Katter v Melhem

Court of Appeal (NSW)|2015-04-16|Before: McColl JA, Leeming JA, Commission J

Court Act 1970 Legislation Cited: Bankruptcy Act 1966 (Cth), s 40(1)(g) Evidence Act 1995 (Cth), s 157

Civil Procedure Act 2005 (NSW), ss 73, 86, 100, 133 District Court Act 1973 (NSW), ss 4, 44, 51, 134 Supreme Court Act 1970 (NSW), ss 53, 69

Uniform Civil Procedure Rules 2005 (NSW), pt 39; rr 36.11, 36.12, 36.15, 36.16, 39.35, 39.45, 59.4, 59.10, Cases Cited: Abigroup Limited v Abignano [1992] FCA 871; 39 FCR 74 Achurch v The Queen [2014] HCA 10; 88 ALJR 490 Adamson v Ede [2009] NSWCA 379 Ainsworth v Criminal Justice Commission [1992] HCA 10; 175 CLR 564 AT v Commissioner of Police, NSW (No 2) [2010] NSWCA 337 Athens v Randwick City Council [2005] NSWCA 317; 64 NSWLR 58 Australian Hardboards Ltd v Hudson Investment Group Ltd [2007] NSWCA 104; 70 NSWLR 210 Bailey v Marinoff [1971] HCA 49; 125 CLR 529 Bainton v Rajski (1992) 29 NSWLR 539 Bakarich v Commonwealth Bank of Australia [2010] NSWCA 43 Batemans Bay Local Aboriginal Land Council v Aboriginal Community Benefit Fund Pty Ltd [1998] HCA 49; 194 CLR 247 Blair v Curran [1939] HCA 23; 62 CLR 464 Burrell v R [2008] HCA 34; 238 CLR 218; 82 ALJR 1221 Calvin v Carr [1979] UKPC 1; [1980] AC 574; [1979] 1 NSWLR 1 Chamberlain v Deputy Commissioner of Taxation [1988] HCA 21; 164 CLR 502 Cooney v The Council of the Municipality of Ku-ring-gai [1963] HCA 47; 114 CLR 582 Day v Harness Racing New South Wales [2014] NSWCA 423 De L v Director-General, New South Wales Department of Community Services [1997] HCA 14; 190 CLR 207 DJL v The Central Authority [2000] HCA 17; 201 CLR 226 Donnelly v Australia and New Zealand Banking Group Ltd (No 2) [2015] NSWCA 41 Doyle v Hall Chadwick [2007] NSWCA 159 Dranichnikov v Minister for Immigration and Multicultural Affairs [2003] HCA 26; 197 ALR 389 Environment Protection Authority v Condon as Liquidator for Orchard Holdings (NSW) Pty Ltd (In Liq) [2014] NSWCA 149; 86 NSWLR 499 Essex Incorporated Congregational Church Union v Essex County Council [1963] AC 808 Eyres v Butt [1986] 2 Qd R 243 Farquharson v Morgan [1894] 1 QB 552 Gamser v The Nominal Defendant [1977] HCA 7; 136 CLR 145 Glennan v Commissioner of Taxation [2003] HCA 31; 198 ALR 250 Goater v Commonwealth Bank of Australia [2014] NSWCA 382 Gould v Vaggelas [1984] HCA 74; 157 CLR 215 Grave v Blazevic Holdings Pty Limited [2012] NSWCA 329 Hayek v Trujillo [2007] NSWCA 139 Hill v Green [1999] NSWCA 477; 48 NSWLR 161 Honnery v Smith (1957) 57 SR (NSW) 598 Jackamarra v Krakouer [1998] HCA 27; 195 CLR 516 Joseph Katter & Susan Vera Katter v Robert George Melhem (No 2) [2014] FCA 1176; 319 ALR 646 Kirk v Industrial Court of New South Wales [2010] HCA 1; 239 CLR 531 Kirkpatrick v Kotis [2004] NSWSC 1265; 62 NSWLR 567 Kuru v State of New South Wales [2008] HCA 26; 236 CLR 1 Lachlan v H P Mercantile Pty Ltd [2015] NSWCA 130 Martin v The Nominal Defendant [1954] 74 WN (NSW] 121 Melhem v Katter [2013] NSWDC 203 Minister for Local Government v South Sydney City Council [2002] NSWCA 288; 55 NSWLR 381 Mulder v Director of Public Prosecutions (Cth) [2015] NSWCA 92 Nanschild v Pratt [2011] NSWCA 85 Nominal Defendant v Saleh [2011] NSWCA 16 Phillips v Walsh (1990) 20 NSWLR 206 PT Garuda Indonesia Ltd v Australian Competition and Consumer Commission [2012] HCA 33; 247 CLR 240 Re Refugee Tribunal; ex parte Aala [2000] HCA 57; 204 CLR 82 Rebenta Pty Ltd v Wise [2009] NSWCA 212 Reznitsky v Director of Public Prosecutions (NSW) [2014] NSWCA 79 Richards v Cornford [2010] NSWCA 99; 76 NSWLR 572 Riverina Wines Pty Ltd v Registrar of the Workers Compensation Commission of NSW [2007] NSWCA 149 Rockcote Enterprises Pty Ltd v FS Architects Pty Ltd (No 2) [2008] NSWCA 205 Secretary of State for Defence v Warn [1970] AC 394 Shimokawa v Lewis [2009] NSWCA 266 Smith v New South Wales Bar Association [1992] HCA 36; 176 CLR 256 Solution 6 Holdings Ltd v Industrial Relations Commission of New South Wales [2004] NSWCA 200; 60 NSWLR 558 Sophron v The Nominal Defendant [1957] HCA 27; 96 CLR 469 Stead v State Government Insurance Commission [1986] HCA 54; 161 CLR 141 Stollznow v Calvert [1980] 2 NSWLR 749 The Indian Grace [1993] AC 410 Thoday v Thoday [1964] P 181 Thwaite v Thwaite [1981] 2 All ER 789 Tomko v Palasty (No 2) [2007] NSWCA 369; 71 NSWLR 61 Twist v Randwick City Council [1976] HCA 78; 136 CLR 106 Wang v Farkas [2014] NSWCA 29; 85 NSWLR 390 Woodward Pty Ltd v Kelleher [1989] NSWCA 82 Yirrell v Yirrell [1939] HCA 33; 62 CLR 287 Zukowski v Royal Insurance Co of Canada (2000) 189 DLR (4th) 476 Texts Cited: Spencer Bower and Handley, Res Judicata (4th ed 2009, LexisNexis) Category: Principal judgment Parties: Joseph Katter (First Applicant) Susan Vera Katter (Second Applicant) District Court of New South Wales (First Respondent) Robert George Melhem (Second Respondent) Representation: Counsel: P E King (Applicants) J A Hogan-Doran / B Lloyd (Second Respondent)

