New South Wales Court of Appeal CITATION : Kation Pty. Limited & Anor. v. Lamru Pty. Limited & Ors. [2003] NSWCA 344 HEARING DATE(S) : 18 November 2003 JUDGMENT DATE : 18 November 2003 JUDGMENT OF : Sheller JA at 16, 18; Hodgson JA at 1; Giles JA at 17 DECISION : Application for extension of time and application for leave to appeal both dismissed with costs. CATCHWORDS : PRACTICE - Interlocutory decisions - Whether leave to appeal and extensions of time should be granted. Kation Pty. Limited - first claimant Peter Lawrence Lewis - second claimant PARTIES : Lamru Pty. Limited - first opponent Russell William Lamb - second opponent Nortex Pty. Limited - third opponent FILE NUMBER(S) : CA 40615/03 COUNSEL : Mr. N. Cotman SC for claimants Mr. S. Motbey for 1st and 2nd opponents SOLICITORS : Kemp Strang, Sydney for claimants Lyons & Lyons, Bondi Junction for 1st & 2nd opponents LOWER COURT Supreme Court - Equity Division JURISDICTION : LOWER COURT ED3081/97 and ED1750/02 FILE NUMBER(S) : LOWER COURT Hamilton J JUDICIAL OFFICER : IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40615/03 ED 3081/97 ED 1750/02 SHELLER JA GILES JA HODGSON JA Tuesday 18 November 2003 KATION PTY. LIMITED & ANOR. LAMRU PTY. LIMITED & ORS. Judgment 1 HODGSON JA: The Court is dealing with a Notice of Motion filed on 30 September 2003 by Kation Pty Ltd and Peter Lawrence Lewis to extend time for applying for leave to appeal from certain interlocutory judgments of Hamilton J, and also an application for leave to appeal from those judgments and a judgment of 26 June 2003. 2 The matter was listed today on the basis that, if time was extended and if leave to appeal was granted the appeal would be heard today. However the Court determined that it would hear argument on the question of leave to appeal, and then decide whether leave would be granted and whether then to proceed on the actual hearing of the appeal. The judgment I am delivering is only a judgment on the question of whether time should be extended as sought, and whether leave to appeal should be granted. 3 The matter is a complex one and has involved a lengthy hearing by the primary judge. The parties to the proceedings are firstly the claimants whom I have identified, secondly the first and second opponents Lamru Pty Ltd and Russell William Lamb, being parties with an essential unity in interest, and thirdly a company in liquidation, Nortex Pty Ltd in liquidation and the liquidator of that company. Although the company in liquidation and the liquidator are involved in the disputes, the substantial issues being fought are issues essentially between the claimants (and I will call those interests the Lewis interests), and the first and second opponents (and I will call those interests the Lamb interests). 4 The proceedings initially commenced with a challenge by the Lamb interests to a decision of the liquidator of the company concerning a proof of debt. There ensued further proceedings involving the company which in substance required a determination in relation to dealings concerning the company by the Lewis interests and the Lamb interests, the company in substance being a vehicle for those interests in relation to a certain business. 5 The substantial dispute as it emerged arose from claims by the Lamb interests that they had not received amounts that they should have received from the company in the years 1991 to 1996, those being years when both Mr Lewis and Mr Lamb were involved in the business of the company, and also in the years 1997 onwards, when Mr Lamb had ceased to be involved in the business of the company. Mr Lamb's claim was inter alia that, in the period after he ceased to be involved in the business of the company, money which should have gone to the company was improperly dealt with by Mr Lewis. 6 In support of that claim Mr Lamb gave evidence, protected by a certificate under s.138 of the Evidence Act, in December last year, of a practice that had been engaged in while both Mr Lewis and Mr Lamb were involved in the business of the company whereby money was in effect diverted from the company to be divided between Mr Lamb and Mr Lewis; and he sought to rely on that evidence to support an inference that Mr Lewis had improperly dealt with money of the company after Mr Lamb ceased to be involved in his business. 7 As I have said, that evidence was given in December last year. In April this year the Lewis interests applied to amend their defence to rely on that evidence to make out a defence of lack of clean hands, and also a defence based on the requirement that a party seeking equity should do equity. In relation to the latter, the Lewis interests sought to rely on what they said was an admission by Mr Lamb that the cash dealings in the years up to 1996 gave rise to a cash balance owing to Lewis or the Lewis interests from Lamb or the Lamb interests of $120,000 or more; and it was contended that if the Lamb interests sought relief in relation to the dealings with the company, they must do equity at least to the extent of bringing into account this amount of $120,000 or more. 8 As I have said, that application was brought in April: apparently the intention to bring the application was notified on 4 April, and the application was actually brought on 14 April. The hearing of the matter had been adjourned from December until 14 April. Hamilton J gave a decision on that application on 29 April, in which he in substance allowed the defence of lack of clean hands to be raised but not the defence that the Lamb interests should be required to do equity by in effect giving credit for this amount of $120,000 or more. 9 No application was made at that time for leave to appeal from that decision, and the case then proceeded and by June this year was nearing completion. One of the judgments in respect of which an extension of time is sought is that decision of 29 April. 10 On 20 June, the judge made evidentiary rulings concerning evidence sought to be led by the Lewis interests concerning the effect which the cash dealings given in evidence by Mr Lamb in December would have on the accounts of the company and on the quantum of the claim by the Lamb interests. The primary judge rejected that evidence, and those two decisions of 20 June are the other decisions in respect of which an extension of time for application for leave to appeal is sought. 11 A further application to amend the defence was then made, in substance to raise a defence to the Lewis claims that the accounting in respect of the 1991 to 1996 years should take into account the cash transactions dealt with by the evidence of Mr Lamb. That application to amend was rejected by the primary judge on 26 June 2003, and that is the other judgment in respect of which leave to appeal is sought. 12 Mr Cotman for the Lewis interests has submitted that the primary judge made errors in his decisions which were reviewable on appeal notwithstanding the principles in House v The King (1936) 55 CLR 499. In my opinion it is appropriate for this court to refuse the extensions of time sought, and to refuse leave to appeal, without entering into the question whether the decisions of the primary judge are reviewable. Although it has been said by Mr Cotman that no appeal was brought from the decision of 29 April 2003 because it was anticipated that the case would soon conclude, in my opinion if it had been wished to challenge that decision on an interlocutory basis an appeal should have been brought promptly. In my opinion, the circumstance that the trial was then permitted to proceed and to approach conclusion is a very powerful consideration against the granting of leave to appeal from that decision. 13 The evidentiary decisions of 20 June are in substance consequential upon that decision of 29 April. The application for leave to amend dealt with in the decision of 26 June, although not an identical application to that made and refused in April, was as a matter of substance very similar; and in my opinion insufficient reason has been given for the delay of six months from the giving of the evidence in December to the bringing of that application. 14 If the extension of time and leave to appeal is refused, the situation as I see it is that, if the decision of the primary judge is in substance against the Lewis interests and they wish to appeal from that decision, they will still be able to include as a ground of appeal that the amendments sought to be agitated now should have been allowed. It seems to me that if an appeal on that ground were successful, then it is unlikely that there would need to be a complete rehearing of the whole case. At worst it seems to me that there would need to be rehearing of relatively narrow issues which have been discussed during argument with Mr Cotman and also with counsel for the Lamb interests, Mr Motbey. 15 For those reasons, in my opinion this court as a matter of discretion should refuse the extension of time that has been sought and should refuse leave to appeal from the interlocutory judgments that I have mentioned. 16 SHELLER JA: I agree. 17 GILES JA: I also agree. 18 SHELLER JA: The order of the Court is that application for extension of time and the application for leave to appeal are both dismissed with costs. ********** Last Modified: 11/24/2003 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.