Talifero v Asbestos Injuries Compensation Fund Limited as Trustee for the Asbestos Injuries Compensation Fund

Court of Appeal (NSW)|2018-12-18|Before: Beazley P, Sackar J

Solicitors: Segelov Taylor Lawyers (Appellant) Baker McKenzie (Respondent) NSW Crown Solicitor's Office (Attorney-General, NSW) File Number(s): 2018/172078 Decision under appeal Court or tribunal: Supreme Court of New South Wales Jurisdiction: Equity Citation: [2018] NSWSC 589 Date of Decision: 04 May 2018 Before: Sackar J File Number(s): 2018/30145

[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

BEAZLEY P AND SACKVILLE AJA: The Court delivered judgment in this appeal on 11 October 2018. [1] This judgment assumes familiarity with the Principal Judgment, including the abbreviations used in the Principal Judgment.
The Court made the following orders in the Principal Judgment: "1. Direct the Estate to file within seven days a summons seeking leave to appeal from the decision of Sackar J made on 4 May 2018. 2. Grant leave to appeal. 3. Appeal allowed. 4. Set aside Order 1 made by the primary Judge on 4 May 2018, being judicial advice given pursuant to s 55 of the James Hardie Former Subsidiaries (Winding Up and Administration) Act 2005 (NSW) (Winding Up Act). 5. Direct the parties to file within 14 days agreed short minutes of additional orders giving effect to this judgment, together with brief joint submissions addressing the Court's power to make the orders." If the parties were unable to agree they were to file their respective versions of short minutes of order supported by brief written submissions in accordance with a specified timetable.
Since the Principal Judgment was delivered the following events have occurred: (i) On 12 October 2018, the Estate filed a summons seeking leave to appeal. (ii) On 25 October 2018, the Estate filed written submissions. These indicated that the parties had reached agreement in some matters but disagreed on others. The Estate foreshadowed that the Trustee would seek leave to amend its summons to address the procedural difficulty identified in the Principal Judgment. [2] (iii) On 7 November 2018, prior to this Court making final orders resolving all issues in the proceedings, the Trustee filed an application in the High Court seeking special leave to appeal from the Principal Judgment. (iv) On 9 November 2018, the Trustee filed its proposed short minutes of order and its submissions in support. The Trustee sought leave to file an amended summons seeking an alternative orders pursuant to s 55 of the Winding Up Act. The Trustee also filed an affidavit sworn by its solicitor, Mr Walter, addressing the Estate's financial position. (v) On 3 December 2018, the Estate filed its proposed short minutes of order and submissions in support. The attached material included the Estate's response to the Trustee's application for special leave to appeal to the High Court.

Substantive order

The parties are agreed that the Trustee should have leave to amend its summons to claim the following relief (Order 1A): "Pursuant to s 55 of the James Hardie Former Subsidiaries (Winding Up and Administration) Act 2005 (NSW) order that Asbestos Injuries Compensation Fund Ltd as Trustee for the Asbestos Injuries Compensation Fund be advised that it is obliged to pay the whole of the liability of Amaca Pty Ltd (formerly known as James Hardie & Coy Pty Ltd) under the judgment given in favour of Anthony David Talifero (as legal personal representative of the Estate of the late Francis John Talifero) on 11 December 2017 (including the liability under that judgment to pay pre- and post-judgment interest and costs)." The proposed Order 1A reflects the terms suggested in the Principal Judgment. [3]
The amendment sought by the Trustee, if permitted, will overcome the procedural difficulty identified in the Principal Judgment. An order in the form of proposed Order 1A will also enable the Court to determine the issue presented to it and avoid a waste of court time and costs. [4] Accordingly, the Trustee should have leave to amend its summons to include a claim for relief in the form of Order 1A and an order to that effect should be made.
The Trustee submitted, without elaboration, that the judicial advice should also be given pursuant to s 63 of the Trustee Act. It may be that the Trustee had in mind (although it did not say so) that a direction pursuant to s 63 of the Trustee Act would bind persons who were given notice of the application for judicial advice (including the Estate). [5] However, the Trustee has not explained why it should be permitted at this stage to invoke the power conferred by s 63 of the Trustee Act when it instituted the proceedings under s 55 of the Winding Up Act and now seeks a direction pursuant to that provision. In our view, the Trustee should not be given leave at this stage of the proceedings to amend its summons to seek judicial advice pursuant to s 63 of the Trustee Act and no such advice should be given.

