether there is such a reasonable expectation is objective. (vi) The invocation of a reasonable expectation that if a fact exists it will be disclosed, directs attention to the effect or likely effect of non-disclosure unmediated by antecedent erroneous assumptions or beliefs, or high moral expectations that exceed the requirements of the general law or of the prohibition imposed by s 42 of the [Fair Trading Act]."
I referred to the evidence in respect of the non-disclosure claim (Judgment [155]ff) and particularly the evidence of Messrs Stone and Redmond. I noted an issue as to whether the version of the loan agreements that contained the conversion right was genuine and noted (Judgment [160]) that: "I proceed on the basis that is now common to both parties, that the first version of the loan agreements was genuine, notwithstanding that the events set out above would have raised real doubt as to that matter had it not been common ground."
I then addressed the question of the Plaintiff's knowledge of the conversion right by reference to the knowledge of its director Mr Redmond (Judgment [162]) and observed that: "In cross-examination, it was apparent that Mr Redmond did not have a precise understanding of the mechanism which had been adopted for the original acquisition of shares in GCA and GCS, which had included both the issue of shares and the transfer of shares to Holdings from companies associated with Messrs Stone and Skinner (T51-52). However, it is plain that the initial arrangement contemplated that Holdings would acquire a specified proportion of the shares of GCA and GCS, being 28% of those shares, and Mr Le Plastrier [who then appeared for the Defendants including Mr Skinner] cross-examined Mr Redmond on that basis (T52), and I infer that he did so in accordance with his instructions. Mr Le Plastrier also put to Mr Redmond in cross-examination (I infer, on instructions) that Mr Redmond was content to provide $400,000 for a 51% shareholding (T54) and no attempt was made to impugn his evidence to that effect. Mr Redmond's evidence in cross-examination, although not particularly precise, made clear that his real objection to the mechanism for conversion of loans to equity in the first version of the loan agreements was that such conversion could occur at the election of Fullham and H Ridge and without Holdings' consent (T54). There was no suggestion that Mr Redmond was told of the terms on which Messrs Stone and Skinner or their associated entities could bring about the conversion of the loans to equity. Indeed, Mr Le Plastrier cross-examined him on the basis that he was not told of that matter, and it was put that he did not ask about those details, although he rightly responded that his solicitor had (at least later) made inquiries to seek to obtain further information (T55)."
I referred to the Defendants' submissions in response to the non-disclosure case and observed (Judgment [163]-[164]) that: "In closing submissions, Mr Le Plastrier submitted that Holdings had not established a causal connection between the Omission (as defined) and entry into the alleged Arrangement (as defined). I do not accept that submission. It seems to me to be simply inconceivable that Holdings would have entered into an agreement to acquire specified percentages of the shares in GCA and GCS, had disclosure been made that any percentage holding which it acquired could be diluted at will by Fullham and H Ridge, at the direction of Messrs Stone or Skinner, by calling upon their loans to GCA and directing that the loans be repaid by an issue of shares in GCA and/or GCS to them or their associated entities. The claim for misleading and deceptive conduct in respect of these matters therefore succeeds against Mr Stone, who made the relevant representations as to the interest that Holdings would acquire in GCA and GCS. It seems to me clear that Holdings would not have invested in GCA and GCS at all, rather than investing on different terms, had it been disclosed that the percentage interest which it acquired could be diluted by Messrs Stone and Skinner and their associated interests at will and without its consent."
Finally, I noted a question as to the form of the pleading in paragraph 52 of the Amended Statement of Claim, to which I will refer below and, in finding Mr Skinner liable for misleading conduct in respect of the non-disclosure of the conversion rights under the first loan agreements, I observed (at [165]) that: "… [T]he Defendants had common legal representation and no submission was made that the position of Messrs Stone and Skinner could or should be distinguished in this regard. I should not distinguish between the position of Messrs Stone and Skinner in this respect, where they did not submit that I should do so and where each of them must have known of the existence of the relevant conversion rights (on the premise that they existed) and could have disclosed them so as to avoid any misleading conduct by non-disclosure."

