Hy-Tec Industries v Constable & Ors

As is clear from two previous judgments in this matter, Hy-Tec Industries v Constable & Ors [2006] FMCA 704 and Hy-Tec Industries v Constable & Ors (No 2) [2006] 966, on 24 May 2006 I set aside a sequestration order made against Stephen Constable in somewhat unusual circumstances. The moving party in those proceedings was not the bankrupt but the petitioning creditor. I accepted that upon the evidence put before me the sequestration order should not have been made. This was the position both of the petitioning creditor and of the debtor. The real contest in the proceedings was whether or not the sequestration order should be annulled pursuant to s.153B of the Bankruptcy Act 1966 or set aside pursuant to the court's power to review a decision of a Registrar. The distinction was important because if the proceedings were annulled then the trustee was entitled to payment of his own costs and expenses (as opposed to his legal costs) whereas if the sequestration order was set aside no such order in favour of the trustee could be given. These matters were all discussed in detail in my first judgment when, upon receiving certain undertakings from the petitioning creditor in favour of the trustee, I ordered that the petition be dismissed.

There was another party in the proceedings besides the petitioning creditor, the bankrupt and the trustee. This was a Mr Simon Beverly, solicitor. Mr Beverly was the solicitor for the petitioning creditor at the time the sequestration order was made. I made certain findings concerning Mr Beverly's conduct which, as I stated in my judgment, were findings for the purposes of those proceedings only. I came to the conclusion that Mr Beverly should be responsible for the legal costs of the petitioning creditor and of the trustee; Mr Constable was not represented.

In order to grant the application for review I first had to grant an extension of time for that application to be made. In order to do that I had to have regard to the conduct of the petitioning creditor, the bankrupt and the trustee. In paragraphs 13 to 19 inclusive of my reasons I rehearsed the history of the proceedings. At paragraph 15 I made reference to the second solicitor who had acted for the petitioning creditor in this manner:

"[15] Hy-Tec employed Mr Hodges to act for them in early 2006. Mr Hodges was required to obtain the file from Mr Beverly to consider the situation and to advise. I do not think there was any delay in his making the application for annulment on 27 February 2006. There was some further delay until 11 April 2006 when Mr Hodges filed the second application for the extension of time and for the review. Mr Hodges is no longer acting for Hy-Tec. I think I can draw an inference that Mr Hodges' knowledge of the Bankruptcy Act and procedures may not have been that of the experts who have appeared before me in these proceedings. The subtleties of the two different types of application may have evaded him. I would be disinclined to find that the applicant's conduct through its solicitors between 27 February 2006 and 11 April 2006 disbarred them from the possibility of my granting an extension of time."

The judgment was duly published and Mr Hodges saw it. On 30 May 2006 he wrote to the court. As Mr Hodges says in his submissions to me:

"[4] On 30 May 2006 I wrote to His Honour, Magistrate Raphael FM concerning the adverse inferences published concerning me found in paragraph 15. In my letter I referred His Honour to the affidavit evidence tendered in the proceedings. It is relevant for the court in considering whether to amend the reasons for the judgment to consider the evidence tendered in the proceedings and therefore to re-state the relevant portions of such evidence in these submissions. The evidence in a chronological format tendered in the proceedings relevant to the filing of the second application is as follows:

24 Feb 2006: On Friday 24 February 2006 I obtained affidavit evidence from both Ms Tracey Loureiro and Mr Stephen Constable. Both affidavits were before the court at the hearing.

27 Feb 2006: On Monday 27 February 2006 I filed an application for annulment of the bankruptcy of Mr Stephen Constable. Further, on such date I filed an appearance in matter number 648 of 2005 which therefore enable me to access the court file in such matter.

08 Mar 2006: On Wednesday, 8 March 2006 I obtained affidavit evidence from Mr Gibbons. This affidavit was tendered as part of the evidence at the hearing. The affidavit contains evidence of early contact with the trustee. This evidence was not available to me at the time of the filing of the application on 27 February 2006.

