New South Wales Supreme Court CITATION : New Cap Reinsurance Corporation Ltd v AE Grant & Ors, Lloyd's Syndicate No. 991 [2009] NSWSC 950 HEARING DATE(S) : 06/08/09, 27/08/09 JUDGMENT DATE : 11 September 2009 JURISDICTION : Equity Division Corporations List JUDGMENT OF : Barrett J Re-opening allowed. DECISION : Orders at paragraph [23] made, Orders at paragraph [24] to be made. CATCHWORDS : PROCEDURE - re-opening after judgment but before orders made - where conduct of hearing was on false basis - need for decision to be adjusted in light of correction of misapprehension LEGISLATION CITED : Corporations Act 2001 (Cth), s 588FF CATEGORY : Principal judgment Compagnie Noga D'Importation et D'Exportation SA v Abacha [2001] 3 All ER 513 CASES CITED : New Cap Reinsurance Corporation Ltd v AE Grant & Ors, Lloyd's Syndicate No. 991 [2009] NSWSC 662 Wentworth v Wentworth [1999] NSWSC 638 New Cap Reinsurance Corporation Limited - First Plaintiff PARTIES : John Raymond Gibbons - Second Plaintiff A E Grant & Ors, Lloyd's Syndicate No. 991 FILE NUMBER(S) : SC 2351/02 COUNSEL : Dr S R Derham - Plaintiffs SOLICITORS : Henry Davis York - Plaintiffs IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION CORPORATIONS LIST BARRETT J FRIDAY, 11 SEPTEMBER 2009 2351/02 NEW CAP REINSURANCE CORPORATION LIMITED & ANOR v A E GRANT & ORS, LLOYD'S SYNDICATE NO 991 JUDGMENT 1 For reasons published on 14 July 2009 (see [2009] NSWSC 662), I concluded that the plaintiffs were entitled to a number of orders outlined at paragraphs [126] to [129] of those reasons. 2 The successful plaintiffs have sought leave to re-open and to tender certain further evidence in support of the proposition that the proposed orders outlined at paragraph [126] should be varied. 3 The decision reflected by the reasons of 14 July 2009 proceeded on the footing (stated at paragraph [42]) that, on and after 31 December 1998, there existed two debts owing, due and payable by NCRA to a single group or collection of persons referred to as "the defendants", being, as described in paragraph [2], "A E Grant and numerous persons named in a schedule to the originating process" who were "associated together as the members of Lloyd's Syndicate No 991". 4 The originating process was filed on 19 April 2002. The "defendant" (singular) was identified as: "A E Grant and Others, Lloyd's Syndicate Number 991 (as detailed in the attached schedule of members)". 5 One of the orders sought by the originating process was: "An order that the defendant pay the plaintiffs the sum of US$5,980,600 (as particularised in the attached schedule of payments) or such other sum as the Court may order under section 588FF(1) of the Act" [that is, the Corporations Act 2001 (Cth)]. 6 As embodied in an amended interlocutory process filed on 17 December 2008, the plaintiffs' claim was for: "An order that the Respondent pay to the Applicants the sum of US$5,980,600 under section 588FF(1) of the Corporations Act together with interest on that sum under section 94 of the Supreme Court Act 1970 (NSW) from 19 April 2002." 7 The "respondent" named in the amended interlocutory process was "A E Grant & Ors, Lloyd's Syndicate No 991". 8 In the course of the hearing on 17 December 2008, the following exchange occurred: "HIS HONOUR: The defendant is named as A E Grant & Ors in the interlocutory process. Is there a list of people? FORSTER: There is. The list of people is contained in the affidavit of Neil Patrick Dooley of 3 September 2003. HIS HONOUR: How many people are there, roughly? FORSTER: The answer to your Honour's question is about 700. The list of the persons I understand forms part of the originating process in these proceedings." 9 It was in the light of the descriptions in the originating process and the amended interlocutory process, the terms of the orders sought, the answers given by senior counsel for the plaintiff to the court's specific questions soon after the start of the hearing and the course of submissions thereafter (including written submissions referring simply to "the respondent") that the court's decision proceeded on the footing that I have described at paragraph [3] above. 10 The further evidence the plaintiffs wish to lead following re-opening shows, however, that there was not, at all material times, one constant body of persons making up Lloyd's Syndicate No 991. On the contrary, there were two relevant bodies of persons, one during the year that ended on 31 December 1997 and the other during the year that ended on 31 December 1998. While it appears that there was a degree of commonality between the membership of the 1997 group and the membership of the 1998 group, it is now clear that there was not precise correspondence. 