Diver v Neal

Bankruptcy Act 1966 (Cth) LEGISLATION CITED: Family Provision Act 1982 (NSW) Uniform Civil Procedure Rules 2005 (NSW)

Autodesk Inc v Dyason (No 2) [1993] HCA 6; 176 CLR 300 Caska v Caska [1999] NSWSC 289 Harrison v Schipp [2002] NSWCA 78; 54 NSWLR 612 Herszlikowicz v Czarny [2005] VSC 354 CASES CITED: NSW Bar Association v Smith [1991] NSWCA 215 Stares v Public Trustee [2005] NSWSC 37 State Rail Authority of New South Wales v Codelfa Construction Pty Ltd [1982] HCA 51; 150 CLR 29 Varnel v Heyes [2008] NSWSC 987 Wentworth v Rogers (No 9) (1987) 8 NSWLR 388 Wentworth v Woollahra Municipal Council [1982] HCA 41; 149 CLR 6l72

Kaye Aileen Diver (Appellant) PARTIES: John Neal (First Respondent) Jan Sim (Second Respondent)

COUNSEL: R Brender (Appellant) M Gorrick (Respondents)

SOLICITORS: Kennedy & Cook Lawyers (Appellant) Morton & Harris RMB Lawyers (Respondents)

LOWER COURT JURISDICTION: Supreme Court

LOWER COURT JUDICIAL OFFICER: McLaughlin AsJ

LOWER COURT MEDIUM NEUTRAL CITATION: Diver v Neal [2008] NSWSC 304

IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL 40197/2008

ALLSOP P IPP JA BASTEN JA

1 THE COURT: Judgment in this matter was delivered on 18 March 2009 ([2009] NSWCA 54). By notice of motion filed on 27 March 2009 supported by affidavit the appellant seeks an additional order to those made on 18 March. The order now sought is an order said to be supported by the Family Provision Act 1982 (NSW), s 15 to the effect that the full sum of $80,000 (being the original legacy of $20,000 to the appellant left by the testator and the additional provision of $60,000 referred to in order 2(a) made on 18 March 2009) be placed in a discretionary trust to be formed so that the $80,000 be kept out of the hands of creditors of the appellant. 2 The respondents, the executors of the will, through their solicitors have indicated that they will not be filing any submissions in response to the motion and will submit to any order of the Court. In exchange of correspondence those solicitors had, prior to obtaining the instructions to which we have just referred, expressed their concern to the solicitors for the appellant that the suggested course would be contrary to the Bankruptcy Act 1966 (Cth). 3 Submissions have been filed on behalf of the appellant. It was submitted that consideration was given to raising the matter at the hearing of the appeal but that it was thought preferable to await the view of the Court. It was submitted by the appellant that the motion should not be seen as a general reopening or reargument but merely an alternative mechanism of dealing with the additional bequest ordered by the Court. 4 Despite that characterisation, the motion seeks further and other orders with the express intention of achieving a different legal effect to the orders made by the Court. The orders were in fact entered shortly after they were made, in accordance with the Uniform Civil Procedure Rules 2005 (NSW), r 36.11(2). Nevertheless, the motion having been filed within 14 days after the orders were entered, the Court has power to set aside or vary its orders: r 36.16(3A).

5 While the Court has power to vary orders, the exercise of that discretion should take into account the public interest in preserving the finality of concluded litigation: see State Rail Authority of New South Wales v Codelfa Construction Pty Ltd [1982] HCA 51; 150 CLR 29 at 38 (Mason and Wilson JJ). After noting that jurisdiction existed in the Court to entertain the application in that case, their Honours continued: "Nevertheless, it is a power to be exercised with great caution. There may be little difficulty in a case where the orders have not been perfected and some mistake or misprision is disclosed. But in other cases it will be a case of weighing what would otherwise be irremediable injustice against the public interest in maintaining the finality of litigation. The circumstances that will justify a rehearing must be quite exceptional." 6 To similar effect in Wentworth v Woollahra Municipal Council [1982] HCA 41; 149 CLR 672 at 684 the Court stated: "[T]he circumstances in which this Court will reopen a judgment which it has pronounced are extremely rare. The public interest in maintaining the finality of litigation necessarily means that the power to reopen to enable a rehearing must be exercised with great caution. Generally speaking, it will not be exercised unless the applicant can show that by accident without fault on his part he has not been heard."

7 In Autodesk Inc v Dyason (No 2) [1993] HCA 6; 176 CLR 300, Mason CJ (in dissent as to the outcome) referred to the last passage set out above from Wentworth, and continued at 302: "But these statements do not exclude the exercise of jurisdiction to reopen a judgment which has apparently miscarried for other reasons, at least when the orders pronounced have not been perfected by the taking out of formal orders. So much was acknowledged by Brennan, Dawson, Toohey and Gaudron JJ in Smith v New South Wales Bar Association (No.2) [[1992] HCA 36; 176 CLR 256 at 264-266] when their Honours said: 'if reasons for judgment have been given, the power is only exercised if there is some matter calling for review'."