Costs

The parties are agreed that it is unnecessary for this Court to make any costs order in relation to the application before the primary Judge because his Honour made a costs order (Order 3) which has not been set aside. The parties are also agreed that the Trustee should be ordered to pay the Estate's costs of the appeal from the assets of the Fund on an indemnity basis.

Submissions

On the assumption that this Court is prepared to make Order 1A, the Trustee submitted that the operation of Order 1A should be stayed until the determination of the Trustee's application for special leave to appeal and, if the High Court grants special leave, the determination of the appeal. [6] The Trustee recognised that exceptional circumstances must be shown before a stay is warranted, including a stay to preserve the subject matter of litigation pending the determination of an application for special leave to appeal. [7]
The Trustee contended that exceptional circumstances exist which justify the grant of a stay of Order 1A. It argued that a stay would preserve the subject matter of the litigation, namely the sum of $269,031.36 being the amount of damages awarded by the Dust Diseases Tribunal not already paid to the Estate. The Trustee expressed "concern" that if it succeeds in obtaining special leave to appeal and the High Court allows the appeal, the Estate may not have the financial resources to repay the amount. The Trustee submitted that the application for special leave to appeal is strongly arguable and has a significant chance of success. It offered to pay the sum of $269,031.36 into Court pending determination of the application for special leave to appeal and of any subsequent appeal should leave be granted as a means of overcoming any prejudice to the Estate.
The Estate submitted that this Court has no power to stay an order in the nature of judicial advice given pursuant to s 55 of the Winding Up Act. A provision such as s 55 of the Winding Up Act provides a facility for a court to give private advice to a trustee and is an exception to the Court's ordinary function of deciding disputes between competing litigants. [8] The only effect of a stay of an order made under s 55 would be to suspend the personal protection afforded to the Trustee by the judicial advice. The stay would not relieve the Trustee from its legal obligation to pay to the appellant the whole of Amaca's liability pursuant to the judgment of the Dust Diseases Tribunal.
In the alternative, the Estate submitted that there are no exceptional circumstances justifying a stay, for two reasons:

the application for special leave to appeal does not enjoy sufficient prospects of success; and
the evidence does not establish that the Estate lacks the financial capacity to repay any amount the Trustee pays prior to the determination of the application for special leave to appeal and, if leave is granted of any appeal.

