Joubert in his capacity as liquidator of Barry Ling Pty Ltd (in Liquidation) v Allan Jones

Judgment 1This is an appeal from a decision of the Local Court. The appeal was heard and determined by me earlier this year: see Joubert in his capacity as liquidator of Barry Ling Pty Limited (in Liquidation) v Jones [2013] NSWSC 280. 2Shortly after publication of that judgment the liquidator, in correspondence with the defendants, raised two matters for correction under the slip rule. One was undoubtedly properly categorised as a slip and its correction is not opposed. The other is in contest, both as to whether the Court has power to make the order sought and as to whether any discretion to do so should be exercised in favour of the liquidator. 3In the proceedings in the Local Court, the liquidator sought to recover a payment of $70,000 made by the insolvent company in discharge of a debt owed by the principal of the company, Mr Barry Ling, and his wife, Ms Debra Roberts. The defendants are Ms Roberts' parents, Mr Allan Jones and Mrs Jacqueline Jones. 4It was not disputed that the transaction was voidable under s 588FE of the Corporations Act 2001 (Cth). The only issue raised for the Court's determination was whether the defendants had established a defence under s 588FG. The learned magistrate held in favour of the defendants. 5The liquidator appealed against the verdict in favour of each defendant. However, at the outset of the hearing of the appeal before me, the liquidator stated that he no longer wished to disturb the verdict in favour of Mr Jones. Accordingly, the appeal as against him stood to be dismissed by consent. 6I allowed the appeal against the verdict in favour of Mrs Jones. The parties are agreed that the order I made purportedly giving effect to that decision should be corrected so as to provide as follows: That the verdict in favour of the second defendant be set aside and in lieu thereof that there be judgment in favour of the plaintiff against the second defendant in the sum of $91,896.10 being $70,000 in respect of the principal claim and $21,896.10 in interest from 24 July 2009 to 10 April 2013. 7The matter in contest relates to the costs awarded to Mr Jones in the proceedings below. The magistrate gave his decision on 18 December 2012. In addition to giving a verdict for the defendants, his Honour made the following order as to costs on that date: The plaintiff is to pay the defendants' costs, unless within 14 days of judgment a party notifies the other party of an intention to apply for a costs hearing and then applies to the registry for such a hearing within 7 days of the notice. 8The summons for leave to appeal to this court in respect of that judgment was filed on 15 January 2013. On 26 February 2013, the defendants having exercised their right to a costs hearing in accordance with the order set out above, the magistrate made the following further order as to costs: The plaintiffs are to pay the defendant's (sic) costs of the proceedings on the ordinary basis up to the end of 22/06/2012 and thereafter on the indemnity basis, including any reserved costs. 9At no stage was the summons commencing the present appeal amended to include any challenge to that further order. 10The appeal to this Court was heard on 15 March 2013. As already indicated, the appeal as against Mr Jones was abandoned at the outset of the hearing. 11During the course of the hearing, for a reason that does not matter in the present context, I stated that I thought the issue of costs would have to be heard separately. By the time I delivered my judgment on 2 April 2013, I had resolved the concern I raised during the hearing but it remained to hear the parties as to costs, as stated at [50] of the judgment. I heard the parties as to costs immediately after delivering my judgment and proceeded to deliver an ex tempore judgment. Neither party opposed that course. My reason for reciting that aspect of the history of the proceedings is explained below. 12I made the following orders as to costs on 2 April 2013: (1) that the plaintiff have leave to appeal against the order as to costs insofar as it concerns the second defendant; (2) that the appeal against that order be allowed; (3) that the order be vacated insofar as it concerns the second defendant and in lieu thereof that the second defendant be ordered to pay half of the plaintiff's costs of the proceedings below on the ordinary basis. 13The orders now sought, ostensibly under the slip rule (or presumably the inherent jurisdiction it is sometimes said to reflect) are: 1 The plaintiff have leave to appeal against the order as to costs made in the Court below insofar as it concerns the first defendant. 2. The order for costs made in favour of the first defendant in the Court below be set aside. 3. The plaintiff be ordered to pay the first defendant's costs of the proceedings in the Court below on the ordinary basis. 14The application is brought on the frank premise that an issue was overlooked by those representing the plaintiff. As noted above, I had indicated during the hearing that I would hear the parties separately as to costs. It appeared to be suggested in the evidence in support of the present application that the liquidator's failure to raise the matters now relied upon was contributed to by that understanding. If that was the suggestion, I reject it. The parties ought to have appeared to take judgment ready to argue costs immediately. To the extent that litigants in this state have any different expectation as a matter of entitlement, it must be scotched. 