Mr Skinner's application to reopen as to the findings of liability for non-disclosure

Mr Skinner submits that a power to reopen is available where it is established that a relevant misapprehension exists or a decision has miscarried. I accept, of course, that the court has power to review, correct or alter its judgment until its orders have been perfected by the entry of formal orders: Smith v NSW Bar Association [1992] HCA 36; (1992) 176 CLR 256 at 265; Permanent Custodians Ltd v Geagea (No 4) [2016] NSWSC 934 at [15]. It is, of course, also well-established that, except in exceptional circumstances, a party should not be permitted, after a case had been decided against it, to raise a new argument which it failed to put during the hearing when it had an opportunity to do so: Metwally v University of Wollongong (No 2) [1985] HCA 28; (1985) 60 ALR 68 at [71].
At the same time, there are circumstances in which allowing reopening is appropriate to allow a matter to be addressed by a trial judge which would otherwise be open on appeal, and the court's discretion whether to permit that course must be exercised in the interests of justice, and guided by the provisions of s 56 of the Civil Procedure Act 2005 (NSW): Wentworth v Wentworth [1999] NSWSC 638 at [8]; Wentworth v Rogers [2002] NSWSC 921 at [9]; Kernaghan v Corrections Corporation of Australia Staff Superannuation Pty Ltd (No 2) [2007] FCA 1040 at [13]; Permanent Custodians Ltd v Geagea (No 4) above at [15]. That jurisdiction to reopen at least exists where the court has proceeded according to a misapprehension of the facts or the relevant law and that misapprehension cannot be attributed solely to the neglect or default of the party seeking the rehearing, although an application to reopen may be allowed even if the party seeking it is not entirely blameless: Autodesk Inc v Dyason (No 2) [1993] HCA 6; (1993) 176 CLR 300 at 303; Grimaldi v Chameleon Mining NL (No 2) [2012[ FCAFC 6; (2012) 200 FCR 296 at [773].
In Autodesk Inc v Dyason (No 2) above at 303, Mason CJ observed, in respect of the jurisdiction to reopen that: "What must emerge, in order to enliven the exercise of the jurisdiction, is that the Court has apparently proceeded according to some misapprehension of the facts or the relevant law and that this misapprehension cannot be attributed solely to the neglect or default or the party seeking the rehearing. The purpose of the jurisdiction is not to provide a backdoor method by which unsuccessful litigants can seek to re-argue their cases."
Although his Honour's observation was in dissent, as to the outcome of the application in that case, it was subsequently approved by the High Court in Elliott v The Queen [2007] HCA 51; (2007) 234 CLR 38 at [32].
In De L v Director-General, Department of Community Services (NSW) (No 2) [1997] HCA 14; (1997) 190 CLR 207 at 215, the majority of the High Court similarly observed that the court may reopen a judgment: "[I]f it is convinced that, in its earlier consideration of the point, it has proceeded 'on a misapprehension as to the facts or the law', where 'there is some matter calling for review' or where 'the interests of justice so require'. It has been said repeatedly that a heavy burden is cast upon the applicant for reopening to show that such an exceptional course is required 'without fault on his part', ie without the attribution of neglect or default to the party seeking reopening." [Citations omitted]
In New Cap Reinsurance Corporation Ltd v A E Grant [2009] NSWSC 950 at [20], Barrett J (as his Honour then was) noted that: "… these principles, as they apply in a case such as the present, can be summarised in one basic proposition, namely, that a single judge whose decision is susceptible to appeal through readily available channels (with or without any preliminary need for leave to appeal) should allow re-opening after judgment where it is obvious to that judge that the decision has miscarried and that the miscarriage may be rectified and the situation retrieved by attention to the matter by that judge rather than by an appeal court. What is highly undesirable is that the first instance judge should be cast in the role of hearing what amounts to an appeal against his or her own decision."
The principles relevant to reopening were helpfully reviewed by Rothman J in Permanent Custodians Ltd v Geagea (No 4) above, to which I have had regard. I proceed on the basis, noted by Rothman J (at [19]), that the principles applicable at first instance are broadly the same as would be applicable on appeal, although s 56 of the Civil Procedure Act 2005 (NSW) may require a more flexible approach in dealing with a matter at first instance.
