Kation Pty Ltd v Lamru Pty Ltd; Lewis v Nortex Pty Ltd

CATCHWORDS: PROCEDURE - judgment and orders - application to vary orders - construction of court orders - purpose of order - amendments unnecessary - application to vary orders refused.

Civil Procedure Act 2005 (NSW) ss 56, 56(4), 101(1), 101(2) LEGISLATION CITED: Supreme Court Act 1970 (NSW) s 46 Uniform Civil Procedure Rules 2005 Sch 5, rr 36.7, 36.16, 36.17

CASES CITED: Kation Pty Ltd v Lamru Pty Ltd [2009] NSWCA 145 Kation Pty Ltd v Lamru Pty Ltd (No 2) [2009] NSWCA 428

Kation Pty Ltd (Appellant and First Cross-respondent) Peter Lawrence Lewis (Second Appellant and Second Cross-respondent) PARTIES: Lamru Pty Ltd (First Respondent and First Cross-appellant) Russell William Lamb (Second Respondent and Second Cross-appellant) Nortex Pty Ltd (In Liq) (Third Respondent and Third Cross-respondent) Brian Raymond Silvia (Fourth Cross-respondent)

J Baird (Kation, Peter Lawrence Lewis) COUNSEL: S J Motbey (Lamru, Russell William Lamb) V R Gray (Nortex, Brian Raymond Silvia)

Toomey Pegg Lawyers (Kation, Peter Lawrence Lewis) SOLICITORS: Lyons & Lyons Solicitors (Lamru, Russell William Lamb) Somerset Ryckmans (Nortex, Brian Raymond Silvia)

LOWER COURT JURISDICTION: Supreme Court

LOWER COURT JUDICIAL OFFICER: Young CJ in Eq; Hamilton J; Palmer J

LOWER COURT DATE OF DECISION: 22 June 2001; 19 July 2001; 19 April 2002; 9 December 2002; 20 December 2002; 29 April 2003; 20 June 2003 (Tcpt 2689); 20 June 2003 (Tcpt 2692); 26 June 2003; 2 March 2004; 29 November 2004; 19 May 2005; 13 October 2005; 23 May 2006; 27 July 2006

LOWER COURT MEDIUM NEUTRAL CITATION: [2001] NSWSC 511; [2001] NSWSC 610; [2002] NSWSC 337; [2002] NSWSC 1192; [2002] NSWSC 1245; [2003] NSWSC 354; [2003] NSWSC 581; [2004] NSWSC 121; [2004] NSWSC 1143; [2005] NSWSC 482; [2005] NSWSC 1062; [2006] NSWSC 480; [2006] NSWSC 768

IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 2006/267873

ALLSOP P HODGSON JA BASTEN JA

Tuesday 14 December 2010 KATION PTY LTD v LAMRU PTY LTD; LEWIS v NORTEX PTY LTD (In liq) (No 5) Judgment 1 THE COURT: On 12 June 2009 the Court proposed that various orders be made, although orders were not at that time entered: Kation Pty Ltd v Lamru Pty Ltd [2009] NSWCA 145. The relevant orders were directed to be entered by a second judgment delivered on 21 December 2009: Kation Pty Ltd v Lamru Pty Ltd (No 2) [2009] NSWCA 428. Interest rate issue 2 The orders made by the trial judge (Hamilton J) included an obligation to pay interest on various amounts, identified in the following terms: "…together with interest at the rates payable under Schedule 5 of the Uniform Civil Procedure Rules 2005". 3 With effect from 1 July 2010, Schedule 5 was repealed. The prescribed rate at which interest is payable under s 101 of the Civil Procedure Act 2005 (NSW) is now identified in r 36.7 of the Uniform Civil Procedure Rules 2005 (NSW) ("the UCPR"). 4 On 7 September 2010, Lamru Pty Ltd filed a notice of motion, purportedly in the proceedings in this Court, seeking a variation of the relevant orders so as to replace the words quoted above with the words "prescribed for the purposes of s 101 of the Civil Procedure Act 2005". 5 The Registry routinely made the matter returnable before the Court on 13 September 2010. The parties were given an opportunity to provide brief written submissions in relation to the issues raised. It is doubtful that s 46 of the Supreme Court Act 1970 (NSW) authorises a judge of the Court to vary an order of the Court, or dispose of an application to vary an order. Accordingly, this judgment is a judgment of the Court as originally constituted. 6 The applicant on the motion needed to identify the power to entertain the motion. The orders of this Court having apparently been entered in December 2009 and the power to set aside or vary the judgment or order pursuant to r 36.16 having long since passed, it is doubtful whether the Court would have power to vary the order. In the meantime, an application for special leave in relation to the orders of the Court has been considered by the High Court and rejected. This was not a case in which the orders sought to be varied were made by mistake, whether clerical or otherwise, or did not accord with the orders anticipated by the parties, or that had consequences not intended by the Court. Accordingly, there was no basis for the operation of the so-called "slip rule", as now found in UCPR, r 36.17. 7 In addition to varying the orders of this Court, Lamru sought to vary orders made by the trial judge which had been set aside by this Court, but which had identified the interest payable in the same way. Neither the power to make such an order, nor its purpose, was addressed. Each order identified the date from which interest was to be calculated, the rate at which it was to run, and the date upon which it ceased to run, namely "payment". The effect of an order in that form was to fix the pre-judgment interest rate according to the rates prescribed for post-judgment interest. 8 Questions of power aside, the application is misconceived because it is unnecessary. The order in this Court was made in accordance with s 101 of the Civil Procedure Act. Pursuant to s 101(1), interest is payable on the amount of a judgment which is from time to time unpaid, unless the Court otherwise orders. The Court did not otherwise order for the purposes of this provision. Further, interest payable under sub-s (1) is to be calculated "at the prescribed rate or at such other rate as the court may order": s 101(2). The order made by the Court was for payment at the prescribed rate, according to the terms of the prescription then in force, namely Schedule 5 of the UCPR. The Court did not order that interest be calculated at any other rate. 9 The rate prescribed in Schedule 5 was ambulatory in effect and varied from time to time. An order of the Court which identified that as the means of calculation, was effective to allow for variations in the rate, from time to time. From 1 July of this year, the prescribed rate was no longer found in Schedule 5, but in r 36.7. That change could not alter the purpose or effect of the Court's order. To suggest that an order which simply referred to "the prescribed rate", to use the language of s 101, had some different effect from an order which identified where the rate so prescribed was then to be found, is to import into the construction of court orders an element of literalism, without regard to the purpose of the order, which should be rejected. 10 The trigger for the application, as appears from an affidavit filed in support of the motion, was a claim by solicitors for Mr Lewis, in response to a bankruptcy notice dated 11 August 2010, that no interest accrued on the amount outstanding from 1 July 2010 because there was no prescribed rate of interest under Schedule 5 of the UCPR from that date. The reasoning set out above contradicts that assertion. The omission of Schedule 5 by Amendment 32 of 2010 to the UCPR does not mean that interest ceased to run in respect of judgment debts where the interest rate was identified in the judgment as that prescribed in Schedule 5. At least in the present matter, the judgment should be understood as set out above. 11 In the result, Lamru is correct on the underlying point of law, namely the effect of the judgment. Its motion, however, should be dismissed because the amendment of the judgment sought is not required. Further, no amendment would have been appropriate in any event: the issue in dispute was properly one to be resolved in the bankruptcy proceedings and not by this Court. There should be no order as to the costs of the application.

