New South Wales Supreme Court CITATION : United Rural v Lopmand [2002] NSWSC 441 CURRENT JURISDICTION: Equity Division FILE NUMBER(S) : SC 4039/99 HEARING DATE(S) : 30/04/02 JUDGMENT DATE : 22 May 2002 United Rural Enterprises Pty Limited - Plaintiff PARTIES : Lopmand Pty Limited - First Defendant Tracey John Lake - Second Defendant Alyson Rosemary Lake - Third Defendant JUDGMENT OF : Barrett J COUNSEL : Mr C.R. Newlinds - Plaintiff Mr A. Davis - Defendants SOLICITORS : Kemp Strang - Plaintiff McCooe Raves Poole - Defendants CATCHWORDS : PROCEDURE - application by defendants to re-open and amend after hearing concluded CASES CITED : Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589 State of Queensland v J L Holdings Pty Ltd (1996) 189 CLR 146 DECISION : Application to re-open granted - 7 - IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION BARRETT J WEDNESDAY, 22 MAY 2002 4039/99 – UNITED RURAL ENTERPRISES PTY LIMITED v LOPMAND PTY LIMITED & ANOR JUDGMENT 1 On 19 and 20 March 2002, I heard the proceedings instituted by the plaintiff against the defendants. The trial took the usual course and, at its conclusion, I reserved judgment. On 3 April 2002, I gave leave for the defendants to file a notice of motion seeking leave to re-open their case and to file an amended defence and several cross-claims. I also gave directions for the filing of evidence on that application which was listed for hearing on 30 April 2002. By consent, I indicated that I would not progress my judgment pending determination of that application. The application was heard on 30 April 2002 and opposed by the plaintiff. This is my decision on that application. 2 It is, in one sense, not surprising that the defendants made the application. In the course of the trial, they sought to ventilate matters that did not arise on the pleadings. The plaintiff resisted all such attempts, making it clear that it adhered to the line taken in the initiating process and that its case had been prepared for trial on the basis that the defendants would likewise confine themselves within the scope of their defence. There was, in short, no room for any conclusion that the parties (and I emphasise the plural, which I regard as referring to all parties) had, expressly or by implication, agreed to expand the basis for determination of their rights and liabilities. 3 It is appropriate to outline the respective cases appearing from the pleadings, noting that the proceedings were commenced in the District Court at Sydney and afterwards removed into this court where the matter proceeded upon the District Court pleadings. The plaintiff's originating process was the amended statement of liquidated claim filed on 3 May 1999. The defendants' defence was by way of the amended notice of grounds of defence filed on 18 August 1999. 4 The plaintiff's case, as thus pleaded, was that the plaintiff, at the request of and on behalf of the defendants and each of them, paid to Gilbert Frank Investments Pty Ltd ("Gilbert") a sum of $250,000 on or about 13 May 1994; that the defendants agreed that that sum was payable with interest on demand; that interest would be payable on the amount outstanding at the rate of 2% p.a. over the Westpac indicator lending rate; that demand was made for $448,881.50 together with interest from the end of November 1997 and upon terms that ongoing interest would continue to run on the principal sum at the stated rate; and that no payment had been received. The plaintiff's issues for trial were formulated thus: "Whether as a result of the conversations of the parties in early 1994 and the payment of monies by the plaintiff for the benefit of the first defendant [on] 13 May 1994 there came into existence a contract whereby the defendants agreed to repay the sum of $250,000 together with interest to the plaintiff on demand." 5 The defendants, by their defence, denied the assertions as to an obligation to repay with interest and said that the sum allegedly paid to Gilbert was paid in order to purchase one half of a share in Painten Holdings Pty Ltd ("Painten"); that it was agreed between the plaintiff and the first defendant that each would take one half of the share in Painten held by Gilbert by the plaintiff's paying to Gilbert the sum of $250,000 which would be repaid to the plaintiff out of that share when all of the assets of Painten were sold; that, upon the sale of all the assets of Painten, any amount above $250,000 due to the Gilbert share was to be divided between the plaintiff and the first defendant in equal shares; that the defendants were to obtain the release of John Alexander (the controller of Gilbert) from all obligations under guarantees. 6 The alternative version of the purpose of the $250,000 payment put forward by the defendant was advanced by way of defence to the plaintiff's claim that the defendants were indebted to the plaintiff in that sum. That alternative version was not formulated and presented in such a way as to involve any claim for relief on the issue of the ownership of shares in Painten, even though it raised for possible determination questions relevant to that issue. The defendants' concern is that the share ownership question has been partially argued in such a way that the court will have to make some findings in relation to it but without the defendants' having made any substantive claim on the question and without any opportunity for them to put on all appropriate evidence and to be properly heard on the issue. To the extent that the defendants are thus deprived, it is a situation entirely of their own making. 7 A number of contentions were aired on the hearing of the application but in the end I think there is only one relevant question, namely, whether it is necessary or appropriate that the matters the defendants wish to agitate really need to be argued and determined in these proceedings at this extremely late stage or, in the alternative, can, with due regard to the proper interests of all parties, be left to be determined in separate proceedings initiated by the defendants. 8 I have little doubt that, had the defendants' moves to raise the new issues been made before the hearing began, it would have been successful. But the defendants made no such move at that point, preferring to join issue on the ground the plaintiff had marked out and to maintain that stance right to the point where the hearing was completed and judgment was reserved. It was only after the proceedings as defined by the pleadings had reached that point that the defendants saw fit to seek to broaden the controversy. One can only think that their move in that direction was motivated by a desire, conceived in light of their appreciation of the evidence adduced by both parties, to avoid a decision on the basis of the defence mounted by them to the plaintiff's debt claim as pleaded. 