Bond University Ltd v Limgold Pty Ltd, Nista Pty Ltd & Anor [1996] QSC 117

IN THE SUPREME COURT OF QUEENSLAND No. 1824 of 1995 Brisbane BETWEEN: BOND UNIVERSITY LIMITED Plaintiff AND: LIMGOLD PTY LTD & NISTA PTY LTD First Defendant AND: LONG-TERM CREDIT BANK OF JAPAN, LIMITED Second Defendant REASONS FOR JUDGMENT - MOYNIHAN J. Judgment delivered 12 July 1996 CATCHWORDS: Application for trial of separate issues refused - whether equitable interest in land - lengthy trial - risk of unfairness, overlapping of evidence and duplication of costs. Counsel: Morrison Q.C. and McKenna for the Plaintiff P.A. Keane Q.C. and L.F. Kelly for the Defendants Solicitors: Minter Ellison for the Plaintiff Clayton Utz for the Defendants Hearing Date: 29 April 1996 -- 1 of 10 -- IN THE SUPREME COURT OF QUEENSLAND No. 1824 of 1995 Brisbane BETWEEN: BOND UNIVERSITY LIMITED Plaintiff AND: LIMGOLD PTY LTD & NISTA PTY LTD First Defendant AND: LONG-TERM CREDIT BANK OF JAPAN, LIMITED Second Defendant REASONS FOR JUDGMENT - MOYNIHAN J. Judgment delivered 12 July 1996 Among the relief sought in a summons issued on 28 March 1996, the defendants seek a trial of separate issues in relation to the allegations contained in paras.1-29 (except for paras.5(b), 6, 8 and 9) of the statement of claim when the separate trial point was argued (the current edition delivered on 29 May 1996) and of the counter-claim. There are 105 paragraphs of the statement of claim. As I have indicated, there have been a number of editions; particulars have been sought, provided, (with or without argument and or order) in respect of a number of aspects of the pleadings. At the time the separate trial issue was argued, the pleadings (including particulars) could not be regarded as finalised and there were apparently outstanding disclosure issues. The summons of 28 March 1996 came before the Court on 4 April 1996, some matters were dealt with and was adjourned in order to see whether trial dates could be found to try the whole of the action in July. It may be accepted that there is a public -- 2 of 10 -- 2 interest, or anyway an interest wider than that of the particular parties, in at least that aspect of the action directed to the determination of the plaintiff's entitlement to occupy the Bond University site (the university land) as soon as possible. The matter is however, not by any means the only one seeking trial dates in respect of which such considerations arise. On 11 April 1996 the matter, which had been placed on the supervised case list because of the anticipated length of the trial and its complexity, was reviewed. A number of directions were given with regard to the future conduct of the action, but no trial date was made available at that stage. It was not possible on that review, having regard to time constraints, to deal with the matters raised by the summons of 28 March and it was directed that it be listed before a chamber judge to be dealt with in the course of the chambers jurisdiction. It came before me on 29 April and I made a number of orders in respect of relief sought by various paragraphs of the summons and reserved a decision as to determination of the question of a trial of separate issues. On 30 May, the matter came on again for review in the context of the supervised case list and was offered a trial commencing 8 July 1996. The matter was however not set down for trial; essentially because it was clear that the plaintiff would not be ready to proceed to trial on that date. There was a subsidiary but not determinative issue as to the availability of counsel retained by the plaintiff for dates offered. The defendants wished to have the matter proceed to trial on the dates offered in July. It may be noted that a number of directions given for the conduct of the action have apparently not been complied with, at least in accordance with the timetable set. -- 3 of 10 -- 3 It should also be noted that the action is not rendolent with the prospect of a consensual resolution. The plaintiff opposes an order for a trial of separate issues. In arguing for that, the defendants frankly indicated that their preference was for a determination of all the issues between them and the plaintiff at a single trial. They anticipated (justifiably) that the prospect of obtaining a hearing sooner rather than later would be enhanced if the trial of separate issues required significantly less hearing time than would a trial of the whole action. There are differences between the parties as to estimated hearing times. The plaintiff estimates that a trial would require some 20 sittings days. The defendants' estimate is 10-15 days. The defendants' estimate that a trial of the issues which they seek to have separately determined would occupy 5-7 days. The plaintiff's position essentially is there would be little reduction of the time required for a trial as compared to a trial of separate issues because the volume and complexity of evidence called on a trial of separate issues would be little reduced by comparison with a trial of the action. I may say that, as things presently stand, I would not be in the least