Epicastle Pty Ltd & Lewis v Hardy & Anor [1992] QCA 160

IN THE COURT OF APPEAL [1992] QCA 160 SUPREME COURT OF QUEENSLAND C.A. No. 2624 of 1985. Brisbane Before Fitzgerald P. McPherson J.A. Demack J. BETWEEN: EPICASTLE PTY LTD (First Plaintiff) Respondent - and - SHANE GEORGE LEWIS (Second Plaintiff) Respondent AND: PETER WILLIAM HARDY (a bankrupt) (First Defendant) - and - THE OFFICIAL TRUSTEE IN BANKRUPTCY as the Trustee of the property of PETER WILLIAM HARDY (a bankrupt) (Second Defendant) Respondent Consolidated with Writ 3764 of 1985 BETWEEN: ROCKDEL PTY LTD (Plaintiff) Appellant AND: SHANE GEORGE LEWIS (Defendant) Respondent JUDGMENT - THE COURT Delivered the Twenty-Fifth day of June 1992 MINUTE OF ORDER Appeal allowed. Vary order made on 27 June 1991 by inserting after the word "is", and before the word "null", in the paragraph numbered 3 in that order the words "as between the parties to action no. 2624 of 1985". CATCHWORDS PRACTICE - PARTIES TO ACTIONS - Order made for consolidation of actions with 1 common party - Whether true consolidation - whether definition in 2nd action bound by consent order in 1st action - whether defendant consented to terms of order - whether actions treated as separate by parties. Counsel: Dutney Q.C. for the appellant McHugh for the respondents Epicastle Pty Ltd and Lewis Egan for the respondent The Official Receiver Solicitors: R G Kilner & Black N R Barbi Morris Fletcher & Cross Hearing date: 17 June 1992 IN THE COURT OF APPEAL -- 1 of 7 -- SUPREME COURT OF QUEENSLAND C.A. No. 2624 of 1985. Brisbane Before Fitzgerald P. McPherson J.A. Demack J. BETWEEN: EPICASTLE PTY LTD (First Plaintiff) Respondent - and - SHANE GEORGE LEWIS (Second Plaintiff) Respondent AND: PETER WILLIAM HARDY (a bankrupt) (First Defendant) - and - THE OFFICIAL TRUSTEE IN BANKRUPTCY as the Trustee of the property of PETER WILLIAM HARDY (a bankrupt) (Second Defendant) Respondent Consolidated with Writ 3764 of 1985 BETWEEN: ROCKDEL PTY LTD (Plaintiff) Appellant AND: SHANE GEORGE LEWIS (Defendant) Respondent JUDGMENT - THE COURT Delivered the twenty-fifth day of June 1992 This appeal involves two actions in the Supreme Court. In the first of them, which is no. 2624 of 1985, Epicastle Pty Ltd and Shane George Lewis are the plaintiffs. -- 2 of 7 -- 3 Originally the only defendant in the action was Hardy; but when he became bankrupt the Official Trustee was added as co-defendant. In the second action no. 3764 of 1985 the plaintiff is Rockdel Pty Ltd and the defendant is Shane George Lewis. According to the statement of claim delivered in the second action, the material facts are that Lewis was registered proprietor of a lot in a building units plan. He executed a bill of mortgage over that lot, which was registered on 22 April 1985 as no. H566200. The bill of mortgage was in favour of Peter William Hardy, who in July 1985 executed and delivered to Rockdel Pty Ltd an instrument transferring his interest as mortgagee. It was lodged at the Titles Office, but before it was registered Lewis lodged a caveat preventing its registration. In both his defence in the second action and his statement of claim in the first, Lewis alleged fraud on the part of Hardy in procuring execution of the bill of mortgage H566200 that was later registered in his favour. According to these allegations, Hardy was Lewis’s solicitor and induced Lewis to execute the bill of mortgage by false assertions about its intended effect, and then fraudulently filled in his own name as mortgagee. After pleadings had been delivered, various interlocutory steps were taken in the actions. Then in August 1990 there were discussions between representatives of the plaintiffs and of the defendants in the first action with a view to settlement of that action. It was agreed that a form of consent order should be prepared and placed before a Judge and that his approval to the compromise should be obtained in accordance with the provisions of the Bankruptcy Act 1966. In due course the matter came before Moynihan J in Chambers on 27 June 1991, when his Honour made the order that is the subject of this appeal. Disregarding recitals and other matters with which it deals, the order made on that occasion declared the bill of mortgage H566200 to be "null, void and of no effect" as being "a sham procured by the fraud" of the first defendant Hardy. The order went on to direct -- 3 of 7 -- 4 that the second defendant (who was the Official Trustee) execute documents and do things necessary to effect a release of that bill of mortgage. It also ordered that the first action (No. 2624 of 1985) be adjourned to the settlement list; that there be no order as to the costs of that action; and that Lewis as second plaintiff in that action be given liberty to apply. The form of the order of 27 June 1991 presents some problems which it is not necessary to investigate on this occasion. Its relevance for present purposes is that when, shortly after the order had been made on 27 June 1991, the second action no. 3764 of 1985 came to trial before Byrne J in the Supreme Court, counsel for Lewis applied for leave to amend the defence in the action so as to plead the order as an answer to the claim of the plaintiff Rockdel in that action. Trial of the action now stands adjourned pending this appeal, which Rockdel has brought against the order made by Moynihan J. The fundamental question is whether Rockdel is bound by the order made on 27 June 1991; and whether, if it is not bound, the order should be varied so as to make its effect plain beyond argument. In support of his contention that Rockdel is bound by the order, Mr McHugh of counsel for the respondents Epicastle and Lewis based his submissions on two grounds. He said that Rockdel was a party to the action in which the order was made; and, that counsel for Rockdel had appeared at the hearing at which the order was made on 27 June 1991 and had refrained from opposing it. Rockdel was not a party to the first action No. 2624 of 1985. It was nevertheless submitted that the order in question was made