11 Also, it appears from the further evidence that, while the defendant was described in the originating process in the way I have mentioned ("A E Grant and Others, Lloyd's Syndicate Number 991 (as detailed in the attached schedule of members)"), there were in fact two schedules attached to the originating process as filed, one of nineteen pages headed "Schedule 1 – Lloyd's Syndicate No. 991 – 1997 Underwriting Year" and the other of fifteen pages headed "Schedule 2 – Lloyd's Syndicate No. 991 – 1998 Underwriting Year". Confusion arising from the fact that the originating process now existing in the court file has only Schedule 1 attached to it and that the pages of Schedule 2 are separate within the file is resolved by several of the affidavits the plaintiffs wish to read. Those affidavits (coupled with an inspection of the content of the court file) leave no real doubt that the two schedules I have described (thirty-three pages in all) formed part of the originating process when filed, that the staple by which the document as a whole was held together was at some later time removed or came out, that the pages other than the fifteen constituting Schedule 2 were at some later time again stapled together and that those fifteen pages were left separate and loose within the file, having themselves again been stapled together. As the file now exists, the fifteenth of the fifteen pages has again been separated. 12 While, as I have said, there can be no real doubt that the originating process, as filed, incorporated both Schedule 1 and Schedule 2, the fact that a document of that importance could be treated in the way I have described while forming part of the court's record is a matter for concern that I propose to refer to the court's Principal Registrar. 13 Taken as a whole, the evidence proposed to be tendered by the plaintiffs shows clearly that the reinsured parties with whom NCRA contracted through A E Grant Underwriting Agencies Ltd in respect of the 1997 year were not identical with the reinsured parties with whom it so contracted in respect of the 1998 year; also that the parties relevant to the 1997 year are those named in Schedule 1 to the originating process as filed and the parties relevant to the 1998 year are those named in Schedule 2. It follows that the parties to the December 1998 commutation agreement entered into by NCRA were different as regards the different years and that proceedings were instituted against each of these groups. On the revised view of matters emerging from the new evidence the plaintiffs wish to tender, the debt of US$2,697,380 resulting from the commutation referable to 1997 was a debt to the 1997 group of persons and the debt of US$3,283,380 resulting from the commutation referable to 1998 was a debt of the 1998 group. 14 In the light of the further evidence they seek to tender, the plaintiffs accept that a different connotation must also attach to the matters mentioned in paragraph [27] of the 14 July 2009 reasons. The payments of US$2,000,000 on 8 January 1999 and US$3,980,600 on 14 January 1999 to A E Grant Underwriting Agencies Ltd in respect of a "Contract Name" described as "A E Grant Syn 991" cannot any longer be regarded as having been made to the agent of a single group of principals. The payments, taken together, must be regarded as having been made in part for the account of the persons in the 1997 group and in part for the account of those in the 1998 group. The conclusion that the payments were made in or towards discharge of the debts arising from the commutation agreement is not disturbed. 15 There does, however, arise a question about which payment related, in whole or in part, to which debt arising from commutation. There is, of course, no correspondence between either of the debts and either of the payments. There is also the point that the aggregate amount of the payments of 8 January 1999 and 14 January 1999 (US$5,980,600) was US$160 less than the aggregate of the two commutation amounts (US$5,980,760). 16 The plaintiffs' contention is that, by means of the two payments, the whole of the 1997 commutation amount, apart from US$160, should be taken to have been satisfied and that the whole of the 1998 commutation amount, apart from US$160, should be taken to have been satisfied. Because they bear the onus of proof and have no means of satisfying it as to the US$160 (in the sense that they cannot show that either the US$2,697,380 debt owed to the 1997 group or the US$3,283,380 debt owed to the 1998 group was short-paid by US$160), the plaintiffs will proceed on the footing that the payments actually made operated to discharge the two debts pro tanto to the extent of US$2,697,220 and US$3,283,220 respectively (that is, the whole less US$160 in each case). The fact that the payments of 8 January 1999 and 14 January 1999 were made to the syndicate agent is sufficient to ground an inference that at least US$2,697,220 went to the 1997 group of persons and at least US$3,283,220 went to the 1998 group of persons. 