Payment to liquidator 12 On the Monday of the week in which judgment was foreshadowed in respect of Lamru's motion, an email was received in the Registry from the liquidator and Nortex Pty Ltd seeking the following further orders: "1. An order correcting the orders entered in these proceedings on 23 July 2010: i order 3(e) be corrected by inserting the words "to the liquidator for payment" after the words "reconstitute the Nortex Unit Trust by paying"; ii that order 4(c) be corrected by inserting the words "to the liquidator for payment" after the words "reconstitute the Nortex Unit Trust by paying". 2. An order that Kation Pty Ltd and Peter Lawrence Lewis pay the Liquidator's costs of this notice of motion." 13 The notice of motion, in so far as it referred to orders entered on 23 July 2010, was incorrect. The orders identified were made on 12 June 2009 and were (with two exceptions not presently relevant) directed to be entered on 21 December 2009. That is clarified in the affidavit of Mr Marc Ryckmans, filed in support of the motion. The affidavit further stated: "On 22 July 2010, Registrar Riznyczok directed the entry of orders in the original Equity proceedings as varied by the Court of Appeal's various decisions." 14 So far as orders 3(e) and 4(c) are concerned, that statement was erroneous in several respects. This Court replaced the orders made in the Equity Division. Further, those orders were directed to be entered by this Court, not the Registrar, on 21 December 2009, not 23 July 2010. Order 3(e) commences, "(e) order that Lewis and Kation reconstitute the Nortex unit trust by paying into the trust fund" specified amounts. Order 4(c) commences, "order Lewis reconstitute the Nortex Trust Fund by paying into the Trust Fund" various sums. 15 It is true that order 4(d) required that "Lewis pay to the liquidator" as the trustee of the Nortex trust fund, specified amounts. Whilst the language differs, the effect of each provision is the same. There is no need to vary the language of order 3(e). 16 Mr Ryckmans' affidavit set out a conversation between counsel for the liquidator and counsel for Mr Peter Lewis and Kation in which the former asked whether the latter's clients accepted that the liquidator "is entitled to enforce payment of moneys which Peter Lewis and Kation have been ordered to pay to reconstitute the Nortex Unit Trust". The response as set out in the affidavit was, "I will have to reserve my position on that point". A later affidavit of Mr Ryckmans elaborated upon this conversation and related another conversation between counsel on another occasion. In that other conversation, after orders were entered and prior to the hearing of the special leave application, counsel then briefed for Mr Lewis and Kation said: "As neither the Liquidator nor Nortex was the trustee of the Nortex Unit Trust they would not be entitled to enforce the Court's orders against Mr Lewis or Kation." 17 There is no indication in the earlier conversation that the semantic distinction between orders 3(e), 4(c) and 4(d) was likely to be relied on to justify not reconstituting the trust fund. The later conversation does however raise that question. 18 As the trustee of the fund is Nortex and Nortex is under the control of the liquidator, the effect of the order proposed and the order as made is one and the same. The plain intent of the orders was that they be enforceable by Nortex and the liquidator. This makes it unnecessary to consider the operation of the slip rule. Any party seeking to resist payment on the basis foreshadowed by Mr Ryckmans would be at serious risk of breaching his or its obligations under s 56 of the Civil Procedure Act 2005 (NSW). Any counsel who gave advice to that effect would be at serious risk of breaching his or her obligations under s 56(4).

19 The notice of motion of the liquidator must be refused. Nevertheless, the position taken by counsel for Kation and Mr Lewis disentitles them to an order for whatever small amount of costs may have been incurred as a result of responding to the motion.

Conclusions 20 The Court makes the following orders:

(1) the notice of motion filed on behalf of Lamru Pty Ltd on 7 September 2010 be dismissed with no orders as to costs;

(2) the notice of motion filed by the liquidator on behalf of Nortex Pty Ltd (In liq), September 2010 be dismissed with no order as to costs. **********

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