Turning now to the basis of the application to reopen in this case, Mr Loofs submits that the Court recorded (in Judgment [165]) that there was no differentiation between the positions of Mr Skinner and Mr Stone in the Defendants' submissions and that Mr Skinner bore the same liability as Mr Stone. Mr Loofs submits that there was significant differentiation between the position of Mr Skinner and Mr Stone regarding the allegation of omission and that a submission had been made that Mr Skinner had no knowledge of the non-disclosure and that no such submission was made in respect of Mr Stone. Mr Loofs refers to paragraphs 3 and 4 of the Defendants' final submissions at the hearing, where the Defendants had taken issue with a submission by the Plaintiff in respect of Mr Skinner which they characterised as tantamount to an allegation of fraud; referred to a passage of cross-examination where Mr Skinner said he did not know either whether a version of the loan agreement that did not include the conversion right was provided to Mr Redmond in November 2011, or whether a version of the loan agreement that provided for converting the loan to capital was first provided to Mr Redmond in January 2012; and submitted that this exchange did not establish that Mr Skinner "knew" that agreements with capitalisation provisions had been "withheld" from Mr Redmond. The Defendants did not, however, submit at the hearing that that evidence was of any relevance to the claim for misleading or deceptive conduct, by non-disclosure, against Mr Skinner and the observation in the judgment that the Defendants had not sought to differentiate the position of Mr Stone and Mr Skinner in respect of that particular claim was correct.
Mr Loofs also submits that it is an element of the Plaintiff's claim for misleading or deceptive conduct by non-disclosure that they have a "reasonable expectation" that the conversion facility be disclosed and, adopting the observations of Sackville AJA in Fabcot Pty Ltd v Port Macquarie-Hastings Council above at [209], to which I referred in the Judgment, such an expectation must be established by: "Circumstances and context … The relevant circumstances include the knowledge of the person who claims to have been misled and any common assumptions or practices established between the parties or in the particular activity or business in which they are engaged."
Mr Bennett, who appears for the Plaintiff, responds there was no differentiation of any moment between Messrs Skinner and Stone, and points to the last sentence of Judgment [165] (quoted above) where I noted that both Messrs Stone and Skinner: "must have known of the existence of the relevant conversion rights (on the premise that they existed) and could have disclosed them so as to avoid any misleading conduct by non-disclosure."
Mr Bennett points out that Mr Skinner accepted in cross-examination that he was aware of the Plaintiff's investment of $400,000 in the companies; he was aware that, in exchange for that additional investment, the Plaintiff's shareholding was to increase from 28% to 51%; and was aware of the conversion rights (T232) and benefited, through his family trust, from the conversion rights. Mr Bennett points out that Mr Skinner also accepted, in cross-examination, that he personally did not take any step to make Mr Redmond, his financial adviser or his solicitor aware of the right to conversion (T233). Mr Bennett submits, where the relevant issue was Mr Skinner's failure to inform the Plaintiff of the conversion rights, there is no differentiation between Mr Skinner and Mr Stone, and no misapprehension reflected in the Court's judgment.
In reply, Mr Loofs accepts that a case for non-disclosure could be established against Mr Skinner if he: "knew that there had not been the relevant disclosure, which could permit an equating of the position of [Mr] Skinner with [Mr] Stone". The difficulty with that proposition, however, is that Mr Skinner did know, relevantly, that there had been a non-disclosure by him, in his dealings with the Plaintiff and its representatives, just as Mr Stone knew that there had been a non-disclosure by Mr Stone, in Mr Stone's dealings with the Plaintiff and its representatives, irrespective of whether either of them knew what the other of them, or any third party, may have conveyed to the Plaintiff. It seems to me that this submission wrongly treats knowledge of non-disclosure by others as essential to establishing liability arising from the fact of non-disclosure by Mr Skinner.