17 The immediate question is whether the plaintiff's should be allowed to re-open in order to adduce the further evidence and to make the further submissions to which I have referred. 18 No orders have yet been made. To that extent, the proceedings have not been concluded. But the plaintiffs nevertheless put their case in full before judgment was reserved on 27 February 2009 following the receipt of written submissions requested by the court at the conclusion of the hearing on 17 December 2008. 19 The question whether, in those circumstances, the court may – and, if so, should – allow the plaintiffs to re-open is to be approached by reference to principles referred to by Santow J in Wentworth v Wentworth [1999] NSWSC 638 at [13] to [18]: "While appellate courts must have regard to whether and to what extent there is any prospect of any final appellate review and which in the case of the Australian courts of appeal depends upon special High Court leave, the principles for exercise of the discretion as laid down in Smith v NSW Bar Association (No. 2) (supra) at 265 embrace all courts: 'The power is discretionary and, although it exists up until the entry of judgment, it is one that is exercised having regard to the public interest in maintaining the finality of litigation ( Wentworth v Woollahra Municipal Council (1982) 149 CLR 672 at 684)). Thus, if reasons for judgment have been given, the power is only exercised if there is some matter calling for review ( Marinoff v Bailey (1970) 92 WN(NSW) 280 at 284; National Benzole Co Ltd v Gooch [1961] 1 WLR 1489 at 1492-1494). And there may be more or less reluctance to exercise the power depending on whether there is an avenue of appeal ( State Rail Authority of NSW v Codelfa Constructions Pty Ltd (1982) 150 CLR 29 at 38-39, 45-46; Wentworth v Rogers [No 9] (1987) 8 NSWLR 388 at 394-395).' Per Brennan, Dawson, Toohey and Gaudron JJ in Smith v NSW Bar Association (No 2 ) at 265. Their Honours went on to say (at 265) 'the power to review a judgment in a case where the order has not been entered will not ordinarily be exercised to permit a general re-opening'. Speaking in broad terms, the basis for review has been expressed thus (in Yenald (supra) at 42,362): 'An order varying the terms of a judgment that has not been entered will be made to correct error or oversight or to give effect to a review of the contemplated order so that the orders made deal more adequately with the matter as litigated by the parties before the Court. (See: The Texas Company (Australasia) Ltd v FCT (1940) 63 CLR 382 per Starke J at 457).' In appellate courts particularly, there is to be weighed the public interest in the finality of litigation against what would otherwise be irremediable injustice; State Rail Authority of New South Wales v Codelfa Construction Pty Limited at 38 per Mason and Wilson JJ. But that latter factor does not have the same weight where, as here, appeal is allowed as of right or as a matter of usual course. The discretion to re-open or vary a judgment is thus significantly qualified. As is so often said, the power should 'be exercised with great caution'; Wentworth v Woollahra Municipal Council (1982) 149 CLR 672 at 684. Examples where re-opening was denied serve to illustrate the constraint observed by the courts in exercise of the discretion: (i) Where the ground was that the Court misconstrued a section of legislation this was said to be 'an attempt to re-argue the substantial question decided in the appeal after hearing full argument from counsel for the parties'; Wentworth v Woollahra Municipal Council (supra) at 685. (ii) Where the grounds are an allegation of bias against the Court or allegations of mistaken findings of fact, the proper procedure is to seek special leave to appeal from the High Court. Wentworth v Rogers (No 9) (1987) 8 NSWLR 388 at 395. (iii) Where what is occurring is in truth the re-agitation of arguments already considered by the Court; as was said by Mason CJ in Autodesk (at 302): 'It must be emphasised that the jurisdiction [to review or re-hear an issue] is not to be exercised for the purposes of re-agitating arguments already considered by the Court; nor is it to be exercised simply because the party seeking a re-hearing has failed to present the argument in all its aspects or as well as it might have been put'. (iv) Where the parties have been sufficiently heard