FEDERAL COURT OF AUSTRALIA

Haslam v Money for Living (Aust) Pty Ltd (No 2) [2009] FCA 468

MARY ANN HASLAM, BERNARD DICKENS, PHYLLIS LESLIE DICKENS, DELIA LEMON, ESTELL SYLVIA SMITH, THE ESTATE OF ELAINE GAINSFORD, EDWARD JAMES GAINSFORD, ATHOL EASTERBROOK and YVONNE GRAY v MONEY FOR LIVING (AUST) PTY LTD (ADMINISTRATORS APPOINTED) (ACN 107 611 218), MFL PROPERTY HOLDINGS PTY LTD (ADMINISTRATORS APPOINTED) (ACN 111 105 125), STEPHEN O'NEILL, GARY DENNIS O'NEILL, JOLANTA SIMONE OLSZEWSKI, PERMANENT MORTGAGES PTY LTD (ACN 097 176 362), PERPETUAL TRUSTEE COMPANY LIMITED (ACN 000 001 007), LATROBE INVESTMENT SERVICES AUSTRALIA PTY LIMITED (ACN 007 416 211), CASH FLOW KING PTY LTD (ACN 108 343 853), PATRICK O'DONNELL, BILL KAFALTIS, JASON TALEB, KERRILI PTY LTD (ACN 097 980 222) (TRADING AS DIAKOU FAIGEN (A FIRM), REGISTRAR OF TITLES, MKM CAPITAL PTY LTD (ACN 111 776 464), RECORDER OF TITLES, THE COMMISSIONER OF STATE REVENUE OF VICTORIA, THE COMMISSIONER OF STATE REVENUE OF TASMANIA and STABLE TECHNOLOGIES PTY LTD (ACN 062 528 545)

VID 1468 of 2005

MIDDLETON J

4 MAY 2009

MELBOURNE

THE COURT DECLARES THAT:

1.                  The following persons constitute the group members of this representative proceeding (the ‘Affected Group Members’):

(a)        William Bruce Burton;

(b)        Annette Marion Burton;

(c)        Albert Walter Dally;

(d)        Lorraine Joy Dally;

(e)        Shirlee Esther Davey;

(f)         Raymond John Debenham;

(g)        Anna Rose Kocsis;

(h)        Leslie Luspai Kocsis; and

(i)         Joyce Doris Orchard.

2.                  The land situate and known as 36 Kiewa Street, Doncaster in the State of Victoria being the land more particularly described in Certificate of Title Volume 8673 Folio 913 (‘the Burton land’) is subject to the interest of William Bruce Burton and Annette Marion Burton as tenants in possession pursuant to s 42(2)(e) of the Transfer of Land Act 1958 (Vic), namely a lease for the life of  William Bruce Burton and Annette Marion Burton or until William Bruce Burton and Annette Marion Burton vacate the Burton land for a period longer than six months.

3.                  William Bruce Burton and Annette Marion Burton have an equitable vendors’ lien to the extent of the unpaid balance of the purchase price (together with interest thereon) under the contract of sale for the Burton land between William Bruce Burton and Annette Marion Burton and the second respondent dated 8 December 2004.

4.                  The land situate and known as 12 Springs Road, Donnybrook in the State of Victoria being the land more particularly described in Certificate of Title Volume 8461 Folio 993 (‘the Dally land’) is subject to the interest of Albert Walter Dally and Lorraine Joy Dally as tenants in possession pursuant to s 42(2)(e) of the Transfer of Land Act 1958 (Vic), namely a lease for the life of  Albert Walter Dally and Lorraine Joy Dally or until Albert Walter Dally and Lorraine Joy Dally vacate the Dally land for a period longer than six months.

5.                  Albert Walter Dally and Lorraine Joy Dally have an equitable vendors’ lien to the extent of the unpaid balance of the purchase price (together with interest thereon) under the contract of sale for the Dally land between Albert Walter Dally and Lorraine Joy Dally and the second respondent dated 1 November 2004.