Notwithstanding the detail of Mr Loofs' submissions in respect of this matter, it seems to me that no relevant misapprehension is established, either on the part of the Court or Mr Skinner's legal representatives at the trial. It seems to me that Mr Skinner's knowledge whether loan agreements with capitalisation provisions had been "withheld" by Mr Stone or others from Mr Redmond was not a necessary aspect of the claim for misleading or deceptive conduct, by a failure to disclose, against him. The factual basis of the finding of misleading or deceptive conduct, by non-disclosure, against Mr Skinner was that Mr Skinner knew of the conversion rights in the first loan agreements; those rights were plainly material to whether the Plaintiff would acquire the percentage of shares in the companies for which it had bargained; and Mr Skinner did not disclose the first loan agreements or the conversion rights to the Plaintiff, or its representatives, during his several dealings with the Plaintiff and its representatives in respect of the Plaintiff's investment in the companies. That approach that I adopted to that non-disclosure was consistent with that adopted, in respect of somewhat similar facts, on appeal in APIR Systems Ltd v Donald Financial Enterprises Pty Ltd [2009] FCAFC 45, to which reference was made at the hearing and in the Judgment. That approach is reflected in the last sentence of Judgment [165] and it involves no misapprehension as to either the relevant facts or Mr Skinner's case.
Mr Loofs also submits that what he describes as a "late and inchoate" contention as to Mr Skinner's liability based on omission by silence, without identification of certain matters, led to a position where his legal representatives could not reasonably have apprehended the content of the case against him, or could not have done so other than at a level of generalised assertion. There is no doubt that there were issues as to the way in which the Plaintiff's case was pleaded and put, to which I referred in the Judgment. However, I do not consider that the Defendants' generally, or Mr Skinner particularly were caught by surprise by the non-disclosure case for the reasons noted below.
First, Mr Loofs submits that particularity was required for a pleading of a case of non-disclosure by omission. It was open to the Defendants, including Mr Skinner, to seek further particulars of the claim against them at any point. It seems to me that, having conducted the trial on the basis that further particulars were not required, it is not open to them to complain of lack of particularity in those allegations at this point. Mr Loofs also draws attention to the fact that paragraph 52 of the Amended Statement of Claim, as I noted in the Judgment [165], referred to representations made by the several Defendants concerning the shareholding that the Plaintiff would receive for its investment, as the basis of an alleged failure to qualify those representations. Mr Loofs accepts that the "failure to qualify" case, with respect to allegations made in the 14 December 2010 email, the Presentation and the Financial Projections and the Wollongong Presentation (to which reference was made in the Judgment) "at least identifies the representations said to have been made". Mr Loofs submits that the position is otherwise with respect to representations that were not made by Mr Skinner.
Mr Loofs rightly recognises that, in paragraph 77 of the Plaintiff's closing submissions, they included a schedule of representations alleged to have been made by, among other persons, Mr Skinner, which expressly identified a claim arising from failure to disclose the version of the loan agreements that contained the conversion rights and stated that: "It is the omission of not disclosing the terms of the non-disclosed loans that is the basis of Messrs Stone's and Skinner's misleading and deceptive conduct." Mr Loofs again complains that that submission is in generalised terms. With respect, it does not seem to me that there could have been any doubt in the mind of Mr Skinner or his legal representatives of the nature of the case that was then put against him.
Mr Bennett responds that the pleadings raised the non-disclosure claim against Mr Skinner, pleading the fact of the loans containing the conversion rights (Amended Statement of Claim [50]); the failure to disclose their existence (Amended Statement of Claim [51]); the making of representations that called for such disclosure (Amended Statement of Claim [52]); and an express allegation that both Mr Stone and Mr Skinner engaged in misleading and deceptive conduct by failure to refer to the loans (Amended Statement of Claim [53]). Mr Bennett points out that that claim was identified in both his opening oral submissions (T8-9) and in his written closing submissions (paragraphs 77, 122-130). He points out that the Defendants' closing submissions also addressed the question of the loans and their capitalisation.
The difficulty with Mr Loofs' submissions as to surprise is that paragraph 52(b)-(c) of the Plaintiff's Amended Statement of Claim squarely pleaded that Mr Skinner, as one of several Defendants, in making representations, had failed to qualify those representations by reference to the fact that loans were convertible to shares and the corresponding allegation was also made against Mr Skinner in respect of the November 2011 representation as to a 51% shareholding in the Company. The existence of those allegations was clear, although the earlier pleadings of specific representations, as I had noted in the Judgment, did not extend to Mr Skinner. That case was also squarely identified in opening and in the Plaintiff's closing submissions and Mr Skinner's former legal representatives conducted his defence on a basis that plainly recognised the existence of a claim for non-disclosure against Mr Skinner in that respect.
