Supreme Court New South Wales Medium Neutral Citation: Almona Pty Ltd v Parklea Corporation Pty Ltd (No 3) [2020] NSWSC 226 Hearing dates: On the papers Decision date: 13 March 2020 Jurisdiction: Equity Before: Robb J Decision: See paras 72 and 74. Proceedings are to be stood over to 10 AM on 9 April 2020. Note paras 23 to 25, 63 and 64 with regards to necessary elements of future submissions made by the parties. Legislation Cited: Civil Procedure Act 2005 (NSW) Cases Cited: Almona Pty Ltd v Parklea Corporation Pty Ltd (No 2) [2020] NSWSC 167 Category: Procedural and other rulings Parties: Almona Pty Ltd (plaintiff) Parklea Corporation Pty Ltd (first defendant) Secured Asset Portfolio III Limited (second defendant) PT Limited (third defendant) Representation: Counsel: D Williams SC / E Bishop (plaintiff) K Andronos SC / S Keizer (first defendant) EAJ Hyde / T Epstein (second defendant) J Taylor (third defendant) Solicitors: Bartier Perry (plaintiff) Norton Rose Fulbright (first defendant) King & Wood Mallesons (second defendant) Corrs Chambers Westgarth (third defendant) File Number(s): 2018/317496 Judgment 1. On 28 February 2020, a hearing took place concerning the orders that should now be made following the delivery of the principal judgment in these proceedings. 2. On 2 March 2020, I circulated to the parties a judgment in which, at [80], I set out the orders that I provisionally intended to make at this stage: Almona Pty Ltd v Parklea Corporation Pty Ltd (No 2) [2020] NSWSC 167. I invited the parties to deliver additional brief submissions in writing concerning the terms of the orders, because the time available for the hearing had not been adequate to enable all parties to develop their submissions. 3. All parties have now provided to the Court the additional submissions they were invited to make. These reasons respond to those submissions. 4. It will be convenient to deal with the proposed orders in the order in which they are set out in [80] of the previous judgment. Order 1 1. The first order was an order that the first defendant and the second defendant pay to the plaintiff the sum of $4.25 million plus interest. 2. It is agreed that, if an order is now made concerning the payment of the $4.25 million, the interest should be recalculated as $921,660.57 for the period from 22 March 2016 to 28 February 2020 inclusive, with interest continuing at the present daily rate of $551.57 until payment. 3. All of the parties agreed that this order should be made at this stage, with the appropriate amendment to the interest payable, save for the second defendant. 4. The second defendant repeated, with some elaboration, the submission that it made orally at the hearing on 28 February 2020 that, as the plaintiff did not specifically claim the amount of $4.25 million plus interest in its further amended statement of claim, it is premature that such an order be made now. 5. The second defendant's submissions sought to explain, by reference to an analysis of the further amended statement of claim, why the plaintiff's money claim against the second defendant was strictly confined to the orders sought by the plaintiff that there be an inquiry into the loss suffered by the plaintiff. It follows that, submitted the second defendant, no order should be made against it for the payment of any specific amount to the plaintiff until after the inquiry is concluded. 6. In particular, the second defendant relied upon the following exchange that occurred, on the first day of the hearing in respect of the relief sought by the plaintiff, at T 9.1: WILLIAMS: Our primary case is that we want the land back. HIS HONOUR: I understand that. The question is whether this five days, an alternative $4.25 million compensation case is being run. WILLIAMS: No. It can form part of the enquiry with whatever direction you give to the person who is conducting the enquiry, if that is where you end up. We're not saying we're trying in this proceeding to prove a damages claim. That's subject to an enquiry for damages. 1. The second defendant submitted that the case proceeded on the basis outlined by senior counsel for the plaintiff, and that no party made submissions about damages or equitable compensation in opening address. 2. The second defendant also pointed to the fact that in par 321 of its closing written submissions, the plaintiff proposed alternative orders to those in the further amended statement of claim, which also only sought damages or equitable compensation following an inquiry. 3. The second defendant pointed to par 616(b) of its closing submissions, in which it had stated its position that any award of damages would need to take into account "appropriate adjustments". 