Federal Court of Australia

Hastie Group Limited (in liq) v Multiplex Constructions Pty Ltd (Formerly Brookfield Multiplex Constructions Pty Ltd) (Leave to Appeal) [2024] FCAFC 61

ORDERS

THE COURT ORDERS THAT:

1.    The application for leave to appeal be dismissed.

2.    The Applicants pay the Respondents’ (save for the First and Second Respondents’) costs of the leave application as taxed or agreed.

3.    The First and Second Respondents file any evidence and submissions on costs within seven days with the Applicants responding in a further seven days, after which the matter will be dealt with on the papers.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

(REVISED FROM TRANSCRIPT)

PERRAM J:

1    This is an application for leave to appeal from orders made by Middleton J on 22 December 2022 by the members of the Hastie group of companies and their liquidator. The Hastie group was involved in the provision of services to the building industry. The proposed appeal concerns whether the trial judge was right to dismiss the whole of the group’s case concerning certain bank guarantees.

2    The group had procured the issue of the bank guarantees to the various respondents (who are construction companies) which then drew down on them when the Hastie group ceased trading due to insolvency. It is evident that the way in which the case was conducted before the trial judge meant the sole issue was whether the group owned the bank guarantees or the funds drawn on the bank guarantees as a matter of law. A case was not run before the trial judge that the respondents were contractually obliged to return to the group any surplus in their hands if the guarantees were called upon. To the extent that a claim was advanced for return of all of the proceeds of the bank guarantees, that claim was advanced on the proprietary grounds just noted (and not on the basis of an obligation to account).

3    During the trial, many of the respondents accepted that, as a matter of law, there was an implied term in the relevant contracts requiring them to return any such surplus, and the trial judge accepted this. However, that submission was in aid of their other submission that the group’s claim to own the bank guarantees and their proceeds could not be correct.

4    Towards the end of the trial, it became evident to those then representing the group (who are not their present advisors) that the existence of this obligation gave rise to the possibility of a claim on the basis of the contractual obligation to return any surplus funds. Efforts were made to raise this claim, but it was pointed out by the respondents that it lay outside the pleadings and the lists of issues the parties had prepared from those pleadings. In this regard, the respondents were correct. I do not accept Dr Moore KC’s submission that claiming the amount of the bank guarantees left open the claim for a surplus. Read in context, this allegation in the points of claim could only be seen as going to the property claim.

5    The group were at that point in the trial challenged to amend their pleadings, but did not seek to do so. Nevertheless, in their final submissions before the trial judge, the new surplus claim was advanced but this was resisted by the respondents who again pointed out that it was not their pleaded case. This was not a case in which the parties joined issue to litigate their dispute on unpleaded grounds. The trial judge concluded that the case had been conducted solely on the basis that the group were entitled as a matter of property law to the return of the bank guarantees or their proceeds. As his Honour said, the group had conducted the bank guarantee case on an ‘all-or-nothing’ basis.

6    His Honour rejected that all-or-nothing case and made orders disposing of the whole of the group’s case concerning bank guarantees (although leaving other claims against the respondents on foot). On the present application, the group says that the trial judge erred in disposing of the case in this fashion and a serious injustice arises as a number of respondents have already foreshadowed that they will raise the dismissal of the bank guarantee case as precluding the group from applying to amend their remaining case (as they have stated they intend to do) to pursue bank guarantee surpluses.

7    I would refuse leave because no such case was run at trial. The applicants for leave are bound by the way they conducted their case, and whether they can amend what remains of their case to add the surplus case will be a matter for the docket judge. However, the contention that the trial judge’s orders for disposing of the group’s case are infected by appellable error is without substance. The application for leave to appeal should, in my opinion, be dismissed.

STEWART J:

8    On the reasons given by the presiding judge, I agree with such an order.

BUTTON J:

9    I also agree with the reasons given by the presiding judge, and would add two things. Firstly, I do not accept the submission that was made that the pleading by the respondents of offsetting claims in answer to proprietary claims resulted in the applicants’ pleading being sufficient to raise a non-proprietary claim to the return of the bank guarantee surplus; and secondly, the matters outlined by the presiding judge in relation to contract claims not having been run apply equally to claims in equity or restitution not having been run for the return of the bank guarantee surpluses.

PERRAM J:

10    In relation to the question of costs, the group abandoned before the hearing of the leave application those of its draft grounds which related to its contention before the trial judge that it owned the bank guarantees. Although novel there was no direct appellate authority against the proposition. We do not think that the filing of the application containing those draft grounds is something which warrants the imposition of an indemnity costs order. Further, we would not wish to discourage parties responsibly from discontinuing grounds of appeal which may be thought to have a low likelihood of success by imposing an indemnity costs order when they do so. The appropriate order for those parties other than Multiplex is that the applicants for leave pay the respondents’ costs of the leave application as taxed or agreed. In relation to Multiplex, there is an offer of compromise. Multiplex should file any evidence and submissions on costs within seven days with the applicants responding in a further seven days, after which the matter will be dealt with on the papers.

STEWART J:

11    I agree with those reasons.

BUTTON J:

12    I also agree with the presiding judge’s reasons on costs.

Associate:

Dated:    21 May 2024

SCHEDULE OF PARTIES