Mr Loofs also submits that the Defendants' legal representatives at the hearing must have operated under a misapprehension as to the nature of the case brought against Mr Skinner, leading to the position that there was no differentiation between the positions of Messrs Stone and Skinner. I do not draw that inference. The approach of Mr Skinner's legal representatives would be equally explicable by a choice by Messrs Stone and Skinner to adopt a common position at the hearing, because that allowed common representation, or by a recognition that there was no relevant legal distinction between the position of Mr Stone and Mr Skinner in respect of this claim, where each of them knew a material fact which each of them failed to disclose to the Plaintiff.
Mr Bennett also points to discretionary factors that might tend against reopening in respect of this issue, including the long delay in bringing this matter to a hearing, the fact that two hearings had been vacated on the Defendants' application, the fact that judgment was delivered some months ago and, one might add, that Mr Skinner defaulted in compliance with the Court's directions as to submissions as to orders and costs following that judgment. Mr Bennett also points to a lack of diligence on Mr Skinner's part in respect of raising the point now raised at the hearing; submits that Mr Skinner had not done all that might have been done to raise the point when it was timely and appropriate to do so; and submits that any failure to raise the point was a forensic decision on Mr Skinner's part. It is not necessary to address these discretionary considerations, given the conclusion that I have reached on other grounds.
Accordingly, I am not satisfied that a basis for the application for leave to reopen is established in respect of the findings of liability arising from non-disclosure on the part of Mr Skinner.

Mr Skinner's application to reopen in respect of apportionment

Mr Skinner also seeks leave to reopen to agitate an apportionment claim as between Mr Skinner and Mr Stone, and to amend his Defence to rely on the proportionate liability regime in Part 7.10 Div 2A of the Corporations Act rather than the regime in the Civil Liability Act. Mr Loofs submits that apportionment - implicitly, as between the Defendants - was pleaded and not abandoned and should be dealt with, particularly where the Plaintiff had brought a wide range of claims. Mr Bennett responds that the parties' submissions as to apportionment were considered at Judgment [167] and that no other issue as to distribution of liabilities was raised in the proceedings. Mr Loofs submits that the amendment to substitute the reference to the Corporations Act causes no prejudice to the Plaintiffs. Mr Bennett did not contend to the contrary, subject to the question of costs that I address below.
Mr Loofs made clear, in the course of the oral hearing on 26 October 2016, that a reopening in respect of the apportionment issues could be undertaken in an efficient way. Mr Loofs pointed out that the written submissions made by Mr Skinner were intended to set out the grounds on which it was contended that there should be significant apportionment of liability to Mr Stone, that it is not intended to adduce further evidence and the matters relevant to apportionment were also addressed in the Plaintiff's submissions. While Mr Loofs raised the possibility that the Court could make an apportionment order, if leave were granted, by reference to the parties' written submissions, it would at least be necessary to hear Mr Stone in respect of such an order. Mr Loofs made clear that, if there were an oral hearing, Mr Skinner would only need to be heard in response to Mr Stone or any oral submissions of the Plaintiff.
The question of apportionment, as between the Plaintiff on the one hand and the Defendants collectively, was to some extent raised in the hearing, although I noted in the Judgment that it was not clear whether a claim for apportionment on that basis was ultimately pressed. I addressed that question in Judgment [167], against the contingency that it was pressed, so far as it was claimed that the Plaintiff's lack of diligence amounted to a basis for apportionment of loss to it. I rejected that claim, not only on the basis that the Civil Liability Act did not apply to claims under the Corporations Act and under the Australian Securities and Investments Commission Act 2001 (Cth), but also on the basis that a lack of diligence on the basis of a party which was misled did not amount to contributory fault, so as to allow the party which engaged in misleading or deceptive conduct to reduce its liability by reliance on the proportionate liability regime.
Paragraph 32 of the Further Amended Defence to the Amended Statement of Claim raised the question of apportionment as between the Defendants under s 34 of the Civil Liability Act, pleading that: "[A]ny liability for which the (number) Defendant is found to be responsible should be reduced in accordance with the amount that the Court considers just having regard to the extent of the (number) Defendant's responsibility for the loss or damage found to have been suffered by the Plaintiff." However, no submission was made at the hearing as to any claim for apportionment as between Mr Stone, Mr Skinner, Mr Collins or the corporate defendants, and there would have been obvious difficulty in making that submission where the Defendants then shared common representation.
