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[2014] NSWCA 464
Court of Appeal (NSW)
2014-12-05
Emmett JA, Gleeson JA, Harrison J, Hislop J, Patten AJ
Original judgment source is linked above.
Judgment 1EMMETT JA: By summons filed on 2 October 2014, Mr Norman Hilton has applied for leave to appeal from orders made by Harrison J on 3 July 2014. On that day, Harrison J set aside orders made by Hislop J on 22 May 2009 and by Patten AJ on 5 August 2009. In order to put Harrison J's orders into context, it is necessary to say something very briefly about the proceedings.
Background to the Proceedings 2By deed of loan dated 6 December 2007, Mr Hilton advanced the sum of US$350,000, together with the sum of AUD$20,000, to Ms Isobelle Gidley and Mr Richard Shears as borrowers (the Borrowers). The loan was guaranteed by Mr Daniel Bickel and Ms Cynthia Berkemeier (together, the Guarantors). Ms Berkemeier is the respondent to the present application. 3The Guarantors provided security by way of an unregistered mortgage over a property in Douglas Street, Stanmore, which was owned by them as tenants in common (the Stanmore Property). The Borrowers defaulted. Mr Hilton then commenced proceedings against the Borrowers and the Guarantors by a statement of claim filed on 8 May 2008. An amended statement of claim was filed on 4 June 2008. 4Mr Paul Fordyce, a solicitor who had prepared the loan agreements on the instructions of the Borrowers, mistakenly filed a submitting appearance in Mr Hilton's proceedings on behalf of all four defendants, being the Borrowers and the Guarantors. On 2 July 2008, Mr Hilton moved the Court for judgment in the sum of $561,475 and a declaration that he had an equitable mortgage over the Stanmore Property. 5By notice of motion filed on 23 July 2008, all four defendants sought leave to withdraw their submitting appearances pursuant to r 12.5 of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR), which provides that an active party may withdraw an appearance by leave of the Court. The application was supported by an affidavit sworn by Mr Fordyce in which he said that the submitting appearances had been filed in error. Ms Berkemeier and Mr Bickel also swore affidavits in which they said that they had never instructed Mr Fordyce to file a submitting appearance. 6The application to withdraw the submitting appearances had a somewhat chequered career before Hislop J. There were a number of occasions when the matter was listed before his Honour and was partially argued. At various times, Ms Berkemeier did not appear, although at other times she was represented by solicitors. 7Mr Hilton's attitude to the application to withdraw the submitting appearance was that it should be dismissed. Ultimately, on 22 May 2009, Hislop J ordered that the defendants' notice of motion for leave to withdraw the submitting appearance be dismissed with costs (Hilton v Gidley [2009] NSWSC 383). On the occasion when those orders were made, Ms Berkemeier was not present in court and was unrepresented. 8Subsequently, on 5 August 2009, the proceedings came before Patten AJ, on Mr Hilton's application seeking the entry of judgment for the sum of $678,614 against all defendants and a declaration that he had an equitable mortgage over the Stanmore Property. Mr Hilton also sought an order for possession of the Stanmore Property and an order for its sale. Patten AJ made orders to that effect on that day. When the orders were made on 5 August 2009, Ms Berkemeier was not present in court and was not represented. 9By notice of motion filed on 14 October 2013, Mr Hilton sought an order that, pursuant to leave granted on 5 August 2009, a writ of possession be issued in respect of the Stanmore Property. On 30 October 2013, a writ of possession was issued. Ms Berkemeier, who was an occupant of part of the Stanmore Property, was served with a notice to vacate. 10On 20 November 2013, Mr Hilton sought orders varying the orders made on 30 October 2013, including a vesting order with respect to the Stanmore Property. It appears that that application prompted Ms Berkemeier to file a notice of motion on 6 December 2013 seeking to set aside the judgment entered against her by Patten AJ on 5 August 2009 and to set aside the orders made by Hislop J on 21 May 2009. 11It appears that all parties were represented at the hearing before Harrison J on 2 and 3 June 2014 or were at least notified of the hearing. For reasons published on 3 July 2014, Harrison J: (1)Granted leave to Ms Berkemeier to appear in the proceedings for the purpose of opposing Mr Hilton's motion dated 20 November 2013. (2)Set aside the orders made by Hislop J on 22 May 2009. (3)Set aside the orders made by Patten AJ on 5 August 2009. (4)Directed Ms Berkemeier to file and serve any defence or other pleading upon which she intends to rely within 21 days. (5)Stood the proceedings over for further directions, including directions concerning the position of Mr Bickel. (6)Ordered that the costs of the application be Ms Berkemeier's costs in the proceedings. (7)Granted liberty to all parties to apply on 48 hours' notice. 12Because we do not have the motion of 6 December 2013 before us, it is not clear whether the orders made by Harrison J go beyond the orders sought by Ms Berkemeier in her motion. A further complicating factor is that, in the meantime, a sequestration order had been made in respect of the estate of Mr Bickel. Accordingly, any interest of Mr Bickel in the Stanmore Property vested in his trustee in bankruptcy. The trustee in bankruptcy was apparently represented before Harrison J but did not either oppose or support the orders sought on behalf of Ms Berkemeier.