on the impugned issue; Autodesk Inc v Dyason (No 2 ) . (v) Where even if there be the possibility of some misapprehension on the Court's part as to the facts or relevant law, this misapprehension can be attributed solely to the neglect or default of the party seeking the re-hearing; for 'the purpose of the jurisdiction is not to provide a backdoor method by which unsuccessful litigants can seek to re-argue their cases'; per Mason CJ in Autodesk at 303. Examples on the other hand where review has been allowed in the case of a judgment or order of a court of first instance include the following: (i) Where the court's reasons for judgment inadvertently did not deal with important matters argued by counsel at the hearing where an appeal to correct this would involve inevitable delay; Twenty-First Australia Inc v Shade (NSWSC, Young J, 31 July 1998, unreported) in Butterworths Unreported Judgments at 18. (ii) Where the court's reasons involve 'infelicity of expression and ambiguous statements' which may be corrected by the trial judge upon the bringing in of short minutes; Fexuto Pty Ltd v Bosnjak Holdings Pty Ltd (No 2) (1998) 29 ACSR 290. (iii) Where re-opening in respect of an order which was consequential upon a finding of error of law and the trial judge had no intention that the order have the effect that further evidence could be called on in the remittal to the tribunal below, and where the possible effect of the order had not been the subject of argument at hearing; AB v Federal Commissioner of Taxation (1998) 157 ALR 510. (While the order arising out of this decision to re-open the matter and the previous decision which found an error of law were overturned on appeal in Glennan v Commissioner of Taxation [1999] FCA 297, the decision to re-open was not itself canvassed in the appeal.) (iv) Where what was sought was further consideration of orders in respect of the nature and extent of equitable relief which had been earlier sought at trial (in the context of a complex litigation); Farrow Finance Company Ltd (in liquidation) v Farrow Properties Pty Ltd (in liquidation) and Ors (SC(Vic), Hansen J, 16 April 1998, unreported). (v) Where a party had misunderstood the basis of a pleading and failed to address the issue in its strike-out application; Hoad v Nationwide News (1996-1997) 37 IPR 407 [Anderson J SC(WA)]. (vi) Where excision of a paragraph from a judgment was sought where the trial judge had mistakenly referred in his reasons to a situation which did not exist; Smits v Buckworth (No 2) (NSWSC, Young J, 14 November 1997, unreported). (vii) Where the trial judge recalled his order after deciding it was wrong immediately after making it; Pittalis v Sherefettin [1986] 1 QB 868. In the Court of Appeal, where further appeal would have depended on discretionary special leave from the High Court, the Court agreed to re-open its decision in order to permit a reconsideration of a particular issue, because the court had not originally been made aware of authority directly in point and which was to the contrary to that earlier decision; Wentworth v Wentworth (NSWCA, 30 November 1998, unreported). While illustrations of where the courts have or have not re-opened a judgment not yet entered are of value, they can be subsumed more generally in what Mason CJ said in Autodesk (at 301-2). He delimited the scope of the discretion by explaining that 'the exceptional step' of reviewing an issue might occur where a court has good reason to consider that it had proceeded on a misapprehension as to the facts or the law and where the misapprehension cannot be attributed solely to the applicant's neglect or default." 20 It seems to me that these principles, as they apply in a case such as the present, can be summarised in one basic proposition, namely, that a single judge whose decision is susceptible to appeal through readily available channels (with or without any preliminary need for leave to appeal) should allow re-opening after judgment where it is obvious to that judge that the decision has miscarried and that the miscarriage may be rectified and the situation retrieved by attention to the matter by that judge rather than by an appeal court. What is highly undesirable is that the first instance judge should be cast in the role of hearing what amounts to an appeal against his or her own decision. I adopt, in that connection, the following observation of Rix LJ in Compagnie Noga D'Importation et D'Exportation SA v Abacha [2001] 3 All ER 513: "I do not wish to say anything against the usefulness of the reconsideration jurisdiction, within its proper limits. I have made use of it myself. However, it is in the nature of the legal process that, once judgment has