Mr Loofs submits that Mr Skinner should have been advised to seek separate representation, although the Defendants had at all times been either unrepresented or shared common representation. Mr Loofs also submits that an inference exists that the Defendants' then legal representatives operated under a misapprehension as to their ability to advance Mr Skinner's interests, implicitly or explicitly because there was a conflict between Mr Stone's and Mr Skinner's interests. It is not necessary to determine that question, given the result that I will reach below on other grounds.
Several factors support Mr Skinner's claim to reopen, in respect of apportionment, which include the fact that the pleading raised that issue as between the Defendants; it was not addressed at the hearing, but no express statement was made that it was abandoned; and it would have been challenging to address that question at the hearing, where the Plaintiff's case involved several representations pleaded against several Defendants. It seems to me that Mr Skinner's case to reopen in respect of apportionment as between the Defendants is also stronger, as Mr Loofs submits, where he may have difficulty in raising that matter on appeal where it was not raised at first instance, and where he may also have difficulty in bringing a claim against his former legal representatives in respect of any failure to raise that matter, by reason of principles of advocate's immunity.
Mr Bennett fairly accepted, in the course of the oral hearing, that there was no prejudice to the Plaintiff by granting leave to reopen to Mr Skinner in respect of apportionment, other than in respect of costs thrown away by the fact that this matter could have been dealt with at the hearing, had it been pressed at that time, rather than requiring a separate listing. Pursuant to a direction I made at the oral hearing on 26 October 2016, the Plaintiff quantified its costs of the apportionment aspect of this application and of a further hearing as to apportionment as $7,546 inclusive of GST, and Mr Skinner has advised that he consents to an order for payment of such costs and that such costs be payable forthwith. On the basis that such an order is made, it seems to me that any prejudice to the Plaintiff from a reopening will be addressed, and that the interests of justice would be served by granting leave to reopen, limited to the question of apportionment of liability as between the Defendants.
A potential difficulty may arise with Mr Skinner's claim for apportionment, namely that the non-disclosure of the conversion rights by Mr Skinner was, on one view, an independent cause of the Plaintiff's loss, in addition to any non-disclosure by Mr Stone, since disclosure by either Mr Skinner or Mr Stone would have averted that loss. Mr Bennett refers to that matter in submissions, noting that: "[B]y the very nature of the omission either Mr Skinner or Mr Stone could have remedied the problem entirely by merely informing Mr Redmond of what they (individually) knew. This is not a zero-sum issue where the fault, if with one of the two of them, cannot be with the other. It is entirely with both of them." That, however, was a matter for Mr Skinner and his advisers in assessing his prospects of success on a reopening. It does not seem to me reason not to grant leave to reopen that is otherwise appropriate.
On balance, it seems to me that leave to reopen in respect of apportionment should be granted, where the Plaintiff's interests may be appropriately protected by an order for costs payable forthwith, and that question may be determined promptly and in an efficient manner.

Orders

Accordingly, I make the following orders:
The Fifth Defendant be granted leave to reopen his case to put further submissions limited to the question of apportionment of liability as between the Defendants.
The Fifth Defendant be granted leave to file a Second Further Amended Defence to the Amended Statement of Claim, amending paragraph 38 of the Further Amended Defence to the Amended Statement of Claim by replacing the proportionate liability defence based on Pt 4 of the Civil Liability Act 2002 (NSW) with a proportionate liability defence based on ss 1041L-1041N of the Corporations Act 2001 (Cth).
The Plaintiff and any other Defendant to file any submissions in reply to the Fifth Defendant's submissions on apportionment by 4pm on 5 December 2016, indicating whether an oral hearing is requested.
The Fifth Defendant's Notice of Motion dated 30 September 2016 otherwise be dismissed.
The Fifth Defendant forthwith (and in any event no later than 4pm on 22 November 2016) pay to the Plaintiff, by its legal representative, costs thrown away by the application to reopen in respect of apportionment, quantified in the lump sum of $7,546 (inclusive of GST).
The Fifth Defendant pay the Plaintiff's costs of and incidental to his motion filed on 30 September 2016, excluding the costs of apportionment dealt with in order 5, as agreed or as assessed.

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: 14 November 2016

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