Solicitors: PMF Legal Limited (Applicants) Crown Solicitor's Office (First Respondent) Madison Marcus Law Firm (Second Respondent) File Number(s): 2014/3648452015/898632015/89841 Decision under appeal Court or tribunal: District Court of New South Wales Citation: [2013] NSWDC 203 Date of Decision: 22 July 2013 and 18 October 2013 Before: Gibson DCJ File Number(s): 2011/144484

[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]

Judgment

McCOLL JA: I agree with Campbell AJA's reasons and the orders that he proposes.
LEEMING JA: I agree with Campbell AJA.
JC CAMPBELL AJA:

Nature of the Case

The present litigation arises from a judgment for $1 million that Mr Robert Melhem obtained in the District Court of New South Wales against Mr Joseph Katter and his sister Ms Susan Katter. Because there are several different proceedings listed together for hearing, in which the various parties play different roles, it is convenient to refer to the parties by their personal names, rather than by reference to whether they are an applicant or respondent in a particular set of proceedings.
There are three broad topics of dispute. The first is whether it is necessary for the Katters to obtain an extension of time, or leave, from this Court to challenge the validity or enforceability of the judgment for $1 million. The second is whether, if such an extension of time or grant of leave is necessary, it should be granted. The third is whether, if the Court grants an extension of time or leave, the challenge to the judgment succeeds.
In my view, an extension of time is necessary, the extension should be granted to permit the court to consider some but not all of the prayers for relief that the Katters seek, and the judgment should be set aside.
At the hearing the Katters were represented by Mr P E King. Mr Melhem was represented by Mr J A Hogan-Doran and Mr B Lloyd.