4. Finally, the second defendant submitted that proposed order 1 is premised upon a claim for equitable compensation arising out of the finding that the second defendant breached its mortgagee's duty, but that in that case, equitable compensation is not the appropriate remedy, and that the plaintiff's remedy is in an account. 5. Even though the second defendant was not invited to renew its submissions on this issue, it is proper that they be received and acted upon by the Court, because the second defendant could not be given adequate time to develop its submissions on 28 February 2020. It would be an invidious outcome if the Court were to make an order, at this stage, that was likely to be vitiated because the Court had unintentionally denied the second defendant procedural fairness. 6. I note that the plaintiff has not had an opportunity to respond to the second defendant's submissions on this issue, which may be explained by the fact that the Court's invitation to the parties to make additional submissions only extended to making submissions in chief. 7. I will defer making order 1 until the matter can be properly considered at the next hearing on 9 April 2020. I note that the previous judgment wrongly indicated that the next hearing date would be 8 April 2020. 8. Apart from the fact that any delay in making orders is unfortunate, the delay in making order 1 may not have any material effect, as both the first and second defendants have asked for that order, if made, to be stayed until they can each make formal stay applications in respect of the order pending the determination of the foreshadowed appeal and cross appeals. I would, in any event, have granted the short term stays requested by those defendants. 9. I acknowledge the submission made by the second defendant that the orthodox remedy of a mortgagor in respect of the conduct of a mortgagee in exercising a power of sale is an order for an accounting by the mortgagee. 10. However, I had understood that the orthodox approach did not exclude the possibility that the mortgagor may have other particular remedies against the mortgagee, if the mortgagee's conduct satisfied the legal conditions for the availability of other remedies to the mortgagor. If, in the course of exercising a power of sale, the mortgagee shoots the mortgagor on the steps of the mortgaged house during an argument about the delivery of the keys by the mortgagor, and the mortgagee then negligently burns the house down, the mortgagor's estate is not limited to the remedy of an account. 11. The first defendant has an interest in this issue. The first defendant did not oppose the making of order 1, provided that the amount of interest was adjusted. If the plaintiff's only remedy against the second defendant was an account, one might wonder what the basis of the plaintiff's entitlement to a remedy against the first defendant would be. 12. Any delay in making order 1 will have the consequential effect of delaying the time when the first defendant will be entitled to file an appeal against the Court making that order against it. 13. Any submissions exchanged between the parties between now and 9 April 2020 should include submissions by those defendants who are interested in the issue on the pleading and procedural fairness issue that has been raised by the second defendant, and how, if at all, those considerations should be influenced by s 90(1) of the Civil Procedure Act 2005 (NSW). 14. I will also require the second defendant to indicate, with reasonable particularity, what it described in par 8 of its most recent written submissions as "appropriate adjustments". There should be sufficient detail to enable the Court to understand the forensic issues that will arise during the inquiry that may lead to some set off in favour of the second defendant in respect of the $4.25 million plus interest that would be payable to the plaintiff if order 1 were made. 15. To ensure that the consideration of that issue by the Court and the parties is not lopsided, I will require the plaintiff, in the same vein, to provide adequate particulars in its submissions of the claims that it will make in addition to the $4.25 million plus interest, whether by means of the account, damages or equitable compensation. 16. It has become reasonably clear that it will be difficult for the Court to make the most appropriate orders concerning the future conduct of these proceedings, and the proper timing of individual substantive orders, if the parties do not assist the Court and the other parties to understand what the real forensic issues are. Order 2 1. The purpose of order 2 was to dismiss as many of the plaintiff's prayers for relief as could properly be dismissed now, on the basis of the findings in the principal judgment. 2. That is desirable so that the time for filing an appeal by the plaintiff will begin to run, on the basis that the appeal should resolve as much of the dispute between the parties as is possible. 