Morris v Hanley & Ors [2001] NSWCA 374

New South Wales Court of Appeal

CITATION : Morris v Hanley & Ors [2001] NSWCA 374 FILE NUMBER(S) : CA 40752/00 HEARING DATE(S) : 23 October 2001 JUDGMENT DATE : 23 October 2001

Janine Morris (Appellant) Jack Norman Hanley (First Respondent) Geoffrey Donald Reid (Second Respondent) Lynda Maree Cole (Third Respondent) Christine Valmae Hayward (Fourth Respondent) PARTIES : Anthony Bodycote (Fifth Respondent) Robyn Janelle Haydon (Sixth Respondent) Daphne Olive Boyd (Seventh Respondent) Beverley Joy Armfield (Eighth Respondent) Gayle Hanley (Ninth Respondent) Cecil Bellchambers (Tenth Respondent) Mariani Holdings Pty Limited ACN 333 468 620 (Eleventh Respondent) JUDGMENT OF : Heydon JA at 1, 35; Foster AJA at 33; Rolfe AJA at 34

LOWER COURT JURISDICTION : Supreme Court LOWER COURT ED 2650/97 FILE NUMBER(S) : LOWER COURT Young J JUDICIAL OFFICER :

COUNSEL : Mr M F Holmes QC/Mr J R Clarke (Appellant) Mr P T Taylor/Mr D R Stack (Respondents) SOLICITORS : Mark Fraser (Appellant) Parker & Kissane (Respondents)

DECISION : See para 32

IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40752/00 ED 2650/97 HEYDON JA FOSTER AJA ROLFE AJA

23 October 2001 MORRIS v HANLEY & ORS

Judgment

1 HEYDON JA: This is an appeal by leave granted on 19 March 2001 against orders of Young J which, inter alia, were to the effect that the plaintiff provide the sum of $115,000 as security for the costs of the defendants and that the proceedings be stayed until the security was given. 2 The plaintiff alleges breaches of duty by the defendants mainly in the period 13 May 1988 to 5 March 1992. The proceedings commenced on 30 May 1997. 3 On 7 January 1998 Hamilton J refused an application by the plaintiff for interlocutory injunctive relief with costs. He gave reasons for those orders on 8 January 1998. Those reasons revealed that the cause of action which the plaintiff was then relying on was a claim that the original members (the first-tenth defendants) of the eleventh defendant, a company, were under a fiduciary duty to the persons who from time to time were the permanent employees of the eleventh defendant to institute a continuous scheme of workers' co-operative employment, and one of the elements of that duty was that persons becoming permanent employees should be informed of their right to take up shares in the eleventh defendant. 4 Hamilton J said: "the plaintiff does have a fairly arguable case, that a fiduciary relationship did arise despite the novelty of the proposition in such a situation". But he said the case for permanent injunctive relief against the sale of the eleventh defendant's business was, though "fairly arguable", not "strong". He refused interlocutory relief on the balance of convenience. 5 It seems that on some date in 1999 the proceedings were listed for final hearing before Hamilton J for seven days on 6 March 2000. The trial did not in fact proceed on that day. 6 On 14 April, 8 May and 23 May 2000 argument took place before Hamilton J on whether the plaintiff should be allowed to amend her Statement of Claim. She sought leave to file a Third Amended Statement of Claim; in the course of the hearing she abandoned the document originally proffered under that title and replaced it with a further document. Hamilton J said: "It is most unfortunate that quite radical amendments to the plaintiff's Statement of Claim are made at this late stage without any good reason being assigned as to why the amendments, which do not depend on recent events or discoveries, are being made so late. For reasons put to me on behalf of the defendants during the course of argument it is probable that as a result of the amendment, if granted, the fixture on 31 July 2000 will also have to be vacated." 31 July 2000 was the date which replaced 6 March 2000 as the first day of the trial. 7 Hamilton J described the cause of action in the Statement of Claim in its then existing form in similar fashion to the way he described the cause of action relied on on 7 January 1998. He said three causes of action were intended to be added by the amendments. The first was an action against directors for breach of the type of duty owed to the shareholders of the eleventh defendant which was described in Brunninghausen v Glavanics (1999) 46 NSWLR 538. The second was said to be a similar action against the eleventh defendant itself. The third was a common law cause of action in conspiracy. Hamilton J said that these causes of action were "reasonably arguable" and granted leave to the plaintiff to file a new Statement of Claim. That document also contains an allegation of negligence. 8 On 23 March 2000 counsel for the defendants, in the course of a hearing before Hamilton J, handed counsel for the plaintiff a Notice of Motion seeking security for costs. Though it was not apparently filed until 5 May 2000, it alarmed the plaintiff sufficiently to cause her to have prepared written submissions dated 6 April 2000 opposing the application for security foreshadowed in the Notice of Motion. Hamilton J noted the existence of the Notice of Motion in his reasons for judgment of 23 May 2000. 9 The Notice of Motion seeking security for costs was heard on 25 August 2000, and Young J delivered an ex tempore judgment in part acceding to it on that day. 10 The essence of the primary judge's reasoning was put thus: "The leading cases show that the factors a Court must take into account when considering the general question as to whether the inherent power should be exercised to order security for costs include: