New South Wales Supreme Court CITATION : J Aron Corporation & Anor v Newmont Yandal Operations Pty Ltd & Ors [2005] NSWSC 1159 HEARING DATE(S) : 11 November 2005 JUDGMENT DATE : 11 November 2005 JURISDICTION : Equity Division JUDGMENT OF : Palmer J DECISION : Stay granted. CATCHWORDS : PRACTICE AND PROCEDURE – STAY – Two sets of proceedings between same parties raise overlapping issues – appeal in one set of proceedings will resolve many of the issues in the other – appeal imminent – trial of other proceedings still distant – whether a stay should be granted pending determination of appeal. LEGISLATION CITED : Corporations Act 2001 (2001) - s.439C CASES CITED : J. Aron Corp v Newmont Yandal Operations Pty Ltd [2004] NSWSC 1145 J. Aron Corporation –1st Plaintiff/1st Cross Def Goldman Sachs Group – 2nd Plaintiff/2nd Cross Def Newmont Yandal Operations Pty Ltd (Ad App) – 1st Defendant/3rd Cross Def Mark Anthony Korda (as Admin of 1st Def) – 2nd Def/1st Cross Claimant Mark Francis Xavier Mentha (as Admin of 1st Def) – 3rd Def/2nd Cross Claimant Clynton Court Pty Ltd – 4th Defendant/4th Cross Def Australian Metals Corporations Pty Ltd – 5th Defendant/5th Cross Def Eagle Mining Pty Ltd – 6th Defendant/6th Cross Def Great Central Holdings Pty Ltd – 7th Defendant/7th Cross Def PARTIES : Great Central Investments Pty Ltd – 8th Defendant/8th Cross Def Great Central Mines Pty Ltd – 9th Defendant/9th Cross Def Hunter Resources Pty Ltd – 10th Defendant/10th Cross Def Matlock Castellano Pty Ltd – 11th Defendant/11th Cross Def Matlock Mining Pty Ltd – 12th Defendant/12th Cross Def Newmont Wiluna Gold Pty Ltd – 13th Defendant/13th Cross Def Newmont Wiluna Metals Pty Ltd – 14th Defendant/14th Cross Def Newmont Wiluna Mines Pty Ltd – 15th Defendant/15th Cross Def Quotidian No 117 Pty Ltd – 16th Defendant/16th Cross Def FILE NUMBER(S) : SC 4666/03 R.J. Ellicott QC, V.R. Gray – Plaintiffs COUNSEL : T.F. Bathurst QC, M.S. Henry – 1st and 5th to 16th Defendants Ms H. Symons SC (Mbne) – 2nd & 3rd Defendants Abbott Tout – Plaintiffs SOLICITORS : Arnold Bloch Leibler – 1st and 5th to 16th Defendants Gadens (Mbne) - 2nd & 3rd Defendants LOWER COURT JURISDICTION : Introduction 1 This is an application by the First and Fourth Defendants in Proceedings 4666 of 2003 ("the 2003 Proceedings"), for a temporary stay of those Proceedings until determination of an appeal to the Court of Appeal in related Proceedings number 2407 of 2004 ("the 2004 Proceedings"). For ease of reference I will refer to the First and Fourth Defendants simply as "the Defendants". 2 There were originally two grounds for the application. The first was that dismissal of the appeal in the 2004 Proceedings would make the 2003 Proceedings otiose and that further substantial costs in the preparation for trial of the 2003 Proceedings should not be incurred until it is known whether they will be necessary. The second was that a stay of the 2003 Proceedings should be ordered until the Plaintiffs pay a balance of some $8,000, being the remainder of a judgment debt for costs. Mr Bathurst QC, who appears with Mr Henry for the Defendants, the applicants in the application, now does not press this ground. 3 A question as to security for costs has been reserved pending further discussion between the parties. 4 The substantial issues in the 2003 Proceedings and the 2004 Proceedings are set out in a detailed judgment of Austin J in the 2004 Proceedings delivered on 29 November 2004: J. Aron Corp v Newmont Yandal Operations Pty Ltd [2004] NSWSC 1145. I do not need to traverse all of the issues there discussed by his Honour for the purposes of this application. 5 The central question for determination in both sets of Proceedings is the validity of certain Deeds of Company Arrangement pursuant to s.439C of the Corporations Act 2001 (Cth) which are referred to in paragraph A1 of Appendix A to the judgment of Austin J. If the Deeds are valid, the result is that the Defendants are not indebted to the Plaintiffs as alleged in the 2004 Proceedings. 6 In the judgment of 29 November 2004, Austin J decided that certain questions should be determined separately in the 2004 Proceedings pursuant to Part 31 Rule 2 of the Supreme Court Rules, as they then were. The first question was whether, at a certain meeting of creditors, the creditors of each of the relevant companies passed resolutions pursuant to CA s.439C that each of the relevant companies execute Deeds of Company Arrangement. If that question were answered in the affirmative, then the remaining questions identified by his Honour for separate determination did not, on his Honour's view, arise for determination. 7 In the result, his Honour answered the first question in the affirmative. Subsequent upon that decision judgment was entered for the Defendants in the 2004 Proceedings, the parties having agreed upon the terms of the orders which should be made consequent upon his Honour's answer to the first question for determination. 8 The Plaintiffs appealed to the Court of Appeal against the decision of Austin J answering the first question as his Honour did. 9 An application was made to Austin J by the Defendants to stay the 2003 Proceedings pending determination of the result of the appeal in the 2004 Proceedings. On 26 April 2005 his Honour declined to grant a stay. His Honour did not give reasons. His Honour's decision was discretionary, taken in the course of case management of both sets of Proceedings, as the facts and circumstances appeared at the time that his Honour was considering the application. It seems that the appeal in the 2004 Proceedings was then considered to be some distance away. Indeed, I do not think that anything had been done other than the filing of a Notice of Appeal without appointment. Certainly, no date had been set for the appeal. It seems that his Honour's view then was that, as the hearing of the appeal was some distance away, it would be appropriate in the meantime to advance the preparation for trial of the 2003 Proceedings against the possibility that his decision in the 2004 Proceedings was reversed on appeal. 10 What has happened since then is that the interlocutory steps in the 2003 Proceedings have not proceeded in accordance with the timetables which have been set. It is not necessary to go through the reasons for this and to attribute blame to either party. For present purposes, it is sufficient to note that discovery has been delayed by reason of disputes and difficulties between the parties, some of which have not been resolved. Apparently the Plaintiffs have taken some interlocutory steps and the ball is now, figuratively speaking, in the Defendants' court to comply with directions pertaining to it. 11 The 2003 Proceedings are now still some distance away from being given a date for hearing but, in the meantime, the appeal in the 2004 Proceedings has been set down for hearing on 7 and 8 February 2006. It is because the appeal in the 2004 Proceedings is due very soon that this application for a stay of the 2003 Proceedings is brought. 12 The Defendants' submissions are essentially as follows. If the answer given by Austin J to question one of the separate questions is upheld in the Court of Appeal, the result will be that it will have been held that the resolutions referred to in that separate question were validly passed, the Deeds of Company Arrangement came into effect and the judgment consequentially entered for the Defendants in the 2004 Proceedings will stand. That the Defendants are not indebted to the Plaintiffs will be res judicata. Consequently there will be no point in agitating the questions which arise in the 2003 Proceedings, as those questions essentially concern whether or not the Deeds of Company Arrangement, having come into effect, should nevertheless be terminated or declared invalid for a number of different reasons. This is so, the Defendants say, because even if the Deeds are terminated, the judgment in the 2004 Proceedings in favour of the Defendants precludes the Plaintiffs from seeking to recover the alleged debt. 13 On the other hand, so the Defendants say, if the appeal is allowed and the first question identified by Austin J is answered in the negative, the result will be that the resolutions approving the Deeds of Company Arrangement will be held not to have been validly passed, there will be no valid Deeds of Company Arrangement in existence, and there will be no purpose in agitating the questions raised in the 2003 Proceedings as to whether those Deeds should be terminated. In other words, if the appeal is upheld, all of the questions as to termination of the Deed in the 2003 Proceedings will be otiose. 14 According to the Defendants, it would be contrary to the interests of justice and would promote possibly unnecessary expenditure of large sums of money in costs to permit the preparation for the 2003 Proceedings to continue when their ultimate fate one way or the other will very probably be determined by the fate of the appeal in the 2004 Proceedings in a very short space of time. Certainly, the result of the appeal is likely to be known well before the 2003 Proceedings would be ready to be set down for trial. 15 The Plaintiffs do not concede that the consequences of the appeal in the 2004 Proceedings being dismissed or upheld are as the Defendants contend. 16 The Plaintiffs say that, if the appeal is dismissed, one would have to consider carefully, perhaps even obtain a judicial determination on, the effect which that decision would have on the future of the 2003 Proceedings. I take this proposition to indicate that, at the moment, the Plaintiffs are unable to see how dismissal of the appeal would leave any utility in the 2003 Proceedings but they consider that that question must be looked at in the light of what it is that the Court of Appeal actually decides. This is quite understandable and a proper attitude to take. 17 However, as matters presently appear, it is difficult to see how dismissal of the appeal in the 2004 Proceedings, leaving the judgment which has been entered in those Proceedings intact, could do other than, at the very least, remove a very large part of the issues falling for determination in the 2003 Proceedings, even if all of those issues are not finally disposed of or become unnecessary to resolve. 