14 Mar 2006: On Tuesday, 14 March 2006 I obtained the full file from Mr Beverly. The evidence as to exactly when I obtained the full file from Mr Beverly is found in paragraph 2 of my affidavit sworn on 27 March 2006. The evidence contained in the file of the former solicitor was not available to me at the time of filing the application on 27 February 2006. I was therefore not able to consider the material contained in such file at the time of filing of the first application.

17 Mar 2006: On Friday, 17 March 2006 I reviewed the material which I then had in my possession and formed the conclusion that an application for review should be filed. A letter was sent to the trustee pointing out that I had given further consideration to the matter. This letter is found as Annexure "K" to the affidavit of Ms Simone Farrugia. (see reference to letter in paragraph 18 of the reasons for judgment)."

I considered Mr Hodges' letter. I came to the preliminary view that a third party reading the judgment who had no knowledge of the case other than that contained in the reasons for decision, might form an adverse view of the ability of Mr Hodges which, in the light of the evidence at the hearing, would not be deserved. I therefore wrote to all the parties suggesting a corrigendum in the following form:

I think I can draw an inference that Mr Hodges' knowledge of the Bankruptcy Act and procedures may not have been that of the experts who have appeared before me in the proceedings" and replacing them with the words "during that period Mr Hodges gave his client certain further advice which resulted in the second application.

During that period Mr Hodges gave his client certain further advice which resulted in the second application."

I invited the parties to make representations. None of the petitioning creditor, Mr Constable or the trustee had any objection to the proposed corrigendum. Mr Beverly, through his counsel Mr Johnson, wrote to the court on 6 June 2006:

"I refer to your letter of 31 May 2006 in relation to issues raised by Mr Hodges as to the terms of paragraph 15 of the Judgment delivered in these proceedings.

Judgment has been entered in the proceedings on 25 May 2006.

I have not been provided with a copy of any material provided by Mr Hodges as an "interested bystander" - he no longer being on the recorder in relation to the affairs of the Plaintiff, referred to in the letter. To that extent my client is denied the opportunity of expressing any view as to the matters set out in such material.

A reserved judgment in the proceedings was delivered on 24 May 2006. That Judgment was delivered in accordance with the evidence that was before the Court, and specifically put before the Court as being relevant by those advising the Applicant.

It is quite inappropriate for the Court to take into account evidentiary matters received after delivery of Judgment and entry of orders in effect to reopen the Judgment to deal with matters put by a third party who has previously represented the interests of the applicant.

It is submitted in the circumstances that the Court:

1. Has no jurisdiction to issue a corrigendum as contemplated in the letter.

2. In the circumstances to issue such a corrigendum would constitute a denial of natural justice in that the materials sought to be relied upon in the absence of any application being made by a party have not been disclosed to the parties in the proceedings and in particular Mr Beverley.

It is not known to the writer whether a copy of the letter of 31 May 2006 or the materials have been provided to the other legal representatives in the proceedings. In those circumstances I have circulated a copy of the letter of 31 May 2006 and this email to them."

Upon receipt of that email I arranged for the case to be relisted. When the matter was relisted Mr Johnson made an application that I disqualify myself on the grounds of apprehended bias. He also sought to argue that I was functus. Mr Johnson made the point that he had not had a copy of Mr Hodges' letter. I accepted that and advised Mr Johnson that although the gravamen of Mr Hodges' letter had been notified to the parties in my associate's letter of 31 May the whole purpose of offering parties an opportunity to make representations was to allow such a request and that he was quite welcome to have a copy of the letter provided to him. Mr Johnson declined that offer. My understanding of the representations made by Mr Johnson is that at no time has he disputed that in proposing the corrigendum I was not more accurately rehearsing the evidence.

I declined to disqualify myself for the reasons given in Hytec (No 2).