3. I proposed to dismiss prayer A(c), prayer B, prayers 4 and 5, prayer 6 (in so far as it provides an alternative basis for the making of the orders in prayers 4 and 5), and prayer 6A of the further amended statement of claim. 4. The parties agreed to this proposed order, save for the first defendant, who suggested that the Court should now dismiss additional parts of the plaintiff's prayers than is proposed in order 2. 5. I will deal with each of the first defendant's suggestions in turn. For a reason that I will explain below, I will defer actually making an order dismissing the prayers for relief that I am now prepared to accept should be dismissed until the next hearing. 6. The plaintiff's prayers for relief may be found in Annexure A to the most recent judgment. 7. Prayer A(d) – By this prayer the plaintiff sought a declaration that the first defendant was an accessory to the fraud referred to in prayer A(c). As prayer A(c) will be dismissed, there will be no declaration that the registration of the first defendant as proprietor of the Parklea property was procured by the fraud of the second defendant. Consequently, I agree that a declaration could not be made that the first defendant was an accessory to such of fraud, and accordingly this prayer should be dismissed. 8. I note generally that I have deferred consideration of whether the Court should make most of the declarations sought by the plaintiff. The dismissal of prayer A(d) should not, in principle, prevent the plaintiff from seeking a declaration that the first defendant was an accessory to a different fraud committed by the second defendant. Whether or not it is appropriate to make any such declarations is a matter for later consideration. 9. Prayer A(i) – I accept that the Court could not make a declaration that the first defendant holds the whole of the Parklea property on trust for the plaintiff. This prayer should be dismissed. 10. Prayer 1 – This prayer seeks an order that the operation of the current caveat lodged by the plaintiff against the title to the Parklea property be extended until further order, or until the plaintiff becomes the registered proprietor of the Parklea property. The first defendant submitted that the effect of the principal judgment is that the plaintiff does not have the interest sought to be protected by the current caveat, which is an interest that would entitle the plaintiff to be reinstated as the registered proprietor of the property. Even if the plaintiff has some arguable claim to an interest in the property arising from the finding in its favour of an entitlement to at least $4.25 million, that is a different interest that would need to be protected by a different caveat. 11. As far as it goes, the first defendant's submission is correct. However, the plaintiff has indicated that it proposes to contest my finding that it is not entitled to be reinstated as the registered proprietor of the Parklea property on appeal. It may be proper for the Court, or the Court of Appeal, to make an interlocutory order further extending the caveat until the determination of the appeal. The dismissal of prayer 1 would undermine the power of the Court to order any further extension of the caveat. 12. Whether or not the Court should make any further interlocutory order extending the caveat is a contentious issue that will have to be dealt with by the Court at the earliest time that is convenient. 13. I would not dismiss prayer 1 until this issue has been properly determined. 14. Prayer 2 – This prayer seeks an order that the plaintiff have leave to lodge caveats in respect of a caveatable interest pursuant to orders 4 to 6, together with orders restraining the first defendant from dealing with the Parklea property, other than for the performance of orders 4 to 6. 15. The first defendant submits that this prayer should be dismissed in so far as it relies on prayers 4 and 5. 16. Prayers 4 and 5 are to the effect that, on the making of certain payments, the Parklea property shall vest in the plaintiff absolutely, that all steps be taken to cause the plaintiff to become the registered proprietor, and that the Registrar General record the plaintiff as registered proprietor in the Register. 17. The parties have all agreed with the Court's proposal that prayers 4 and 5 should be dismissed. 18. While I accept that there is some logic in the first defendant's submission, I do not propose to dismiss prayer 2 now. Prayer 2 seeks relief that is consequential on other substantive relief. 