18 If the appeal is allowed on the ground that the Court of Appeal concludes that no valid resolutions for the execution of the Deeds were passed, it is difficult to see the further utility of many of the issues in the 2003 Proceedings. 19 The principal ground upon which the Plaintiffs resist the stay application is that it would be unfair to the Plaintiffs at this stage to order a stay of the 2003 Proceedings when they have given discovery and have taken steps to comply with timetables given in the 2003 Proceedings: compliance with the timetable is now to be observed on the part of the Defendants and yet the Defendants seek to be absolved from the burden of doing so by bringing this application. Apparently matters are at a stage where the Defendants would be expected to give further discovery in the 2003 Proceedings. 20 The decision which Austin J was called upon to make as to whether the 2003 Proceedings should be stayed and the decision which I am now called upon to make are essentially questions of case management. Decisions as to case management are discretionary and are made in the light of the facts and circumstances as they appear to be at the time: once made, they are not immutable and rigid. An entirely different course of case management may appear to be appropriate as a case proceeds through preparation for trial and circumstances change. 21 From a reading of his Honour's reasons for judgment on 29 November 2004, it seems to me that his Honour recognised the desirability of the 2003 and 2004 Proceedings being heard together, the evidence in one being evidence in the other, bearing in mind that both sets of Proceedings involve very much the same issues and concern the same ultimate result. However, as the circumstances at that time appeared to his Honour, his Honour considered that a more efficient and speedy resolution of issues may well have been achieved by the formulation of separate questions, and his Honour proceeded accordingly. 22 The events which have since transpired, particularly the imminence of a decision in the Court of Appeal on the appeal in the 2004 Proceedings and the still distant prospect of a date for trial of the 2003 Proceedings being set, casts the matter in a different light when I come to consider it at this point in time. 23 It seems to me that the attainment of speedy and cheap justice, which is the underlying policy of case management, militate in favour of avoiding what may be entirely unnecessary expenditure in the preparation of the 2003 Proceedings for trial when, in a matter of some months, it may be seen as a result of the decision of the Court of Appeal that the 2003 Proceedings are either entirely, or largely, otiose. If the 2003 Proceedings were closer to trial, I may have considered the matter differently. However, to my mind, the imminence of a decision in the Court of Appeal which should make the parties' positions in both sets of Proceedings much clearer has weighed most heavily on my discretion in deciding that a stay of the 2003 Proceedings should be granted pending a determination of the appeal to the Court of Appeal in the 2004 Proceedings. 24 The Defendants seek the costs of this application on the basis that costs should follow the event in the normal course. The Plaintiffs seek an order that costs of the application be costs in the cause. 25 I think that the latter order is the appropriate order for costs. This was not a clear-cut application standing separate from intricate issues of case management. It is very much an application which arises by reason of the twists and turns that these Proceedings have taken towards ultimate resolution. I cannot fairly say that the contest in the application was caused by an inappropriate conception by either side that it was necessary or should be opposed as futile. I think this application should really be treated as part of the ongoing case management of the 2003 Proceedings, bearing in mind that circumstances have changed by reason of compliance and non-compliance with timetables, and by reason of the fact that dates have been set for the appeal to be heard in the Court of Appeal. The preparation of the 2003 Proceedings has progressed in ways that the parties have not altogether been able to foresee. 26 In those circumstances, I think that the costs of today should be simply taken as part of the costs of case management and should await the determination of the whole of the proceedings. Costs of today will therefore be costs in the cause. The orders that I make will be as follows. 27 Proceedings 4666 of 2003 are stayed pending the hearing and determination of the appeal in Proceedings CA 40320 of 2005. 28 The hearing of further interlocutory steps in these proceedings on 14 and 24 November 2005 is vacated. 29 Costs of this application to date will be costs in the cause. – oOo – 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.