6.                  The land situate and known as 112 Tarcombe Road, Seymour in the State of Victoria being the land more particularly described in Certificate of Title Volume 6872 Folio 238 (‘the Davey land’) is subject to the interest of Shirlee Esther Davey as a tenant in possession pursuant to s 42(2)(e) of the Transfer of Land Act 1958 (Vic), namely a lease for the life of Shirlee Esther Davey or until Shirlee Esther Davey vacates the Davey land for a period longer than six months.

7.                  Shirlee Esther Davey has an equitable vendors’ lien to the extent of the unpaid balance of the purchase price (together with interest thereon) under the contract of sale for the Davey land between Shirlee Esther Davey and the second respondent dated 3 November 2004.

8.                  The land situate and known as 57 Peart Street, Leongatha in the State of Victoria being the land more particularly described in Certificate of Title Volume 8916 Folio 133 (‘the Debenham land’) is subject to the interest of Raymond John Debenham as a tenant in possession pursuant to s 42(2)(e) of the Transfer of Land Act 1958 (Vic), namely a lease for the life of Raymond John Debenham or until Raymond John Debenham vacates the Debenham land for a period longer than six months.

9.                  Raymond John Debenham has an equitable vendors’ lien in respect of the unpaid balance of the purchase price (together with interest thereon) under the contract of sale for the Debenham land between Raymond John Debenham and the second respondent dated 20 November 2004.

10.              The land situate and known as 163 Blackburn Road, Blackburn South in the State of Victoria being the land more particularly described in Certificate of Title Volume 7380 Folio 806 (‘the Kocsis land’) is subject to the interest of Anna Rose Kocsis and Leslie Luspai Kocsis as  tenants in possession pursuant to s 42(2)(e) of the Transfer of Land Act 1958 (Vic), namely a lease for the life of Anna Rose Kocsis and Leslie Luspai Kocsis or until Anna Rose Kocsis and Leslie Luspai Kocsis vacate the Kocsis land for a period longer than six months.

11.              Anna Rose Kocsis has an equitable vendors’ lien in respect of the unpaid balance of the purchase price (together with interest thereon) under the contract of sale for the Kocsis land between Anna Rose Kocsis and the second respondent dated 26 November 2004.

12.              The land situate and known as 8 Coventry Street, Burwood East in the State of Victoria being the land more particularly described in Certificate of Title Volume 8383 Folio 169 (‘the Orchard land’) is subject to the interest of Joyce Doris Orchard as a tenant in possession pursuant to s 42(2)(e) of the Transfer of Land Act 1958 (Vic), namely a lease for the life of Joyce Doris Orchard or until Joyce Doris Orchard vacates the Orchard land for a period longer than six months.

13.              Joyce Doris Orchard has an equitable vendors’ lien in respect of the unpaid balance of the purchase price (together with interest thereon) under the contract of sale for the Orchard land between Joyce Doris Orchard and the second respondent dated 6 December 2004.

14.              The seventh respondent’s mortgages are not subject to the equitable vendors’ lien of each of the fifth to ninth applicants and the Affected Group Members over their respective former properties.

the court orders that:

15.              The seventh respondent pay the costs of the proceedings of the applicants and Affected Group Members (including the costs of the hearing of 31 October 2008).

16.              Costs of the application for an extension of time to appeal be reserved for the Full Court.

the court directs that:

17.              Pursuant to s 33Z(1)(g) and s 33Q(1) of the Federal Court of Australia Act 1976 (Cth) any Affected Group Member, together with Athol Easterbrook and Yvonne Gray, may apply for a determination of their entitlement (if any) to orders for damages against the third, fourth and fifth respondents. 

18.              In respect of any such application for damages:

(a)        Each applicant must provide written notice of any proposed application for damages to the third, fourth and fifth respondents by 28 May 2009 at their address for service.

(b)        Each applicant must file and serve on the third, fourth and fifth respondents any affidavit material in support the application for damages by 24 June 2009.

(c)        The third, fourth and fifth respondents must file and serve any affidavit material in opposition to any application for damages on the relevant Affected Group Member, Athol Easterbrook or Yvonne Gray by 15 July 2009.

(d)        The parties must file and serve any further submissions in relation to any application for damages by 4.00pm on 22 July 2009.

(e)        Such application be heard at 10:15am on 31 July 2009.