I invited Mr Johnson and Mr Hodges and any of the other parties to provide me with written submissions on the question of whether or not I was functus. Mr Johnson correctly notes that the judgment delivered on 24 May was a reserved judgment following upon a hearing on 10 May. He says that the judgment was a final determination of all matters before the court in both of the proceedings (SYG648 of 2005 and SYG 612 of 2006) and the orders had been entered. He notes that the application which resulted in the suggestion of a corrigendum was not made by one of the parties but by a person who was once a legal representative of one of the parties and who was a witness to the proceedings by way of affidavit evidence. Mr Johnson relies on the dicta of Barwick J in Bailey v Marinoff [1971] HCA 49; (1971) 125 CLR 529 at [530] where the Chief Justice said:

"Once an order disposing of a proceeding has been perfected by being drawn up as a record of a court, that proceeding apart from any specific and relevant statutory provision is at an end in that court and is in its substance, in our opinion, beyond recall by that court. It would, in our opinion, not promote the due administration of the law of the promotion of justice for the court to have a power to reinstate a proceeding of which it has finally disposed."

See also DJL v The Central Authority [2000] HCA 17; (2000) 74 ALJR 706 at [38].

Mr Johnson then continues at [7] of his submissions:

"[7] On the first occasion upon which Mr Simon Beverly was represented before the court the inadequacies of the Application that was then before the court, namely 2006 proceedings, were the subject of discussion and comment in the presence of Mr Hodges. It was upon that basis that the proceedings were adjourned and directions made as to the further conduct of the proceedings, which directions were not subsequently proceeded with particularly in connection with the requirement to deliver points of claim in respect of the serious allegations sought to be propounded against Simon Beverly which were subsequently abandoned for the purposes of the proceedings. In the end event the 2006 proceedings were not proceeded with, rather an application for an extension of time, unusually, by an Applicant, to review the decision of the Registrar and then the Applicant leaving no evidence. The only relief which was sought, in any event, against Simon Beverly was an order for costs - such order having been made."

Whilst these comments do appear to go the competence of Mr Hodges they do not dispute the affidavit evidence of Mr Hodges' actions that was extracted by him in the letter to the court. Mr Johnson argues:

"[10] No relevant error upon the factual matters before Federal Magistrate Raphael at the time of the hearing and at the time of the delivery of judgment has been identified and it is submitted the matters dealt with in paragraph 15 of the judgment of 24 May 2006 were open to His Honour and cannot now be altered/amended otherwise than on appeal. The proposed new wording of paragraph 15 is a substantial change to an important aspect of the proceedings which will or could be relevant to the quantum of costs to be payable by Simon Beverly upon taxation of the order for costs against him."

Mr Johnson is correct to say that no error upon the factual matters before me has been identified. What has been identified is a conclusion about the ability of Mr Hodges which the unchallenged evidence in the case would not appear to justify. It is clear from Mr Johnson's submissions that he does not see the change in wording as affecting in any way the outcome of the case but he believes that the original wording might provide his client with some ammunition when the costs of the proceedings, which were awarded against him are to be taxed. The corrigendum proposed removes any suggestion of findings in relation to Mr Hodges in regard to what occurred between

27 February 2006 and 11 April 2006 and would leave the taxing officer in a position to make a decision on the basis of the facts as put before him at the appropriate time.

Mr Hodges pointed out that the views expressed by Barwick J in Bailey v Marinoff were followed by those of Justice Gibbs at [539]:

