Swiss Partners Pty Ltd & Ors v Jeffcott Holdings Limited (in liquidation) & Ors A10/2000 [2000] HCATrans 113 (17 March 2000)

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry

Adelaide No A10 of 2000

B e t w e e n -

SWISS PARTNERS PTY LTD, CRAIG PETER BALL and MICHAEL ANDREW WHITING

Applicants

and

JEFFCOTT HOLDINGS LIMITED (in liquidation), MARTIN FRANCIS BYRNES, TIMOTHY PAUL HOPWOOD, ROBERT GRAHAM DOUGLAS HILL, STEPHEN ELLIOT YOUNG, ALEXANDER JOHN PAIOR and JOHN IRVING

Respondents

Application for special leave to appeal

GLEESON CJ

GUMMOW J

KIRBY J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON FRIDAY, 17 MARCH 2000, AT 11.42 AM

Copyright in the High Court of Australia

MR J.H. KARKAR, QC: If the Court pleases, I appear with my learned friend, MR N. LUCARELLI, QC, for the applicants. (instructed by Ebsworth & Ebsworth)

MR T.A. GRAY, QC: May it please the Court, I appear for the first respondent. (instructed by Minter Ellison)

GLEESON CJ: Yes, Mr Karkar.

MR KARKAR: Your Honours, the question of law thrown up by this application is almost identical with that in respect of which this Court granted leave to appeal in the Duke appeal.

GUMMOW J: Except that Duke is nourished by facts.

MR KARKAR: That is so. In this case - - -

KIRBY J: Why should you not just sit quietly by and wait and then we come forward and give our decision and that will save you all that stress and trouble?

MR KARKAR: It will mean also, your Honour, that we will have to apply again to strike out the statement of claim.

KIRBY J: But it may all be clarified and go away. That is how the legal system works.

MR KARKAR: That is so. We think also that we can be of assistance to the Court in - - -

KIRBY J: Is there some nuance in this case that would throw light on the issues of principle that the Court is going to have to deal with in Duke and would, bringing you up out of your turn, advance or take up much time?

MR KARKAR: Yes, your Honour, there is. Your Honours will recall that in Duke the facts were that there was a takeover of the consideration for which was the allotment of shares and the payment of cash. In this case, the transaction was a pure share swap. This case will provide the Court with the complete spectrum of the scenarios that may arise in a takeover situation. So that your Honours will have before your Honours not only a cash and share consideration but a pure swap of share for share. The facts in our case, so far as this application is concerned, are in narrow compass. Effectively, in their statement of claim the plaintiffs say they issued 10 million shares; each of the shares was valued at a dollar; the shares they got in return were valued at nil; therefore their loss is $10 million.

The case need not be nourished by any more facts. It is, as your Honour the Chief Justice reminded us on the last occasion, the kind of case that the former Chief Justice Sir Anthony Mason would refer to as being free from factual complexities so as to make it a very suitable vehicle for special leave.

GLEESON CJ: Are you aware that Duke is fixed for hearing on 7 April?

MR KARKAR: Yes, we are, your Honour.

GLEESON CJ: And it has been allotted one day.

MR KARKAR: Yes.

GLEESON CJ: How long would this case take to argue if this were listed for the same day?

MR KARKAR: We would not think that this case ought to add more than one hour to the present estimate.

GLEESON CJ: Just remind us: what is the current pleading situation? The last time this case was before us, the pleadings were in an unsatisfactory state.

MR KARKAR: Yes. The pleadings were amended after the first judgment of the Full Court. Inspired by a suggestion by your Honour the Chief Justice, we applied to strike out the amended pleading and the amended pleading is the pleading that now stands.

GLEESON CJ: So, your application to strike out the amended statement of claim failed on the authority of the decision in Duke?

MR KARKAR: Expressly so, yes.

KIRBY J: And you promise to only take up an extra hour?

MR KARKAR: I promise.

KIRBY J: Mr Gray is in both cases, is he not?

MR KARKAR: Mr Gray is in both cases.

GLEESON CJ: If the appeal were to be dismissed in Duke, is it inevitable that the application to strike out the statement of claim must fail?

MR KARKAR: Probably so.

GLEESON CJ: And if the appeal in Duke is allowed, is it inevitable that the application to strike out the statement of claim must succeed?

MR KARKAR: Yes.