19.              The application for an extension of time within which to institute an appeal against the orders made on 2 December 2008 be heard and determined by a Full Court.

20.              The seventh respondent file and serve any notice of appeal on or before 4.00pm on 18 May 2009.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
The text of entered orders can be located using eSearch on the Court’s website.

REASONS FOR JUDGMENT

INTRODUCTION

1                                             On 2 December 2008 the Court made a number of declarations and orders in favour of certain named applicants.  The only respondent whom remained and remains to contest these proceedings is the seventh respondent (‘Perpetual’).

2                                             Three matters now require my further determination.  First, the appropriate orders to make in respect of the Affected Group Members as identified in the Court’s orders made on 2 December 2008.  Second, the appropriate order as to costs that should be made.  Third, whether Perpetual should be granted an extension of time to file and serve any notice of appeal in respect of the orders made on 2 December 2008.

AFFECTED GROUP MEMBERS

3                                             Perpetual does not oppose declarations and orders being made in relation to the Affected Group Members on the basis that such declarations and orders are in the same form as the previous declarations and orders made on 2 December 2008. 

4                                             Affidavits have been relied upon by the Affected Group Members to support their claims for relief.  Perpetual has not filed any affidavits in response to the claims made by the Affected Group Members.  However, Perpetual did object to parts of the evidence filed by the Affected Group Members.  Some objections of Perpetual were conceded to be properly taken and that evidence is ruled to be inadmissible.  However, in my view, the other objections taken by Perpetual are not sustainable, and the evidence sought to be introduced is relevant and admissible for the reasons advanced by the Affected Group Members in their written submissions directed to these objections.  I should indicate that the orders sought by the Affected Group Members are supported even if these objections to evidence, as raised by Perpetual, were sustained.  In my view, nothing turns upon the evidence sought to be ruled inadmissible as far as bringing the Affected Group Members within the ambit of the factual circumstances giving rise to the declarations and orders made in favour of the named applicants on 2 December 2008. 

5                                             The parties did not raise any additional legal issues to those already determined by the Court which would impact upon the claims for relief of the Affected Group Members and which would require my separate determination.

6                                             No point was made by Perpetual that the Affected Group Members did not come within one or other of the factual circumstances giving rise to the declarations and orders made on 2 December 2008 in respect of the named applicants therein specifically mentioned and considered.  I should mention that no party sought to identify specifically which category of factual circumstances previously identified in the Court’s earlier reasons covered each Affected Group Member, and no distinguishing feature was sought to be relied upon by Perpetual.  This approach of the parties may have ramifications depending upon the result of any appeal, but does not impact upon the appropriateness of making the declarations and orders now sought by the Affected Group Members. 

7                                             On the basis of my previous reasons, the affidavit material before me and the approach taken by Perpetual, I will make the declarations and orders now sought by the Affected Group Members.

COSTS

8                                             I now turn to the issue of costs.  Perpetual accepts that an order should be made in accordance with the ordinary rule that costs follow the event.  The applicants and Affected Group Members seek an order that costs (including any reserved costs) be awarded on an indemnity basis.

9                                             Where the Court orders a party to pay another’s costs, the ordinary rule provides that those costs will be assessed on a party and party basis.

10                                          The applicants advance a number of arguments in support of their claim for indemnity costs.  Primarily, the applicants rely on the decision of Finkelstein J in Australian Securities and Investments Commission v Money for Living (Aust) Pty Ltd (No 2) (2006) 155 FCR 349 (‘MFL (No 2)’), where his Honour considered the scheme operated by Money for Living (Aust) Pty Ltd and whether it amounted to a vehicle for ‘financial investment’ as defined in s 12BAA(4) of the Australian Securities and Investments Commission Act 2001 (Cth).

11                                          The applicants contend that Perpetual continued to resist the applicants’ claim that a life interest took priority over Perpetual’s mortgage despite being aware of the decision of Finkelstein J in MFL (No 2) at [24]-[25] and, in particular, his Honour’s analysis of the relevant principles of law and their application to the Transfer of Land Act 1958 (Vic) and their equivalent provisions in Torrens legislation in other states in the very same fact circumstances that concerned the parties in this proceeding. 