been rendered, analysis thereafter becomes clarified and refined, and citation of authority is applied to the findings made at first instance so as to illuminate that clarification and refinement of analysis of which I speak. But that is the function of the appeal process. In my judgment, to grant this application that I reconsider my judgment would subvert the appeal process itself. In doing so, it would not answer the interests of justice, but would be the antithesis of justice according to law. There are of course cases where an error of fact or law may be too clear for argument. The best test of that is perhaps – but not necessarily – where the judge himself identifies the error which concerns him. In such a case, it is better that the error is corrected without imposing on the parties the need for an appeal. But no parallel to Noga's application has been cited to me. It is in my judgment wrong for a judge to be treated to an exposition such as would be presented to a court of appeal. If in such circumstances a judge should be tempted to open up reconsideration of his judgment, an appeal would not be avoided, it would be made inevitable. Every case would become subject to an unending process of reconsideration, followed by appeal, both on the issue of reconsideration and on the merits." 21 The way in which the case was presented by the plaintiffs at trial led the court to proceed on an incorrect view of important facts. The case was presented on the footing that there was only one group of defendants, that the two debts arising from commutation were owed to that single group and that the two payments made in January 1999 were made to the same single group. The error was no doubt an innocent misunderstanding by counsel or those instructing them. The result, however, is that, if orders are made and entered in the way indicated in the judgment of 14 July 2009, the court will impose liability in part on some persons who ought not to be subjected to liability and will fail to impose liability in part upon some persons who should be subjected to liability. 22 This is not a case in which the application for leave to re-open is tantamount to an appeal. It is not sought to disturb any of the court's findings or reasoning except to the extent that they have proceeded on a misapprehension about the absence of differentiation between the two groups of defendants and the need to attribute to the respective groups the debts and payments relevant to the 1997 and 1998 years. The case is one in which the new evidence sought to be tendered should be received and taken into account so that, in making its decision, the court may proceed upon a correct basis as regards those matters and thereby remedy the effects of the misapprehension which caused the original decision to miscarry. 23 The court therefore (a) grants leave to the plaintiffs to re-open their case; (b) grants leave to the plaintiffs to rely on the following additional affidavits: (i) affidavit of Andrew Robert Coughlin sworn on 24 July 2009; (ii) affidavit of Sarah Ann Russell sworn on 30 July 2009; (iii) affidavit of John Raymond Gibbons sworn on 30 July 2009; (iv) affidavit of Rodney James Bretag sworn on 30 July 2009; (v) affidavit of Rodney James Bretag sworn 20 August 2009; (vi) affidavit of Callum Francis Johnston Reid sworn on 21 August 2009; (vii) affidavit of Hugh Armenis sworn on 21 August 2009; and (viii) affidavit of Neil Patrick Dooley sworn on 3 September 2003. (c) grants leave to the plaintiffs to amend the originating process by omitting prayers 1 and 2 and inserting instead the following prayers 1, 2 and 2A: "1. An order declaring that each of the following transactions is a voidable transaction within the meaning of Part 5.7B of the Corporations Act : (a) the payment of the sum of US$2,000,000 made by the first plaintiff to the defendants on 8 January 1999 pursuant to a commutation agreement entered into between those parties; and (b) the payment of the sum of US$3,980,600 made by the first plaintiff to the defendants on 14 January 1999 pursuant to a commutation agreement entered into between those parties. 2. An order that the defendants listed in Schedule 1 to the originating process pay to the plaintiffs the sum of US$2,697,220 under section 588FF(1)(a) of the Corporations Act . 