KIRBY J: Is that an argument, your answers to those two questions, an argument for just requiring you, like other litigants who are out there with cases that will be affected by decisions as they come out, to just wait your turn?

MR KARKAR: It is convenient, we would say, your Honours, to hear the two cases at the same time, or one after the other. It is convenient and it is productive of saving in costs.

GLEESON CJ: It seems, from one point of view, to have the contrary effect. Having regard to the answers that you just gave to my questions, it seems that your case, that is to say, the pleading application, will not need to be argued because the outcome of the pleading application will be decisively affected one way or the other by the decision in Duke.

MR KARKAR: That is so. We would say that our case would simply provide the Court with the complete spectrum of the facts upon which to decide Duke and our case.

GLEESON CJ: I can understand why you want to keep your application for special leave to appeal alive pending the decision in Duke because, if the decision in Duke goes one way, it might turn out that you should have succeeded.

MR KARKAR: Yes.

GLEESON CJ: But it is one thing for us, as it were, to keep your application for special leave to appeal alive; it is another thing to actually grant it or, alternatively, refer it to the Full Court to be heard on the same day as Duke, which is another possible cause of action.

MR KARKAR: Yes. Your Honours, there is force in what your Honour the Chief Justice says. We believe that we can be of assistance to the Court and we believe that the facts of our case would provide the Court with that additional perspective.

KIRBY J: Well, it really comes down to that very narrow point. There is a nuance of factual difference. It will only add a little time. You promised us that. And you are here and Mr Gray is common and he does not really raise much of an objection, if any objection at all in his written submission, so it is a question of, really, the convenience of allowing you to be heard before a matter will be decided which effectively determines the outcome of your clients' litigation.

MR KARKAR: Yes, and what we seek to do is - - -

GLEESON CJ: It effectively determines the outcome of the pleading summons.

MR KARKAR: It does. We have, of course, a dismissal application on foot so that we have applied to dismiss the claim based upon that cause of action.

GLEESON CJ: Yes. If Duke goes one way then it will determine the result of your litigation and if Duke goes the other way, it will not.

MR KARKAR: It will not, yes. For all practical purposes, that is so, your Honours. There is a small claim of about $20,000 in relation to the fee that the stockbrokers charged but that is minute, your Honour. We would submit that we can be of assistance to the Court. We would like to have a say seeing that Duke is so vital to the result in our case.

GLEESON CJ: You would like to support the appellant in Duke?

MR KARKAR: Yes, yes, we would.

GUMMOW J: Would you be saying more than is in your summary of argument on the leave application?

MR KARKAR: Not much more; a little more; but not much more. We would, of course, your Honours - - -

KIRBY J: You would like to be there listening alertly and then to jump in if anything is missed?

MR KARKAR: We all know that propositions are going to be tested and we would like to file written submissions and - - -

GLEESON CJ: Mr Myers, I think, is appearing for the appellant.

MR KARKAR: Yes, he is.

GLEESON CJ: And you would like to come along and support him?

MR KARKAR: Yes.

GLEESON CJ: Thank you, Mr Karkar. Yes, Mr Gray.

MR GRAY: If your Honour pleases, the underlying point of principle is the same in this matter as in Duke and we would say that the Court has selected an appropriate vehicle and, that being so, there is no point in this matter going forward at this time. We would accept the special leave application could be adjourned to await the event of Duke.

KIRBY J: Having heard what has happened in the Court this morning, you have backed off a bit from your position in your written submissions.

MR GRAY: Not in terms of our saying this is not a suitable vehicle, if the Court pleases. The position we took was that was not a suitable vehicle. We are dealing here with a pleading summons point and that carries with it a number of problems: interlocutory; there is no factual finding; there is no immediate court finding. The intermediate court below was quite right. It found that this pleading application had to be dismissed because the plaintiffs' position was plainly not untenable.

KIRBY J: It is an important and not uninteresting question. There is a nuance of difference of fact. The marginal cost of an hour is small. There is a litigant before us who has an interest in the issue that will be argued and which, for this point, could be fatal to it. It merely requires, it seems to me, to be convinced that they should not be given that opportunity unless you could tell us that Mr Myers and you are going to gobble up the whole of the day. Neither of you ever waste time. I cannot remember either of you ever wasting time before us.

MR GRAY: No. If the Court pleases, the critical question here is does the suggested difference of fact in any way affect the principal issue.