12                                          In addition, the applicants contend that:

·                    Perpetual’s case, in so far as it rested upon the assertion that its mortgage was registered contemporaneously with the transfer of land, proved to be groundless.

·                    Perpetual’s rejection of an initial Calderbank offer and two subsequent offers was unreasonable in the circumstances and should be taken into account by the Court in the exercise of its discretion.

·                    Perpetual, unreasonably, put the Affected Group Members to formal proof of their claims even though Perpetual was seized of all the relevant facts and law.

13                                          I am not convinced that the circumstances raised by the applicants call for the exercise of my discretion in favour of an award of indemnity costs.  I propose to make the ordinary order for costs.

14                                          I am not persuaded that the decision of Finkelstein J in MFL (No 2) provides a sufficient basis to support the applicants’ contention that Perpetual’s position was unreasonable or otherwise inappropriate.  The passages relied on by the applicants were obiter dicta, were delivered without his Honour having the benefit of a contradictor, and reached without full consideration of relevant evidence or the many arguments which Perpetual advanced before me.

15                                          Indeed, whilst I did eventually adopt the approach of Finkelstein J, at the time the proceedings were commenced before me, the decision in MFL (No 2) could not have been considered ‘a conclusion necessary to resolve a concrete dispute reached after contest in argument’:  see Rural Press Ltd v Australian Competition and Consumer Commission (2003) 216 CLR 53 at [62] (per Gummow, Hayne and Heydon JJ). 

16                                          As far as the assertion that the mortgage was registered contemporaneously with the transfer of land, whilst this was ultimately not accepted, it was not a hopeless contention, and it required proper consideration by the Court.

17                                          As far as Perpetual requiring each of the Affected Group Members to formally prove their claims, I do not regard this as being unreasonable in the circumstances.  Once the material facts were established by admissible evidence, Perpetual did not oppose the orders now being sought.  Perpetual was entitled to view and consider the evidence that could be adduced by each of the Affected Group Members.  I do not regard the conduct of Perpetual in this regard as being unreasonable or improper.

18                                          To further bolster their claim to indemnity costs the applicants and Affected Group Members refer to a Calderbank offer made on the evening before the trial commenced, and two subsequent offers during the course of the hearing.

19                                          Relying on the decision of the Victorian Court of Appeal in Hazeldene’s Chicken Farm Pty Ltd v Victoria WorkCover Authority (No 2) (2005) 13 VR 435 (per Warren CJ, Maxwell P, Harper AJA), the applicants point to the following indicia as supporting their claim for indemnity costs:

·                    The fifth, eighth and ninth applicants obtained a result no less favourable than that made in the Calderbank offer.

·                    The rejection of their offer prolonged the proceedings.

·                    Perpetual had sufficient time to consider the offer, given that the offer was made on 18 November 2007 on the day before trail which was then due to commence on 19 November 2007.

·                    The offer was made after Perpetual was aware of all relevant evidence and after exchange of submissions on facts and law, and shortly after the mediation of the matter.

·                    The offer was simple in its terms, and capable of being accepted.

·                    The offer was a genuine compromise, as the offerees were prepared to forego the priority of their vendor’s liens and costs.

·                    The offer foreshadowed seeking indemnity costs in the event that it was not accepted.

20                                          It was contended that further offers were made on 29 October 2008, prior to the applicants having gone to the expense of contested submissions as to the form of final orders, and on 21 January 2009.  The applicants and Affected Group Members claim that Perpertual’s failure to accept those offers was unreasonable in light of it having had the benefit of my reasons for judgment dated 16 October 2008, and in respect of the offer on 21 January 2009, having had the benefit of the Court orders made in favour of the named applicants on 2 December 2008.

21                                          In my view, the Calderbank letter (either treated in isolation or in combination with the other matters relied upon) does not support a claim for indemnity costs.

22                                          I accept that the Calderbank letter was sent after a mediation, and thus at a time when the parties were fully apprised of the issues.