Facts Giving Rise To The Disputes

On 20 December 2010 the Katters and Mr Melhem entered into a deed of loan, under which the Katters acknowledged receipt of the sum of $600,000, and promised to repay it about six weeks later, on 31 January 2011. They agreed that if they did not repay the $600,000 on or before 31 January 2011 they would pay interest on it at the rate of 5 per cent per month, commencing from 31 January 2011.
On 3 May 2011 Mr Melhem began proceedings in the District Court of New South Wales against the Katters. By that time the Katters had made payments totalling $50,000 to an associate of Mr Melhem, but had otherwise made no payment of the $600,000, or interest. The District Court statement of claim sought $550,000, plus interest accrued which was said to amount to $195,365.93, and various legal fees, bringing the total amount claimed to $745,888.03.
By their defence, the Katters accepted that they had signed the deed of loan, but asserted that they had not received any money. They also disputed some other allegations in the statement of claim, not presently material, which concern circumstances leading to the entry of the deed of loan.
The matter came on for hearing in the District Court of New South Wales on 7 August 2012 before her Honour Judge Gibson. All parties were represented by counsel and solicitors. By that time, Mr Melhem asserted that the total amount owed to him, including interest at the contractual rate of 5 per cent per month, was a little more than $1,050,000.
The hearing proceeded until lunchtime on 7 August 2012. After the lunch adjournment the primary judge gave the parties time to discuss settlement.
Later that afternoon, legal representatives of Mr Melhem and the Katters informed the court that a settlement had been reached. They handed to the court handwritten Terms of Settlement, signed by the respective solicitors, which provided: "1. Verdict and judgment for the plaintiff in the sum of $400,000 inclusive of interest and costs. 2. Judgment against the defendants jointly and severally. 3. No interest to run on judgment if paid within 90 days of 7 August 2012. If not paid within such time, interest shall be payable from 7 August 2012 at the rate prescribed for post-judgment interest. 4. Leave to the plaintiff to enter judgment in the sum of $1 million if payment under 1 (and/or 2 if applicable) has not been paid by 1 April 2013, or unless paragraph 5 herein applies. 5. Each defendant (either jointly or separately) shall execute a put and call option in favour of the plaintiff for the sale of a unit on reasonable terms at 136-138 New Canterbury Rd Petersham. 6. The unit referred to in Order 5 above must be the first available to be sold. On settlement, clear title must be provided. 7. The defendants shall do all things necessary to facilitate the giving effect of Orders 5 and 6 herein. 8. The provision of a unit to the plaintiff under these Orders shall release the Defendants from the liability that they would otherwise have under these Orders provided that: (a) The sale value of the unit is at least $400,000 (plus the amount of any applicable interest under Order 3) at the time of settlement of the unit; and (b) The relevant contract in respect of the sale of the unit is entered into not later than 31 March 2013."
When the primary judge was handed the Terms of Settlement she observed to the parties that Order 4: "… is really a bit inconsistent. The thing is that you have got a verdict for a sum in para 1 and then you have got leave to the plaintiff to enter judgment, but the thing is: how can you enter judgment if you have entered judgment? Can I suggest you change it? You should order it, to be ordered but not entered. Then what you can do is enter it for that other sum."
None of the legal representatives disputed that that course should be taken. The primary judge also suggested to the parties that they might like a non-disclosure agreement, with which they concurred.
JusticeLink records the following as having occurred on 7 August 2012: "(1) Orders in accordance with paragraphs 1 and 2 of the Terms of Settlement as follows (noting that judgment will not be entered until 1 April 2013): 1. Verdict and judgment for the plaintiff in the sum of $400,000 inclusive of interest and costs. 2. Judgment against the defendants jointly and severally. (2) Liberty to apply in relation to order (1) above. (3) Note the contents of paragraphs 3, 4, 5, 6, 7 and 8 as follows: 3. No interest to run on judgment if paid within 90 days of 7 August 2012. If not paid within such time, interest shall be payable from 7 August 2012 at the rate prescribed for post-judgment interest. 4. Leave to the plaintiff to enter judgment in the sum of $1 million if payment under 1 (and/or 2 if applicable) has not been paid by 1 April 2013, or unless paragraph 5 herein applies. 5. Each defendant (either jointly or separately) shall execute a put and call option in favour of the plaintiff for the sale of a unit on reasonable terms at 136-138 New Canterbury Road, Petersham. 6. The united [sic] referred to in order 5 above must be the first available to be sold. On settlement, clear title must be provided. 7. The defendants shall do all things necessary to facilitate the giving effect to orders 5 and 6. 8. The provision of a unit to the plaintiff under the order shall release the defendants from the liability that they would otherwise have under these orders provided that: (a) The sale value of the unit is at least $400,000 (plus the amount of any applicable interest under order 3) at the time of settlement of the unit; and (b) The relevant contract in respect of the sale of the unit is entered into not later than 31 March 2013. (4) Note the agreement of the parties not to disclose the contents of this settlement other than by operation of law. (5) Note the undertaking to the court given by the solicitor for the plaintiff still stand. (6) Exhibits returned."