surprised if a trial of the action took all of 20 days, it will of course impose a requirement for a significant amount of judgment writing time in addition. As presently advised, I am inclined to think that the time for a trial of separate issues would be at the top of the range of the defendants' estimate and that may be unduly optimistic. Against this background, I turn to consider the application for a trial of separate issues. Paragraphs 1-29 of the statement of claim (excluding paras.5(b), 6, 8, 9) found a claim for declarations that the plaintiff has an equitable leasehold interest in the university land or alternatively, an equitable interest entitling it to exclusive occupation -- 4 of 10 -- 4 of the land from the date of Bond University taking up occupation. The period of entitlement contended for is at least 99 years. There is also a claim for declarations to the effect that the first defendant holds the land on trust for the plaintiff to the extent of the latters interest. The balance of the statement of claims founds prayers for restitution on the basis of unjust enrichment of the first defendant, (it relates to the erection of buildings on the land) and an equitable lien to secure the plaintiff's entitlement in that respect. Alternatively, a declaration is sought that the first defendant holds the land on constructive trust to the extent of the unjust enrichment. There is a claim to have the first defendant restrained from dealing with the land inconsistently with the interests of the plaintiff. There are also claims for damages pursuant to ss.82 and 87 of the Trade Practices Act 1974 (Cth) and for a declaration as to the construction of a subordination deed of 14 May 1990 or alternatively for rectification of the deed. Against the second defendant there are claims as to the priority of the plaintiff's interest. I turn to the pleading in paras.1-29 in support of the claims. Paragraph 10 of the Statement of Claim pleads that between 22 May 1987 and 15 May 1989 the plaintiff and first defendant shared a common intent or assumption ("the common intent") entitling the plaintiff to occupy the university land pursuant to a lease which would be granted. The common intent is said to be of the plaintiff's and of the first defendant's directors. Paragraphs 11-26 of the statement of claim then plead conduct it is alleged was induced because of the common intent and para.27 pleads detrimental reliance on that conduct. Paragraph 28 of the statement of claim pleads that by 15 May 1989: -- 5 of 10 -- 5 a) it would have been unconscionable to deny the plaintiff's entitlement to a lease; b) the plaintiff had an equitable interest in the land upon the terms of the lease; c) alternatively, a constructive trust should be imposed to protect the plaintiff's interest. Paragraphs 30-63 of the statement of claim plead various forms of conduct on the part of all defendants and the plaintiff in respect of the period between 15 May 1989 and 8 July 1993. Paragraph 64 pleads that over that period the plaintiff acted on the assumption that: a) the defendants would not act so as to prejudice the plaintiff's right to occupy the land; b) the defendants would permit an unencumbered lease on terms no less favourable than the lease previously referred to in para.10. Put shortly, the events pleaded in paras.1-29 of the statement of claim (with the exception of paras.5(b), 6, 8 and 9) relate to the period from 12 December 1987 to 15 May 1989. The balance of the pleading is founded on events from the latter date to 3 July 1993. This time division is important to the defendants' application for a separate trial. It was submitted that the separate trial relates to the earlier period and that there is no overlap. Furthermore if the plaintiff did not have any entitlement of the kind alleged as at 15 May 1989, there is no basis for any claim in relation to the subsequent period. The plaintiff contends that such a neat separation cannot be effected. The -- 6 of 10 -- 6 plaintiff's case is that the common assumption was not induced solely by the conduct between 15 May 1989 and 1993 and that the conduct pleaded in respect of the later period is also relevant to a determination of issues in respect of the earlier period. Further, it contends that when it acted as pleaded in para.67, it did so in reliance upon not only the common assumption in pleaded para.64 but also on the common assumption in para.10. The plaintiff further contends that what is pleaded in respect of the earlier period is separately relied upon for the second period, in terms of inducing assumptions and acts in reliance. The plaintiff submits that the assumptions pleaded in para.64 are therefore founded on a wider basis than those in para.10; therefore the resolution of the issues for the first period will not put an end to the action in respect of the second period and thereafter. The plaintiff further contends that even if there was a separate trial, it is entitled to (and it intends) to lead evidence of conduct over the second period as relevant to whether the pleaded assumption or intention was held. It contends