A stay should not be granted

Section 55 of the Winding Up Act relevantly provides as follows: "(1) A liable entity or the SPF trustee may apply for advice or direction by the Supreme Court … on any matter relating to: (a) the scope of the entity's or trustee's functions under this Part, or (b) the exercise of any function by the entity or trustee under this Part, or (c) any other matter relating to the operation of this Part. … (6) In determining any such application, the Supreme Court … may decide to: (a) approve or disapprove of any act proposed to be done by the applicant, or (b) give such advice or direction as the Supreme Court … considers appropriate. … (10) No proceedings lie, or civil or other liability arises, against an applicant for or on account of any act, matter or thing done or omitted to be done by the applicant in good faith and in accordance with any approval, advice or direction given under this section."
The Trustee commenced these proceedings seeking an order pursuant to s 55 of the Winding Up Act that: "in the Talifero Proceeding, the [Trustee] would be justified in not paying so much of the damages award made in the Talifero Proceeding as reflects the extent to which Mr Talifero's exposure to asbestos or asbestos products occurred outside Australia." The Trustee did not join the Estate as a party. Indeed s 55 of the Winding Up Act does not confer power on the Court to join a person affected by proposed actions of the Trustee as a party to the application for judicial advice. Nor does s 55 of the Winding Up Act provide for persons who have participated in the judicial advice proceedings to be bound by the advice given. Section 63 of the Trustee Act contains such a provision, [9] but even then a person bound by the advice is not strictly a party to the proceedings. [10]
The Estate was granted leave to appeal from the orders made by the primary Judge on the basis that although not a party to the Trustee's application, its interests were affected. [11] The grant of leave to appeal, however, does not constitute the Estate a party to the Trustee's application for judicial advice.
The effect of advice given under s 55 of the Winding Up Act to the Trustee is that no proceedings lie or any civil or other liability arises against the Trustee on account of any act done by it in good faith and in accordance with the direction or advice (s 55(10)). Section 55 does not say that judicial advice that the Trustee is obliged to act in a particular way creates an obligation enforceable by a third party who would benefit if the Trustee acted in that way. In the present case, the Estate will not be able to enforce Order 1A and will not be able to levy execution on the judgment in order to recover the amount due from the Trustee. [12] The effect of any stay, as the Estate submitted, would therefore be limited to suspending the immunity conferred on the Trustee by s 55(10) of the Winding Up Act pending the determination of the application for special leave to appeal.
There is authority supporting the proposition that ordinarily a declaratory order will not be stayed. [13] One rationale advanced for this proposition is that a stay of the declaration does not alter the underlying rights of the parties and therefore lacks utility. [14] Order 1A is not a declaration, but it is similar in the sense that it does not create rights and obligations enforceable as between the Trustee and the Estate. A stay of Order 1A will therefore not alter their underlying rights and obligations. For that reason Order 1A should not be stayed.
In Re Marks and Federated Ironworkers' Association; Ex parte The Australian Building Construction Employees' and Builders Labourers' Federation [15] an application was made to stay certain orders made by the Commission in a demarcation dispute between unions. It was submitted that where orders create rights and do not merely declare rights the Court has power to stay the orders. In response Mason J said that: [16] "Even so, the Court will be more reluctant to stay an order which, though it creates rights, is otherwise declaratory in the sense that, unlike an injunction, it does not require a party to do or abstain from doing something." This observation indicates that a court will not stay the operation of an order that does not create rights and obligations. It follows that this Court should not grant a stay of Order 1A.
If this conclusion is wrong, we would not in any event grant a stay. We are prepared to assume that the Trustee has reasonable prospects of obtaining special leave to appeal notwithstanding that Order 1A does not create rights and obligations between the Trustee and the Estate. The difficulty facing the Trustee is that the evidence falls well short of establishing that there is a likelihood that if the Trustee pays the amount in dispute to the Estate it will not be able to recoup that amount if its appeal to the High Court is ultimately allowed.
Mr Walter's affidavit annexes correspondence in which the Trustee sought information concerning the Estate's financial position prior to the hearing in this Court. The Trustee threatened that if the requested information was not forthcoming, it would apply for an order for security for costs. The Trustees' own inquiries revealed that Anthony Talifero, the executor and trustee of the Estate, is the registered proprietor of a number of properties. The inquiries did not reveal whether Mr Talifero was registered as proprietor in his own right or in his capacity as executor and trustee of the Estate. Beyond this, the Trustee's inquiries yielded no information and the Trustee did not pursue an application for security for costs.
In the absence of more compelling evidence that a stay is needed to preserve the subject matter of the special leave application, there are no exceptional circumstances that would justify the grant of a stay.