23                                          However, the Calderbank letter was received at 6.58pm on a Sunday night, the evening before the trial commenced the next morning.  The offer was expressed to remain open to 10.00am the next morning.  The offer came too close to the date for trial and gave too little time for contemplation, even though following mediation.  While the offer was itself expressed in simple terms, the practical and commercial consequences of accepting it required consideration and advice.  Given the time of delivery, the proximity to trial and the fact that the offer involved the applicants primarily obtaining the principal relief they sought in the proceeding, I am inclined to the view that the Calderbank letter was primarily designed to trigger costs sanctions, and not to compromise the litigation.  In any event, I do not consider the rejection of the offer was unreasonable:  see CGU Insurance Ltd v Corrections Corporation of Australia Staff Superannuation Pty Ltd [2008] FCAFC 173 at [75].

24                                          The latter two communications (those of 29 October 2008 and 21 January 2009) were not offers of compromise as such, but were more in the nature of submissions and matters put forward for the consideration of Perpetual.  In any event, matters other than those included within the scope of those letters required the consideration of the Court, and were the subject of contention.  I do not consider that Perpetual acted unreasonably in not consenting to the orders proposed by the applicants and Affected Group Members in those two communications. 

APPEAL

25                                          I turn then to the third issue for my determination, the application for an extension of time to appeal.

26                                          It is apparent that the scheme of Pt IVA of the Federal Court of Australia Act 1976 (Cth) (‘the Act’) anticipates that once the common issues have been determined, it is at that point a party disaffected by the determination would be in a position to appeal:  see Merck Sharp & Dohme (Australia) Pty Ltd v Peterson [2009] FCAFC 26 at [8].  It would be normally desirable that this occur at the end of the determination of the common issues, before individual cases or issues are then to be considered.

27                                          In this proceeding, care was taken in choosing the named applicants so as to cover the factual circumstances and legal issues that needed to be determined, and which were to be common to all other group members.  No controversy seems to exist about which issues are in common.  Perpetual seems to accept that the determinations made in relation to the named applicants apply to the Affected Group Members.  It was not necessary to otherwise define the common issues for determination, and no party sought to do so in the course of the proceeding.

28                                          Therefore, in the normal course, it would have been preferable for Perpetual to have instituted a timely appeal before the Court embarked on the determination of the claims of the Affected Group Members.

29                                          This has not occurred, and Perpetual now seeks an extension of time in which to seek to overturn the orders made on 2 December 2008.  Unless an appeal is brought in relation to that earlier determination of the Court, the earlier decision would be res judicata, and any party (including a group member) would be bound by that decision in relation to the common issues resolved.  This is implicit within the scheme of Pt IVA of the Act. 

30                                          It is in this context that I have considered the application for an extension of time to file and serve a notice of appeal from the declarations and orders made on 2 December 2008.  It may be that the application should be for an application for an extension of time to file and serve an application for leave to appeal, but this is probably of no moment in the circumstances.  Declaratory relief was granted in favour of the named applicants and such relief is normally not regarded as interlocutory in nature.

31                                          Extensive written submissions have been provided on this issue, and in my view there are strong arguments in favour of refusing the application for an extension of time, particularly as the whole period of delay in bringing the application has not been satisfactorily explained.  I am also sympathetic to the position of the applicants and Affected Group Members, and the prejudice they will suffer arising from any further delay in the finalisation of this matter.  However, it seems to me that the merits of the appeal must be taken into account in considering whether an extension should be granted, and this is a matter upon which the Full Court would be better placed to consider.  If the primary decision is considered to be in error, this could shift the balance in favour of allowing the application for an extension of time. 

32                                          Perpetual intends to appeal the orders made today.  The extent of the ability of Perpetual to disturb these orders on appeal in view of the Court’s earlier decision (should it not be successfully appealed) may be the subject of further debate.  Nevertheless, Perpetual will at least be entitled to appeal today’s orders and seek a hearing before the Full Court.  One way or another, the matter will proceed before the Full Court.

33                                          In these circumstances, I propose to direct pursuant to O 52 r 2AA of the Federal Court Rules that the application for an extension of time within which to institute an appeal against the orders made on 2 December 2008 be heard and determined by a Full Court.  Any conditions as to costs or otherwise should be considered at that time.

34                                          I suggest the parties seek to expedite all applications and appeals so they can be heard concurrently.

Associate:

Dated:         8 May 2009