that there is a potential for hardship and injustice if there is a separate trial but it is precluded from leading the evidence in respect of the second period. This arises because: a) the defendants would be entitled to cross-examine the witnesses at large, particularly as to their later conduct, at least in relation to credit; b) the defendants would gain an unfair advantage in that the plaintiff would be constrained in the evidence it could lead but the cross-examination would not be; c) those witnesses dealing with both periods would thereby be cross- examined twice if there were two hearings. -- 7 of 10 -- 7 The plaintiff further contends that since the state of mind of the directors of the respective companies is in issue, all facts and declarations from which intention may be inferred (whether previous or subsequent to the transaction in issue), are admissible citing eg. Phipson on Evidence 14 Ed. paras.16-01, 17-01. So far as the counter-claim is concerned, (the defendants seek a separate trial of that) it is founded on an allegation of a loan to the plaintiff by Limgold (one of the first defendant). It then alleges that the plaintiff and Limgold entered into a "subordination deed" whereby past and future loans to the plaintiff together with interest were subordinated to the debts of all other creditors of the plaintiff to be repaid only if there was what I will call a relevant surplus from where they could be paid. There are on the counter-claim issues not only as to the construction of the deed of subordination, but whether however it is construed, in the events which have occurred there is a surplus for repayment. The plaintiff contends that a resolution of these issues will not only occupy time but will necessarily involve witnesses not otherwise connected with the conduct of the first period but who would be giving evidence in respect of the second. It may be that the present provisions of the rules as to a separate trial are more liberal in effect, than were provisions such as were applied in Evans Deacons Industries Ltd v. Commonwealth of Australia (1983) 1 Qd.R.40, Dunstan v. Simeon Pty Ltd (1978) V.R.669 and Verwayen v. Commonwealth of Australia (1988) V.R. 203. It does not however seem to me necessary to determine that for the purposes of the present application. It may be accepted that ordering a separate trial is justified if it will result in the saving of time and expense; including taking into account the determination of any issues which would remain outstanding. Thus, the probability -- 8 of 10 -- 8 that the determination may dispose of the whole action is relevant. Whether the separate trial may result in injustice to a party is, of course, significant and issues such as overlapping of evidence in the event of the resolution of the action proceeding in two stages are also relevant. One may be sceptical as to at least the full extent of the application of some of the objections raised by the plaintiff to the separate trial of issues sought by the defendants. There is, for example, much to be said for the submission on the part of the defendant that the plaintiff must establish a common assumption in respect of the first period in order to succeed in the second and that one may be sceptical as to the admissibility of evidence relating to the second period in respect of the first. One cannot, however, dismiss at least the second of these propositions; at least not without a much greater consideration of issues and evidence that is possible or appropriate on an application such as this. The latter comment also applies to the plaintiff's submission of unfair advantage by constrained evidence but unconstrained cross- examination. It cannot be gainsaid that, if the determination of the issues proceeds in two stages, there is a potential overlap of evidence. For example, at least nine of the plaintiffs and six of the defendants' directors (past and present) are said to be at least potential witnesses in respect of both periods. Some of these reside overseas and others reside interstate. Translation and interpretation of the Japanese language are involved. There is potential for duplication of costs on these and other accounts if the disposition of the matter proceeds into the two stages. To the considerations which I have so far identified must be added the scepticism I expressed earlier about the defendants' time estimates for a trial of the separate issues and the prospect of tight -- 9 of 10 -- 9 management minimising the time necessary for the disposition of the whole case. In summary therefore, there is, in my view, insufficient prospect of a trial of separate issues significantly shortening the length of time to dispose of the dispute manifest in the action. This is coupled with a real risk that that course could add costs, complications and ultimately delay to the final disposition of the matter. I therefore refuse the application for a trial of separate issues. I will hear submissions as to direction with a view to the matter being tried as soon as it is ready and a judge can be made available to hear it. -- 10 of 10 --