19. As to prayer 2A, the Court has not yet, and will not, make an order granting leave to the plaintiff to lodge a new caveat to protect interests in the Parklea property that the Court has found in its principal judgment do not exist. It is not necessary to dismiss prayer 2A now. 20. Prayer 2B supports any order that the Court may be persuaded to make that prevents the first defendant from defeating the plaintiff's claim, lost at first instance, but which may succeed on appeal, to be reinstated as the registered proprietor of the Parklea property. 21. It will be open to the first defendant to contend at the next hearing that the order that it seeks dismissing part of prayer 2 should be made then. I will not make the order now, as I am not sure of the collateral consequences of doing so, and I would give the plaintiff a better opportunity than it has had to respond to the first defendant's argument. 22. Prayer 3(a) to 3(e) – This prayer seeks an order that there be an inquiry into, and that an account be taken, of various aspects of the conduct of the second defendant as mortgagee. The first defendant's submission is that the inquiry and account sought by these parts of prayer 3 could only arise if the plaintiff had successfully impeached the transfer of the Parklea property to the first defendant and the third defendant's mortgage, whereas the plaintiff failed on both claims. 23. I am not persuaded that the first defendant's argument is entirely correct. It is not clear that the relevant parts of prayer 3 depend upon the plaintiff having impeached the transfer of the property to the first defendant and the third defendant's mortgage. The plaintiff may be entitled to pursue a more general inquiry into the second defendant's conduct as mortgagee. As I have indicated in the preceding judgment, I do not propose to make any order for an inquiry and the taking of any accounts until after the basis of that exercise has been disclosed by the plaintiff, and any orders that are made will identify the issues to be pursued. 24. The issue of whether, and if so to what extent, it is useful to dismiss prayer 3 will be deferred until the Court is better able to understand the true nature of the inquiry and the accounting process that the plaintiff wishes to pursue. 25. Prayer 3A – This prayer seeks an order that the first and second defendants pay to the third defendant (or alternatively to the plaintiff) the difference between the amounts determined by the inquiry in respect of: (d) the amount payable by the first defendant to the third defendant as at a date determined by the Court for settlement following the account and inquiry, and (a) the amount payable by the plaintiff to the second defendant and secured by the registered mortgage as at 22 March 2016. 26. It does appear that the premise of prayer 3A is that the plaintiff would succeed against the defendants on its principal case, which has failed. However, I find the relationship between prayers 3 and 3A opaque, and I do not propose to dismiss any part of those prayers until the plaintiff has had the opportunity to explain, if it can be done, the continuing utility of those prayers. 27. Prayer 6 – The first defendant submitted that, in light of the dismissal of prayers 4 and 5, prayer 6 should be dismissed in so far as it is put in the alternative to prayers 4 and 5. I note that an order in those terms is already proposed by the Court. Order 3 1. This is an order to be made consequentially upon order 2 that the plaintiff's claims against the third defendant are dismissed. 2. The third defendant is content for an order to be made in those terms. 3. The plaintiff submitted that it is premature to dismiss all claims against the third defendant, because it is an interested party in respect of orders 12 and 13, which the plaintiff seeks in its proposed short minutes of the orders to be made. 4. Those proposed short minutes may be found at Annexure B of the previous judgment. 5. They are to the effect that the basis of the Court's finding that the first and second defendants are obliged to pay $4.25 million to the plaintiff justifies declarations that the Parklea property is held partially on trust for the plaintiff or that the plaintiff has a charge over that property. 6. As presently advised, I would agree with the submission made by the third defendant that the plaintiff's proposed orders 12 and 13 do not provide a reason to keep the proceedings on foot as against the third defendant. On the basis of the findings in the principal judgment, if the proprietary interests asserted by the plaintiff exist, they would not take priority over the third defendant's registered mortgage, and could only be enforced as against the first defendant. 7. It has appeared to me that the possible existence of the proprietary interests claimed by the plaintiff could only have commercial value to the plaintiff if the market value of the Parklea property exceeded the total amount secured by the third defendant's registered mortgage. 