Orders

The following orders should be made, in addition to those made in the Principal Judgment:
Grant leave to the respondent (Trustee) to file an amended summons in the form of the document annexed to the short minutes of order filed by the appellant (Estate) and marked "A".
Direct the amended summons be filed within seven days.
In lieu of Order 1 made by the primary Judge on 4 May 2018 make the following order: Pursuant to s 55 of the James Hardie Former Subsidiaries (Winding Up and Administration) Act 2005 (NSW) order that Asbestos Injuries Compensation Fund Ltd as Trustee for the Asbestos Injuries Compensation Fund be advised that it is obliged to pay the whole of the liability of Amaca Pty Ltd (formerly known as James Hardie & Coy Pty Ltd) under the judgment given in favour of Anthony David Talifero (as legal personal representative of the Estate of the late Francis John Talifero) on 11 December 2017 (including the liability under that judgment to pay pre- and post- judgment interest and costs).
Order that the appellant's costs of the appeal be paid by the respondent from assets of the Asbestos Injuries Compensation Fund on the indemnity basis (as agreed or assessed).
EMMETT AJA: On 11 October 2018, Beazley P and Sackville AJA published reasons for their conclusions in relation to the issues raised by the appeal and directed the parties to file short minutes of orders to give effect to their conclusions. However, the parties were unable to agree on the orders and it is necessary for the Court to resolve the parties' differences. I have read the proposed reasons for the orders that are proposed by Beazley P and Sackville AJA. Having reached a different conclusion from that of Beazley P and Sackville AJA, I would not make those orders. However, I do not wish to say anything against the making of the orders proposed in the light of the conclusions reached by Beazley P and Sackville AJA.

Endnotes

Talifero v Asbestos Injuries Compensation Fund Ltd as Trustee for the Asbestos Injuries Compensation Fund [2018] NSWCA 227 (Principal Judgment).
The difficulty was that the Estate had sought relief pursuant to ss 55 of the Winding Up Act when s 55 only allows an application for advice to be made by the Trustee or a liable entity: Principal Judgment at [18].
Principal Judgment at [129].
Principal Judgment at [130].
See Trustee Act, s 63(11), reproduced at fn 9 below.
See Jennings Constructions Ltd v Burgundy Royale Investments Pty Ltd [No 1] (1986) 161 CLR 681; [1986] HCA 84 (Burgundy Royale) at 684 (Brennan J) (application for a stay should first be made to this Court); Rinehart v Walker (2012) 83 NSWLR 347; [2012] NSWCA 1 at [10] per curiam.
Burgundy Royale at 684; Rinehart v Walker at [47].
Macedonian Orthodox Community Church St Petka Inc v His Eminence Petar (2008) 237 CLR 66. [2008] HCA 42 (Macedonian Church) at [64] (Gummow ACJ, Kirby, Hayne and Heydon JJ).
Subsections 63(8)-(11) of the Trustee Act provide as follows: "(8) Where the question is who are the beneficiaries or what are their rights as between themselves, the trustee before conveying or distributing any property in accordance with the opinion advice or direction shall, unless the Court otherwise directs, give notice to any person whose rights as beneficiary may be prejudiced by the conveyance or distribution. (9) The notice shall state shortly the opinion advice or direction, and the intention of the trustee to convey or distribute in accordance therewith. (10) Any person who claims that the person's rights as beneficiary will be prejudiced by the conveyance or distribution may within such time as may be prescribed by rules of court, or as may be fixed by the Court, apply to the Court for such order or directions as the circumstances may require, and during such time and while the application is pending, the trustee shall abstain from making the conveyance or distribution. (11) Subject to subsection (10), and subject to any appeal, any person on whom notice of any application under this section is served, or to whom notice is given in accordance with subsection (8), shall be bound by any opinion advice direction or order given or made under this section as if the opinion advice direction or order had been given or made in proceedings to which the person was a party."
Macedonian Church at [65].
Principal Judgment at [19]-[20].
The Roosters Club Inc v Northern Tavern Pty Ltd [2003] SASC 143 (Roosters Club) at [14] (Doyle CJ, Nyland and Bleby JJ agreeing).
Roosters Club at [18]-[22]; Arnhem Land Aboriginal Land Trust v Northern Territory (2006) 157 FCR 255; [2007] FCAFC 31 (Arnhem Land) at [6]-[8] per curiam. A stay or injunction might be granted against the exercise of the underlying rights: Arnhem Land at [5]-]6].
Roosters Club at [21], [22].
(1981) 34 ALR 208.
Re Marks and Federated Ironworkers' Association; Ex parte The Australian Building Construction Employees' and Builders Labourers' Federation (1981) 34 ALR 208 at 211.

Amendments 18 December 2018 - [6], [8], [10] [18] [22], Fn 5 - typographical amendments. 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: 18 December 2018

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