9 The two factors which need to be balanced here are, first, avoidance of the unfairness inherent in allowing any party a re-run of its already concluded case and, second, the principle that no party should be shut out from litigating an issue which is fairly arguable: State of Queensland v J L Holdings Pty Ltd (1996) 189 CLR 146. The important question, it seems to me, is therefore whether, the defendants will be in any sense be shut out from adequately ventilating the matters they wish to raise in their foreshadowed cross claim if I proceed to determine the claim of the plaintiff I have already heard and leave the defendants' claims to become the subject of separate and subsequent proceedings. 10 Determination of the plaintiff's claim will answer the question whether the payment of $250,000 by the plaintiff to the defendant represented or was in pursuance of the making of a loan by the plaintiff to the defendants. If, on the balance of probabilities, the answer is positive, the classification and purpose of the payment will be determined once and for all so far as the rights and obligations of these parties are concerned. If it is negative, there will be no definition, in the form of a determination of a question put in issue on the pleadings, of the status of the payment or of the rights and obligations arising from the making of the payment – unless some form of estoppel operates to give significance to any finding there may be that it was because it had some other character that the payment did not have the character of a loan. 11 In theory, it may be possible to decide that there was no loan without expressing any view or making any finding as to the true nature and purpose of the payment of $250,000. In practical terms, however, it is very likely that any finding that it was not a loan would be accompanied by (or proceed from) a finding that the payment was for some other purpose or upon some other consideration, with the only apparently available candidate being the character of purchase money for an interest in the share capital of Painten. The possibility that such a finding might be an outcome of the case as argued means that the result might be such as to preclude later re-argument of that point as between these parties because of the principles discussed by the High Court in Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589. It would, in my view, be entirely artificial and unsatisfactory for the court to attempt to determine the proceedings already heard on the basis that it must be diligent to avoid making any finding that would bring the Anshun principles into play. 12 Mr Newlinds who appeared for the plaintiff on the application (as well as in the hearing on 19 and 20 March 2002) acknowledged the potential Anshun difficulty but said it could be dealt with by my proceeding to determine the substantive claim of the plaintiff I have already heard, in the context of an undertaking, which the plaintiff is willing to give, that it will not seek to assert or raise any Anshun estoppel in subsequent proceedings instituted by the defendants against the plaintiff. 13 That, to my mind, would not be a satisfactory basis on which to proceed. There are public policy considerations at the basis of the general principle that there should not be conflicting judicial decisions on the same issue involving the same parties. It is not just a matter of the parties' private interests which can be regulated by agreement between them. That being so, the court should strive against a course which opens up the possibility of inconsistent concurrent findings even where the parties are themselves willing to accommodate that possibility by agreement. 14 There is, of course, much to be said for the proposition that all matters in controversy between the immediate parties should be resolved in a single proceeding where all differences are aired and finality is achieved. The fact that one side – here, the defendants – has not been astute to advance its claims in a timely and appropriate way will tell against that party when it comes to costs but, as is borne out by the J L Holdings case, the most pressing consideration must always be the demands of justice in ensuring that all reasonably arguable matters are ventilated and the real controversy is dealt with. 15 The defendants sough to emphasise that counsel who appeared for them on 19 March (but whose retainer was terminated before the matter resumed on 20 March) had been briefed only the preceding evening. It was said that, as a result of that or for some other reason, the defendants' interests had not been adequately represented. That, in my view, overlooks entirely the reality that the defendants had had solicitors acting throughout the preparatory phase and at the hearing and that the partner concerned was sufficiently familiar with the matter to become the defendants' advocate on the second day. If there is any blame to be apportioned for the defendants' failure to formulate and present their defence and cross claims in the appropriate way, it cannot be ascribed to counsel briefed at the last moment and must be laid squarely at the feet of the solicitors. In any event, however, I consider that little is to be gained at this stage by going over that ground. The real question is whether the defendants should be allowed to re-open in the way they wish. 16 If it were not for the Anshun point and the real possibility that a decision on the case as it was argued will inevitably make it necessary for me to come to a view as to whether the moneys were in reality purchase moneys rather than loan, I would refuse the defendants' application. But that one consideration persuades me that the appropriate course is to grant the application to re-open and to file an amended defence and cross claims on appropriate terms as to costs. On that, my predisposition is to think that the defendants should pay all costs of the plaintiff thrown away by reason of the re-opening and this should be on the indemnity basis, with such costs, as assessed or agreed, being payable forthwith. Furthermore, the defendants' leave to file a further amended defence and cross claims should not be exercisable unless and until those costs have been paid. 17 The defendants' notice of motion seeks an order that the defendants have leave to inspect the books of Painten Holdings Pty Ltd either personally or by an accountant appointed for that purpose and that the costs of inspection be paid by Painten Holdings Pty Ltd. Since it has not been shown that Painten Holdings Pty Ltd was served or even made aware of those applications, they are refused but without prejudice to the ability of the defendants to renew them in the appropriate way 18 It is not yet clear how many additional days will be needed for the further hearing of the proceedings. I can say, however, that, assuming something between three and five days will be needed, I shall not have dates available until September at the earliest. I propose, therefore, to allow the parties a short time to consider the best way forward (including appropriate directions) and then to list the matter with a view to the making of orders and directions at that point. Last Modified: 05/23/2002 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.