15The basis on which the magistrate was persuaded to award indemnity costs was that the defendants had served an offer of compromise on 22 June 2012. The offer plainly represented a joint position. The terms of the offer were that the defendants would pay the amount of $10,000 inclusive of interest to the company in liquidation. Mr Golledge, who appears for the liquidator, submits, and I accept, that that offer was not capable of acceptance as to only one of the two defendants. It follows that the outcome of the appeal, in which the position of one of the defendants (Mrs Jones) was reversed, extinguished the premise of the order. If that remains the position, Mr Jones will retain what is (if only in hindsight) a windfall, since it is unlikely that such an order would have been made in his favour had Mrs Jones lost at first instance. 16So much was not disputed on behalf of Mr Jones. He submitted, however, that the Court has no power to make the orders sought and, further, that if such power exists, it ought not be exercised in favour of the liquidator. 17There may be force in the contention that the Court does not have power to make the order sought. The so-called "slip rule" in r 36.17 of the Uniform Civil Procedure Rules 2005 provides: If there is a clerical mistake, or an error arising from an accidental slip or omission, in a judgment or order, or in a certificate, the court, on the application of any party or of its own motion, may, at any time, correct the mistake or error. 18Uninformed by authority, I would not have understood the rule to extend to the circumstance arising in the present case where the court, acting deliberately and without error (indeed by consent) dismissed a proceeding but the order had a consequence overlooked due to the inadvertence of the liquidator's legal representatives. However, there is authority to the contrary: see J Aron Corp v Newmont Yandal Operations [2006] NSWSC 849; (2006) 202 FLR 359 at 59 to 61 per White J; upheld in Newmont Yandal Operations Pty Ltd v J Aron Corp [2007] NSWCA 195; (2007) 70 NSWLR 411. 19In the decision in the Court of Appeal in Newmont Yandal, it was argued that the Court has no power, a judgment having been regularly entered dismissing proceedings, to set aside or recall the judgment "merely because the judgment had unforeseen or unintended consequences". Notwithstanding the force of that contention, the Court of Appeal held otherwise. I think I have to regard myself as being bound by that decision to accept the existence of a power under the slip rule or the inherent jurisdiction of the Court to set aside or recall a judgment dismissing a proceeding on the grounds that the judgment had unforeseen or unintended consequences: see especially the judgment of Spigelman CJ at [30]-[32]; Santow JA agreeing at [185]; Handley JA agreeing at [194]. 20In the present case, however, the untested premise of the liquidator's application is that orders 1 to 3 in his notice of motion filed 15 April 2013 (set out above) amount to the correction, setting aside or recalling of my order made 2 April 2013 dismissing the appeal as against Mr Jones. Mr Marshall, who appeared for Mr Jones, submitted with some force that the relief sought amounts rather to an application out of time for leave to appeal against the costs order of the magistrate made on 26 February 2013, which has never been the subject of the liquidator's appeal. The orders sought do not, in terms, speak to any order made by me. 21It would be interesting to take the time to resolve the question whether that is the proper characterisation of the present application and, if not, whether the present application properly invokes the power recognised in Newmont Yandal, if indeed those issues were determinative of the present application. In the event, it is not necessary to determine those questions, since I have concluded that I should not exercise any discretion to grant the relief sought. 22Mr Marshall relied on a series of features of the proceedings militating against the granting of the relief sought on discretionary grounds. Without derogating from the care with which those submissions were put, they amounted in substance to an endorsement of the considerations underlying the principle of finality. 23The proceedings appear to have been hard fought in the court below, undoubtedly causing all parties to incur substantial costs. Mr Jones, for reasons of ill-health, was cross-examined in advance of the hearing. His evidence persuaded the magistrate that he had established a defence to the liquidator's claim. The withdrawal of the appeal against him reflected a late capitulation to that view. By that capitulation, the liquidator allowed Mr Jones out of the appeal with no further interest to defend other than the costs of the appeal. The later reflection, after argument and determination of the issues as to costs, upon the unforseen consequence of the dismissal of the appeal as against him dragged him back into a proceeding which, as the evidence both in the court below and before me reveals, has already caused him considerable angst. 24The liquidator submitted that any prejudice flowing from those considerations can be cured by an order that the liquidator pay the costs of the application today, which he acknowledged should be borne by him on any view. Whilst I acknowledge that such an order would to some extent meet the prejudice, I do not think that is a sufficient basis for granting what is in substance an indulgence to the liquidator. 25In my view, the interest in finality, considered in the context of the nature and history of the present proceedings, should prevail over the force of the liquidator's position regarding the indemnity costs order. Accordingly, assuming (without deciding) that I have power to grant the relief sought, I would refuse the liquidator's application for orders 1 to 3 set out above.