8 His Honour then referred to three examples, including the decision of this Court in NSW Bar Association v Smith [1991] NSWCA 215 in which orders previously made were reconsidered in circumstances where it was contended that the judgment had proceeded upon a mistaken assumption that particular evidence had been given at earlier hearings, when it had not. Mason CJ then stated in Autodesk that "the public interest in the finality of litigation will not preclude the exceptional step of reviewing or rehearing an issue when a court has good reason to consider that, in its earlier judgment, it has proceeded on a misapprehension as to the facts or the law". His Honour continued at 303: "However, it must be emphasized that the jurisdiction is not to be exercised for the purpose of re-agitating arguments already considered by the Court; nor is it to be exercised simply because the party seeking a rehearing has failed to present the argument in all its aspects or as well as it might have been put. What must emerge, in order to enliven the exercise of the jurisdiction, is that the Court has apparently proceeded according to some misapprehension of the facts or the relevant law and that this misapprehension cannot be attributed solely to the neglect or default of the party seeking the rehearing."

9 Although there may be scope for an intermediate court of appeal to give different weight to particular factors, statements of principle in the High Court are clearly relevant: Wentworth v Rogers (No 9) (1987) 8 NSWLR 388 at 394 (Kirby P, Hope and Samuels JJA). In the context of r 36.16 (3A), it is preferable to express the matter as one of enlivening the exercise of the power, rather than jurisdiction.

10 In relation to a different but related area of reinstitution of proceedings and the bill of review, see Harrison v Schipp [2002] NSWCA 78; 54 NSWLR 612 at 644-645 [212]-[215] (Ipp AJA).

11 While there are numerous examples in the caselaw of a matter being reopened in the circumstances described by Mason CJ in Autodesk, this case does not fall into any of those categories. It was a case in which counsel apparently decided not raise a particular argument until it became known whether the Court would order that further provision be made in favour of the applicant and, if so, in what amount. The applicant sought to justify that position on two bases. One was that it was analogous to the need for reopening to consider an order as to costs in circumstances where an offer of compromise had been made; the other was that the proposed new orders were merely mechanical in effect.

12 Both of these arguments should be rejected. In respect of the costs analogy it is of the nature of an offer of compromise that it not be disclosed, including to the court, until judgment has been delivered. That principle applies not only at trial, but on a rehearing in this Court. It is, accordingly, inevitable that applications for variation of costs orders are made, and can only properly be made, after judgment has been delivered. That circumstance has no similarity with the present application.

13 Nor was the matter merely mechanical. This was a matter which should have been debated at the substantive appeal. One of the considerations adverted to in the Court's reasons was the possibility that a sum awarded may advantage creditors. The case of Caska v Caska [1999] NSWSC 289 was discussed. An evaluative decision was reached as to an additional sum to be paid to the appellant by way of bequest of an additional $60,000. One of the matters that bore upon that assessment was the consideration of the appellant's position and her creditors to the extent that was raised by the parties. It does not follow that if the Court were otherwise satisfied that it was appropriate to make an order to give a benefit by bequest to the appellant in a manner keeping the funds away from the hands of creditors that the same sum would have been concluded to be appropriate. 14 There is no doubt that the Court has power under s 15 to make an order to protect the assets or bequest in a way for the plaintiff's future benefit in life. This is particularly important in cases where the plaintiff is a minor, or is suffering from some other form of legal incapacity, or has displayed an improvidence or weakness in some aspect of his or her life which might see any bequest endangered. However, taking the bequest out of the reach of creditors is another matter entirely. This was not the aim of the orders in the three cases referred to by the appellant: Herszlikowicz v Czarny [2005] VSC 354; Varnel v Heyes [2008] NSWSC 978 and Stares v Public Trustee [2005] NSWSC 37. 15 Certainly as to the first $20,000, which was the bequest by the testator, there appears to be no reason why the act of the testator should be interfered with to impose a discretionary trust on the bequest which he made. As to the additional $60,000 we would not permit the reopening of the appeal to place this money in a discretionary trust out of the hands of creditors. The matter should have been addressed in the context of the totality of the arguments as to the operation of the Act. The degree of protection of any bequest may have had a bearing upon the totality of the orders made. Secondly, important questions of conformance of the operation of State law and the procedures of this Court in the context of the Bankruptcy Act and the policy underlying the Bankruptcy Act would arise. These matters would require careful consideration and argument. A relisting and full reargument of this appeal would be required to ventilate those issues. It would be unfair on the Estate to have this additional burden placed upon it in circumstances where the matter could and should have been raised at the appeal. 16 In these circumstances, we would dismiss the notice of motion dated 26 March 2009 and filed 27 March 2009 in the appeal proceedings. 17 We would also order that the appellant, the applicant on the notice of motion, pay the costs of the respondents of and in connection with the notice of motion.

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