GLEESON CJ: Well, the answer to that question is, "No", as I understand it, having regard to what Mr Karkar has told us about the consequences for his case of Duke.

MR GRAY: Yes. The answer is, "No", because whether it is a share and cash for share swap or share for share swap, the point of principle is going to be the same in regard to the share component for the consideration passing.

KIRBY J: That seems to be true but experience does teach that factual nuances sometimes allow the mind of a decision maker to play on the different possibilities of the outcome of one principle in different circumstances.

MR GRAY: If the Court pleases, we, with respect, have thought that through and we cannot identify any difference that can flow. We have raised the matter in our point of response. In my learned friend's reply he has failed to articulate what possible relevance this change in fact could have and he has not, at the Bar table, today. It is an assertion about the full spectrum of fact. When one goes below that, it is impossible to discern, on our examination, how that slight change of fact can touch the principle at all because in each case we are concerned with, as has been conceded, an issue of how does one view loss when there is an issue of shares involved?

So, the point is simply this: that we have a vehicle that will decide this point. My client would not wish to be going to any further expense. It would prefer to sit and wait by and hear what happens in Duke. There is one aspect of this case that is different that I think I should draw to the Court's attention. There is a cause of action in Swiss Partners that is not in Duke. It is under the Fair Trading Act of South Australia which does lead into the possible difference of approach on damages in regard to GIO v Marks. I just wished to draw that to the Court's attention. There is a different cause of action.

KIRBY J: As to added expense, if the matter is going to be all determined in the one day and you are in both cases, what could be the added expense?

MR GRAY: There will be some different issues that arise because, for example, there has been expert evidence led in Duke from accountants that can have a relevance in regard to the approach the Court takes. Such evidence is not available, of course, in the case at Bar.

KIRBY J: If this Court were to simply refer the matter to the Court dealing with Duke, then the fashioning of the issue upon which special leave was granted would be determined by the issue that emerged in Duke.

MR GRAY: Yes. If the Court pleases, I do not know if I can advance the matter much further. It is a matter, really, for the Court. We say there has been a vehicle chosen that will resolve this point and one does not bring up simply another vehicle unnecessarily because there is necessary an incidental cost that is wasted, in this case minimised, but it still does involve that aspect of it and it simply advances the matter no further.

Mr Karkar is in the position that if the Duke appeal succeeds, then the current strike out is likely to succeed and it will be a question of applying to amend in the light of the High Court's views. May it please the Court.

GLEESON CJ: Thank you. Yes, Mr Karkar.

MR KARKAR: Your Honours, we do not say that the difference in fact will probably have any effect on the legal result but what it will provide the Court with is the spectrum of fact that actually occurs in the marketplace so that the consequences of your Honours' decisions would be based upon all of the scenarios that arise in a takeover situation.

GUMMOW J: This Fair Trading reference is beside the point, is it not?

MR KARKAR: It is beside the point.

GUMMOW J: It turns on paragraph 95, the pleading, which is the Duke point.

MR KARKAR: Yes, yes. I was just about to say that the fact that there is a Fair Trading Act claim does not affect the issue of principle.

GUMMOW J: Or the pleading point.

MR KARKAR: Yes.

GLEESON CJ: Thank you. We will adjourn for a short time to consider the course we will take in this matter.

AT 11.57 AM SHORT ADJOURNMENT

UPON RESUMING AT 11.58 AM:

GLEESON CJ: Mr Karkar and Mr Gray, the course that we are minded to take in this matter is to refer the application for special leave to appeal to be heard by the Court that is sitting on 7 April to deal with the Duke appeal. That will be on the clear understanding that both of those cases, that is to say, the Duke appeal and this application for special leave to appeal, will need to be heard within that day. And I understand you both have the view that that will certainly be possible.

MR GRAY: Yes, your Honour.

GLEESON CJ: On that basis then, the application for special leave to appeal in this matter is referred to the Court which will sit on Friday, 7 April, in Canberra to deal with the appeal in the case of Pilmer & Ors v The Duke Group Limited (in liq) & Ors. The parties to this application should be prepared to argue the application if necessary upon the basis of putting fully the arguments they would wish to put on an appeal if special leave to appeal were granted and in that regard should comply with the requirements of an appeal in terms of written submissions prior to the hearing. The costs of today will be reserved.

MR KARKAR: If the Court pleases.

AT 12.01 PM THE MATTER WAS CONCLUDED