8. There is a question whether there is any purpose in the plaintiff pursuing those orders, given the time and cost that will be involved in the Court determining the claim. The basis of the claim will evaporate if the plaintiff succeeds on appeal in respect of its primary claim. 9. However, I will not make order 3 now and will defer the question of whether that order should be made until the hearing on 9 April 2020. 10. I will require the plaintiff to include in its submissions before that date an explanation of any case that it has as to how, given the findings in the principal judgment, the making of the declarations sought by the plaintiff would establish that it has a proprietary interest in the Parklea property that takes priority over the third defendant's registered mortgage. 11. I will also require some explanation from the plaintiff as to why it is worthwhile for the Court to put in place case management orders that might enable the plaintiff's entitlement to the declarations in the plaintiff's proposed orders 12 and 13 to be dealt with before the proposed appeal is determined. 12. The Court does not have any arbitrary power to prevent a party in the plaintiff's position pursuing such claims as it may arguably make, but the Court is entitled to be provided with adequate information to enable it to make sensible and convenient case management orders. Order 4 1. By this order, the plaintiff would be ordered to pay the third defendant's costs of the proceedings. 2. That order would have been made on the basis that the plaintiff would be free to seek an order, as it proposes to do, that the first and second defendants pay the third defendant's costs. 3. The plaintiff has indicated that it will seek what is commonly called a Sanderson order against the first and second defendants, which, if made, would order those defendants to pay the third defendant's costs, without any equivalent order being made against the plaintiff itself. 4. As the plaintiff has indicated that it will seek a Sanderson order in respect of the third defendant's costs, the Court should not make the proposed order 4 at this stage. 5. Any application by the plaintiff for the making of a Sanderson order will have to be made by notice of motion supported by such evidence as may be necessary. Conclusion 1. By a complex process, the Court has reached the point where it could make some orders dismissing parts of the prayers for relief claimed by the plaintiff. 2. However, the Court has been persuaded that, for the moment, it should not make the proposed order in favour of the plaintiff that it seeks in respect of the payment of the $4.25 million plus interest by the first and second defendants. 3. If the Court were to make orders dismissing aspects of the plaintiff's claim before it made any orders in favour of the plaintiff against the first and second defendants, the time for the plaintiff to file an appeal would start to run before the time for the first and second defendants to cross appeal. That outcome may not facilitate the orderly conduct of the appeal and any cross appeals. 4. Consequently, notwithstanding the objective that the Court has pursued to date, the only order that I propose to make now is to list the proceedings for further hearing on 9 April 2020. 5. Among the many other issues that remain alive, the parties should give attention to the timing when orders should be made to ensure that the appeal and any cross appeals are conducted efficiently. 6. The parties should also bear in mind that due to the greater number of issues that are deferred to 9 April 2020, the parties will need to be more comprehensive and efficient in the submissions that they serve and deliver to the Court before that date. As the parties have already been informed, I will be sitting in the Duty List, so the presentation of the parties' submissions may be interrupted. 7. As is obvious, one hearing and two interlocutory judgments have achieved precisely nothing. I would hope that, before the next hearing date, the parties are able to cooperate to identify those orders that should logically be made on the basis of the findings in the principal judgment, and that the parties do not contend for the making of orders that do not have realistic prospects of success. 8. The orders of the Court are as follows: 1. Order that these proceedings are stood over to 10 AM on 9 April 2020 before Robb J. 2. Order that the parties have leave to file such notices of motion as they may be advised to file, such notices of motion to be returnable at 10 AM on 9 April 2020 before Robb J. 3. On 9 April 2020, the Court will deal with as many outstanding issues in these proceedings as may conveniently be considered or otherwise give directions for their determination. ********** 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. Decision last updated: 19 March 2020