Disposition of the Application 13The present application names only Ms Berkemeier as a respondent to the application for leave to appeal. On the other hand, it is clear that the orders made by Harrison J affect all four defendants, as well as Mr Bickel's trustee in bankruptcy. That is to say, the effect of the orders is to set aside the judgments entered by Patten AJ on 5 August 2009 against the Borrowers as well as Mr Bickel and also the declaration made that Mr Hilton is entitled to an equitable mortgage of the Stanmore Property. 14In those circumstances, the present application must fail for want of proper joinder of parties. When it became apparent that that was a possible consequence, counsel for Mr Hilton sought an adjournment of the present application to enable him to take instructions about the possibility of joining the other defendants, who are affected by the orders that he would seek if leave to appeal were granted. 15It is inappropriate to accede to the adjournment application. I am by no means satisfied that there is any prospect that leave would be granted so far as Ms Berkemeier is concerned in relation to the orders made by Harrison J. It may well be that leave would be granted in respect of the orders made insofar as the other defendants are affected by the orders made by Harrison J. That, however, is not the point at present. 16Insofar as the application affects Ms Berkemeier, the draft notice of appeal raises six grounds. In essence, the grounds can be disposed of shortly. The order made by Harrison J in relation to the orders of Hislop J was based on r 36.16(2)(b) of the UCPR, which provides that the Court may set aside or vary a judgment or order after it has been entered if it has been given or made in the absence of a party, whether or not the absent party had notice of the relevant hearing or of the application for the judgment or order. Mr Hilton, through his counsel, contended that, in circumstances such as these, where there had been an appearance for Ms Berkemeier at some stage during the course of the hearing of the motion for leave to withdraw the submitting appearances, the fact of her absence when the orders were made is not sufficient to attract r 36.16(2)(b). 17Insofar as Harrison J set aside the orders made by Patten AJ, his Honour relied on r 36.15, which provides that a judgment or order of the Court in any proceedings may, on sufficient cause being shown, be set aside by order of the Court if the judgment was given or entered or the order was made irregularly, illegally or against good faith. The contention before Harrison J was that the orders made by Patten AJ were made against good faith, in circumstances where it was suggested that Mr Hilton was aware of certain disabilities on the part of Ms Berkemeier, which were not drawn to the attention of Patten AJ. Be that as it may, the orders that were made by Patten AJ were made in the absence of Ms Berkemeier and in those circumstances, r 36.16(2)(b) would have equal application. On that basis, it seems to me that there is no reason to conclude that the orders made by Harrison J were not within the power conferred by r 36.16(2)(b). 18Further, I am not persuaded that there has been any error in the exercise of discretion by Harrison J. His Honour carefully analysed the history of the proceedings and noted that Hislop J had observed that, if the material described in a letter that had been produced to his Honour but was not admitted into evidence were proved, it may establish an arguable defence for Mr Bickel and Ms Berkemeier. Harrison J observed that it was reasonably apparent that Hislop J would have granted Ms Berkemeier leave to withdraw her submitting appearance if she had been there in person or by counsel or solicitor to prosecute her claim. While Hislop J accepted that the submitting appearance had been filed in error, not unreasonably, he was influenced by the failure of Ms Berkemeier to attend court. 19Harrison J was of the opinion that it was in the interests of justice that Ms Berkemeier be given an opportunity to apply to have the orders made against her set aside. I am not persuaded that any error in the exercise of discretion has been established on the part of Harrison J. Therefore I would be disposed to conclude that the application for leave to appeal should be dismissed. In the circumstances, there would be no utility in granting an adjournment of this application to enable the deficiency in the joinder of parties to be rectified. Therefore, the application for leave should be dismissed so far as it concerns Ms Berkemeier. 20Ms Berkemeier then applied for costs on an indemnity basis. She relied on a letter written by her solicitors to the solicitors for Mr Hilton on 11 November 2014. By the letter, Ms Berkemeier offered to resolve the proceedings on the basis that the application for leave to appeal be dismissed and that each party bear its own costs. While the letter may or may not satisfy the principles in Calderbank v Calderbank [1975] 3 All ER 333, I do not consider that the circumstances of the case are such as would justify the making of a special order for indemnity costs. 21One of the bases upon which the present application is being dismissed is want of proper joinder of parties. That was not a matter raised by Ms Berkemeier. Further, the case before Harrison J was conducted on the basis that the justification for setting aside Patten AJ's orders was r 36.15 of the UCPR, rather than r 36.16. In the circumstances, I would simply dismiss the application for leave to appeal and order the applicant to pay the respondent's costs on the usual basis. 22GLEESON JA: I agree with the orders proposed by Emmett JA and with his Honour's reasons.
DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 23 December 2014
Hilton
Berkemeier