2A. An order that the defendants listed in Schedule 2 to the originating process pay to the plaintiffs the sum of US$3,283,220 under section 588FF(1)(a) of the Corporations Act ." (d) grants leave to the plaintiffs to amend the amended interlocutory process filed on 17 December 2008 by substituting the following for prayers 1 and 2: "1. An order declaring that each of the following transactions is a voidable transaction within the meaning of Part 5.7B of the Corporations Act : (a) the payment of the sum of US$2,000,000 made by the first applicant to the respondents on 8 January 1999 pursuant to a commutation agreement entered into between those parties; and (b) the payment of the sum of US$3,980,600 made by the first applicant to the respondents on 14 January 1999 pursuant to a commutation agreement entered into between those parties. 2. An order that the respondents listed in Schedule 1 to the originating process pay to the applicants the sum of US$2,697,220 under section 588FF(1)(a) of the Corporations Act . 2A. An order that the respondents listed in Schedule 2 to the originating process pay to the applicants the sum of US$3,283,220 under section 588FF(1)(a) of the Corporations Act ." 24 Having regard to the further evidence, the court will now make the following declarations, orders and directions: 1. Declare that each of the following transactions is a voidable transaction within the meaning of Part 5.7B of the Corporations Act 2001 (Cth): (a) the payment of the sum of US$2,000,000 made by the first plaintiff to the defendants on 8 January 1999; and (b) the payment of the sum of US$3,980,600 made by the first plaintiff to the defendants on 14 January 1999. 2. Order that the defendants listed in Schedule 1 to these Orders pay to the first plaintiff: (a) the sum of US$2,697,220 under section 588FF(1)(a) of the Corporations Act 2001 (Cth); and (b) the further sum of [Note 1] under section 588FF(1)(c) of the Corporations Act 2001 (Cth) being interest on the sum of US$2,697,220 from 23 August 2002 to the date of the making of this order. 3. Order that the defendants listed in Schedule 2 to these Orders pay to the first plaintiff: (a) the sum of US$3,283,220 under section 588FF(1)(a) of the Corporations Act 2001 (Cth); and (b) the further sum of [Note 2] under section 588FF(1)(c) of the Corporations Act 2001 (Cth), being interest on the sum of US$3,283,220 from 23 August 2002 to the date of the making of this order. 4. Order that interest after judgment under s 101 of the Civil Procedure Act 2005 be paid on each of the sum of US$2,697,220 referred to in Order 2(a) and the sum of US$3,283,220 referred to in Order 3(a), such interest in each case to be calculated for each day in each 90 day period after the date of the making of this order at the rate that is the sum of the published rate known as the US Dollar 90 Day London Inter Bank Offer Rate on the first day of that period and a margin of 2.463%, save that, if the US Dollar 90 Day London Inter Bank Offer Rate is not published on the first day of a 90 day period, the applicable rate for each day in that period shall be the sum of the published US Dollar 90 Day London Inter Bank Offer Rate on the next day on which that rate is published and a margin of 2.463%. 5. Order that the defendants pay the plaintiffs' costs of these proceedings as agreed or assessed. 6. Direct that the Registrar sign, seal and dispatch to the proper officer of the High Court of Justice of England and Wales, Chancery Division, Companies Court, a letter of request in the terms of the letter which has been initialled and dated by Barrett J upon the making of these orders and placed with the papers. 7. Direct that the immediately preceding Direction 6 be stayed until the day that is 28 days after the entry of judgment in accordance with these orders and if within that time the defendants listed in Schedule 1 to these orders have paid the whole of the amount referred to in Order 2 and the defendants listed in Schedule 2 to these orders have paid the whole of the amounts referred to in Order 3, that direction be permanently stayed. 8. Direct that the claim in paragraph 5 of the amended interlocutory process filed in these proceedings on 17 December 2008, seeking an order that the time for the making of an application for orders under section 588FF of the Corporations Act 2001 (Cth) be extended, be stood over before the Corporations Judge on 20 July 2010, with liberty to restore to the list on two days notice. 9. Direct that the plaintiffs have leave to enter these orders forthwith. Schedule 1 [See Note 3] Schedule 2 [See Note 4] Note 1: The sum to be inserted is interest on US$2,697,220 computed in the manner stated in paragraph [78] of the reasons of 14 July 2009. Note 2: The sum to be inserted is interest on US$3,283,220 computed in the manner stated in paragraph [78] of the reasons of 14 July 2009. Note 3: The names to be inserted are those in Schedule 1 to the originating process. Note 4: The names to be inserted are those in Schedule 2 to the originating process. ********** 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.