"The rule rests on the obvious principle that it is desirable that there be an end to litigation and on the view that it would be mischievous if there were jurisdiction to rehear a matter decided after a full hearing. However, the rule is not inflexible and there are a number of exceptions to it in addition to those that depend on statutory provisions such as the slip rule found in most rules of court. Indeed, as the way in which I have already stated the rule implies, the court has the power to vary an order so as to carry out its own meaning or to make plain language which is doubtful, and that power does not depend on rules of court, but is inherent in the court: Lawrie v. Lees (1881) 7 App Cas 19, at pp 34-35; Thynne v Thynne (1955) P 272, at p 313 Further, it has been held that a court may amend a part of a judgment or an order which is "not the operative and substantial part": Pearlman (Veneers) S.A. (Pty.) Ltd. v. Bernhard Bartels (1954) 1 WLR 1457; such an amendment, which may be far from being merely formal in its effect, could, as Singleton L.J. pointed out in Thynne v. Thynne (1955) P, at p 295, only be made under the inherent jurisdiction. Similarly the rule that a court may review an order made ex parte has been said to be "a rule of natural justice" (Woods v. Sheriff of Queensland (1895) 6 QLJ, at p 164) or "an elementary rule of justice" (Owners of the s.s. "Kalibia" v. Wilson [1910] HCA 77; (1910) 11 CLR 689, at p 694) and this can only mean that the power is traceable to the inherent jurisdiction."

Mr Hodges also argues that insofar as he is concerned he is a party affected by an ex parte judgment on the grounds that he was not provided with an opportunity to rebut the comment made about him in the reasons for decision. An ex parte order can be set aside or varied on the application of any party affected by it; Jovanovic v The Queen [1999] FCA 1008. I do not consider that Mr Hodges' situation is analogous. Mr Hodges is a witness whose evidence could be said to have been misunderstood by the trial Judge. The misunderstanding as to the evidence had no effect upon the decision and is not the subject of a complaint by any of the parties. The ability of such a witness to have the reasons for judgment altered has not, so far as my research has revealed, been the subject of a reported decision.

There are decisions upon changes to reasons between the delivery of an ex tempore judgment and the production of a final version. In Bar-Moredecai v Rotman & Ors [2000] NSWCA 123 the New South Wales Court of Appeal dealt with an appeal from a plaintiff who complained that the trial Judge had made substantial alterations to his understanding of the evidence between the time of the delivery of the ex tempore reasons and the publication of the final judgment. At [193] the court said:

"193 It is always possible, indeed proper, for a judge to revise ex tempore reasons. So long as the substance of the ex tempore reasons is not altered, nor the orders which they sustain, there is no bar to revision, even if it is extensive.

194 In an extra curial publication (1997) 9 Judicial Officers' Bulletin at 25 Gleeson CJ said:

A judicial officer revising a transcript of reasons for a decision is entitled to alter the transcript where, because of a slip, the reasons as expressed do not reflect what the judicial officer meant to say; or where there is some infelicity of expression which the judicial officer desires to remedy. There is no reason, in law or in policy, why a judicial officer who delivers a judgment ex tempore should be strictly bound to the precise manner in which the reasons were expressed. On the contrary, judges and magistrates are encouraged, where it is possible and appropriate to do so, to decide cases promptly and to give their judgments immediately. It would not advance that policy to prevent them from later improving the manner of expression of their reasons, provided, of course, that they do not alter the substance.

See also Kirby J Ex Tempore Judgments - Reasons on the Run (1995) 25 UWALRev 213 at 229-30.

195 This extends to correction of errors of fact, within the constraints mentioned. The matter was well put by Danckwerts LJ in Bromley v Bromley [1965] P 111 at 116:

.... the general principle must be that this court must accept as the authentic record of the judge's judgment that which has been approved by him after consideration of the draft produced by the shorthand writer. It is not only a question of possible mistakes by shorthand writers, who do their best extremely well but are sometimes unable to hear exactly the words used by the judge in the course of his judgment. There are other cases which arise through the judge not saying clearly what he meant, or indeed sometimes by a slip saying something which he cannot possibly have meant.

After all, an extemporary judgment is not always easy to deliver perfectly in all respects on the spur of the moment; there must be corrections which need to be made so as to give the real meaning of the judge, and he is perfectly entitled, it seems to me, not only to correct mistakes, but to alter words which do not express his intended meaning at the time when he uttered them.

See also Lam v Beesley (1992) 7 WAR 88, Loughnan v Altman [1992] FCA 580; (1992) 111 ALR 445 and Wentworth v Rares (Court of Appeal, 19 November 1990, unreported)."