not only in that action but also in the second action no. 3764 of 1985, to which Rockdel was a party. This was said to be apparent from the heading to the order, which consists of the title to the first action, followed by the words "Consolidated with writ 3764 of 1985" and then the title to the second action. On appeal -- 4 of 7 -- 5 we were provided with a copy of an order made by Carter J on 10 December 1986. It recites hearing counsel for the plaintiffs in each of the actions, and proceeds to order that the two actions nos. 2624 of 1985 and 3764 of 1985 be consolidated. There are some obvious difficulties in treating this order of 10 December 1986 as bringing about consolidation, in the true sense, of the two actions: see Cameron v. McBain [1948] V.L.R. 245; Bolwell Fibreglass Pty Ltd v. Foley [1984] V.R. 97, 100. Those difficulties are compounded by the fact that, although in each of the two actions there are quite different plaintiffs with interests that are directly opposed, the order purports to give carriage of the consolidated proceedings to the plaintiffs in the first action. In the circumstances disclosed in the present case, it is scarcely possible to regard the order of 10 December 1986 as more than a direction that the two actions be heard together, which is another but more limited purpose which an order for "consolidation" is sometimes designed to achieve: see Young V. Young [1954] Q.W.N. 27. What tends to confirm that it was to be a consolidation only in this limited respect is that there were additional and distinct issues in the first action in which only the plaintiff Epicastle, and not Rockdel, was interested; and also that the parties themselves plainly viewed the order in this limited way. In the end what is decisive against a wider view of its effect is that the order made by Moynihan J on 27 June 1991 expressly directed adjournment to the settlement list only of the first action no. 2624 of 1985 to proceed to trial in the ordinary way. After the order had been made on 27 June 1991, Lewis actively participated in the second action no. 3764 of 1985, treating it as separate from the first both by appearing to defend it at the trial before Byrne J and by applying to amend his defence at that hearing. It is therefore not possible to regard Rockdel as bound by the order made on 27 June 1991 simply because the second action, to which Rockdel was a party, had previously been consolidated with the first action in which that order was made. From there -- 5 of 7 -- 6 Mr McHugh turned his attention to the conduct of counsel for Rockdel when the order was made by Moynihan J on 27 June 1991. On that occasion Rockdel was represented by Mr Ponder of counsel. His appearance at that hearing is explained by the fact that solicitors for Rockdel had been served with a copy of the summons together with the draft order that was sought. It does not follow that Rockdel would be bound by the order simply by appearing at the hearing at which the order was made. Indeed, it was only Hardy and the Official Trustee, and not Rockdel, who were named as respondents to the summons. Although Mr Ponder’s appearance before Moynihan J is recited in the order itself, it is not suggested that he consented on behalf of Rockdel to the order being made. The order is stated to have been made by consent only of Epicastle and Lewis and the Official Trustee. In fact, it is common ground that what Mr Ponder said to his Honour was that his client was not a party to the action in respect of which the order was being made, and did not consent to the order, but did not or could not oppose it. It is quite impossible to extract from what was said at the hearing that Rockdel by its counsel agreed to the order made on that occasion; or that it so conducted itself as to lead the others who were present to believe that it was consenting to be bound by that order. That would be quite contrary to what was said by Mr Ponder. We were pressed with the submission that prior to the hearing there had been consultation among counsel for the parties, in which certain provisions had, in deference to Mr Ponder’s wishes, been omitted from the draft order in its original form. The suggestion was made that in some way this meant that Rockdel by its counsel had agreed to compromise its claim in action no. 3764 of 1985 on the terms of the orders to be made in action no. 2624 of 1985. Even if it were possible to find that an agreement of compromise had been made - and we are very far from thinking that it was - it is plain that Mr Ponder, in announcing as he did at the hearing that he did not consent to the order being made, could only be considered as repudiating -- 6 of 7 -- 7 that agreement. In that event, the only course open to the other parties would have been to insist that the order be stated to be made with the consent of all parties represented by counsel before the Chamber Judge. Instead of doing that, they kept silent and so acquiesced in what Mr Ponder said. They cannot now be heard to say that the order was made with the consent of Rockdel by its counsel, or that Rockdel is bound by the order that was made on that occasion. In these circumstances it might be enough simply to dismiss the appeal leaving these reasons as a sufficient intimation that the order made on 27 June 1991 does not bind Rockdel as plaintiff in action no. 3764 of 1985. However, it was agreed by all parties that, in the event of our reaching that conclusion, the order appealed from should be varied so as to make it clear that it applied only as between the parties to the first action. Accordingly, the appeal will be allowed to the extent of varying the order made on 27 June 1991 by inserting after the word "is", and before the word "null", in the third-last line of the paragraph numbered 3 in that order the words "as between the parties to action no. 2624 of 1985". The respondent Lewis is ordered to pay the costs of and incidental to this appeal of the appellant Rockdel Pty Ltd. and the respondent The Official Trustee in Bankruptcy. -- 7 of 7 --