The views taken in that case were reinforced by a further decision of the Court of Appeal in Todorovic v Moussa and Anor [2001] NSWCA 419; [2001] 53 NSWLR 463. In that case the trial Judge sought to make a change to his orally delivered reserved decision to add the words:

"I do not accept Mr Fefelov as an accurate witness"

to the paragraph in which he had described this witness in his oral reasons. Beazley J, with whom Powell JA and Sperling J agreed, considered the relevant authorities including Lam v Beesley (1992) 7 WAR 88, Bar-Mordecai (supra), and confirmed that there is an implied power of the court to revise judgments saying at [50]:

"It would be strange if there was such a rule in relation to ex tempore judgments and none in respect of reserved judgments given orally, where the same infelicities of expression and the like may easily occur. Accordingly, I am of the view that there is a power to revise a judge's reasons for decision, within the parameters I have discussed, implied within the statutory provisions which govern the delivery of judgments in the District Court."

14.

Todorovic and the cases cited by her Honour are all cases where there was an alteration to the final version of a decision. There was no suggestion that the judges involved were functus at the time they made those alterations. Even though the proposed corrigendum in this case would, to my mind, be no more than the correction of an "infelicity of expression" I have to doubt whether that correction can properly be made at this late stage. By giving myself permission to make the change against the objection of Mr Beverly it could be suggested that I was opening the floodgates to any witness who felt that his or her evidence was wrongly described by the participating judge to demand an alteration to the reasons. To require the parties to be brought back into court for the purposes of deciding on such a matter would be to fly in the face of the doctrine of functus and the reasons for it adumbrated in Bailey v Marinoff. It is therefore with regret that I would see Mr Hodges in the position of the observer of the action at Belshazzar's feast as interpreted by Fitzgerald in the Rubaiyat:

"The moving finger writes; and having writ

Moves on; nor all the Piety nor Wit

Shall lure it back to cancel half a line

Nor all your Tears wash out a word of it."

15.

Mr Hodges has propelled himself into these proceedings. His reasons for doing so are understandable but, once it became clear that there was resistance to the change proposed, misguided. He should on this basis bear some responsibility for costs. But this matter was dealt with in two stages. Having reconvened the court following receipt of Mr Johnson's letter of objection Mr Hodges was invited to attend. He did attend. Mr Johnson argued, and I accepted, that in relation to the apprehended bias argument Mr Hodges had no right to intervene. He was not a party. But Mr Hodges remained in court whilst that argument continued. The trustee and the creditor were also represented. Mr Johnson's argument that I should disqualify myself failed. There was a request for an alteration to my orders under the slip rule. All parties consented to that. As Mr Beverly's argument in relation to the disqualification failed he would also be responsible for some costs. I then determined to deal with the functus question by way of written submissions. The other parties, having indicated they had no objection to the proposed change, did not make any submissions. In the circumstances it seems that Mr Hodges had wasted a morning in court listening to an unsuccessful application on behalf of Mr Beverly and Mr Beverly had made submissions, through his counsel, on a successful application to deny Mr Hodges the correction to the judgment that he has sought. Mr Beverly's application for me to disqualify myself was not broadcast by the email of Mr Johnson of 6 June. Mr Hodges' attended at the court expecting argument on the basis of that letter. The court has power under Part 21 Rule 21.02(2)(a) to assess costs. The orders I would make in relation to costs on the application being the costs of the hearing in relation to the application that I disqualify myself and the preparation of written submissions on the functus point are:

1

The third respondent pay the costs of the applicant, the second respondent and Mr Hodges of the hearing on 27 June 2006 assessed in the sum of $550.00 each.

2

Mr Hodges pay the costs of the third respondent in respect of the written submissions to which this judgment refers assessed in the sum of $650.00.

I certify that the preceding fifteen (15) paragraphs are a true copy of the reasons for judgment of Raphael FM