On 14 December 2012 the then solicitor for the Katters sent to the then solicitor for Mr Melhem a deed of put and call option, purportedly in compliance with the Terms of Settlement. The deed was expressed to be between two companies (called the Vendors), Mr Melham (called the Purchaser/Plaintiff) Mr Katter (called the First Defendant), and Ms Katter (called the Second Defendant). It provided for the Vendors granting a call option to the Purchaser, and the Purchaser granting a put option to the Vendors. If either option was exercised in a period commencing 10 weeks after the date of the Deed and ending at 5 pm on 31 March 2013 a contract for sale would come into existence, on the terms of an annexed form of contract. The annexed form of contract related to the sale by the two companies to Mr Melham of a townhouse in the development at 136-138 New Canterbury Road Petersham, for the sum of $790,000, of which $400,000 was said to have been paid as a deposit. The townhouse was identified by a lot number in a draft unregistered plan. The contract was in the form of the 2005 edition of the standard form contract of the Real Estate Institute and the Law Society, with various special conditions. The special conditions included a right of the Vendors to make amendments to the draft plan, and limiting the requisitions on title that could be made. The deed contained provision for each of the Katters to sign it. The copy in evidence was signed by Ms Katter, but not by Mr Katter. The deed did not impose any obligations on the Katters concerning the sale of the townhouse, though a recital said that the two companies named as Vendors had agreed to grant a call option on behalf of the Katters.
On 25 January 2013 Mr Melhem's solicitor replied, disputing that the draft deed was the type of document contemplated by the Terms of Settlement. The solicitor for the Katters replied on 26 March 2013, requesting that Mr Melhem execute the deed that had been sent in December 2012, and offering to extend the period of settlement.
On 28 March 2013 the solicitors for Mr Melhem wrote to the solicitor for the Katters, saying: "The Terms of Settlement provide leave to the Plaintiff to enter up Judgment on 1 April, 2013 for $1,000,000.00 if payment is not made in accordance with clauses 1 and 2 of the Sealed Terms. It is up to the Defendants to provide the security. At this point the Defendants have not provided proper security or indeed any payment whatsoever in relation to the sealed terms. That is the Defendants' difficulty. No other or amended Deed or Security has been forthcoming except for this late correspondence and our client has remained unanswered since 25 January 2013 for two months. The defendants' continued delay is noted. If payment is not made in accordance with the Sealed Terms of Settlement of 7 August 2012, by 1 April, 2013 then Mr Melhem reserves his rights to enforce the Terms thereafter."
The solicitor for the Katters replied on 2 April 2013, noting that Mr Melhem intended to enforce para 4 of the Terms of Settlement and saying: "Specifically paragraph 4 of the terms of settlement provides: 'Leave to the plaintiff to enter judgment in the sum of $1 million if payment under 1 (and/or 2 if applicable) has not been paid by 1 April 2013, or unless paragraph 5 applies' The defendants have complied with paragraph 5 of the terms in that a Put and Call Option was executed by the defendants in favour of the plaintiff for the sale of a unit at reasonable terms at the Petersham development. The Put and Call option was delivered to your office on the 14 December 2012 for execution by your client." The letter disputed some contentions of the solicitor for Mr Melhem about why the deed sent in December was not the type of deed required by the terms, and concluded: "It would appear to the writer that your client had no intention to execute the Put and Call Option or enter into the contract of sale pursuant to paragraph 5(b) of the terms. It is considered that your client's failure to execute the Put and Call Option and contract of sale is in breach of the terms consequently, you client has relinquished his rights under the terms."
The solicitor for Mr Melhem replied on 12 April 2013, saying: "Far from the judgment creditor repudiating the sealed Consent Orders of the Court of 7 August 2012, it is the judgement [sic] debtors who have done so. We are now proceeding to enforce the judgment."
By letter of 15 April 2013 the Katters' solicitor replied, denying that his clients had repudiated the agreement, and saying: "I am instructed to advise that my clients will vigorously defend any enforcement of the judgment."
On 25 June 2013 the solicitors for Mr Melhem hand delivered to the District Court a letter addressed to "District Court of New South Wales", which referred in its title to the proceedings between Mr Melhem and the Katters. It is common ground that a copy of that letter was not provided to the solicitor for the Katters.
After confirming that the writers acted for Mr Melhem, the letter continued: "The Judgment Debtors have defaulted in the payment arrangement ordered by the presiding Judge on 7 August 2012. Our client seeks the entry up of the Consent Judgment as set out in Consent Order 4 Sealed 7 August 2012 and relies upon the Affidavit of Robert George Melhem and the supplementary Affidavit of Robert George Melhem, both sworn 13 June 2013. We request that: 1 That this Honourable Court issue a Certificate of Judgment in accordance with paragraph 4 of the Consent Orders of 7 August 2012 to that effect. 2 Such further or other Orders as this Honourable Court may make."
The first of the affidavits of Mr Melhem enclosed in that letter annexed a copy of the consent orders that the court had made on 7 August 2012, and deposed to no payment having been received from the Katters. It continued: "4 I crave leave to refer to paragraphs 5 through to 8 inclusive of the sealed Consent Orders of 7 August 2013. I have not been provided with a Unit prior to 1 April 2013 pursuant to the said Orders or at all. I refer to clause 8(b) of the Orders that Orders 5 through 8 only took effect if the relevant Contract was entered into not later than 31 March 2013. No contract has been entered into. 5 My claim related to a private urgent loan given to the Defendants at the time of entering into the Terms of Settlement at Court on 7 August 2013 [sic], the principal of my claim was $550,000.00. The interest rate on the Statement of Claim dated 3 May 2011 was 60%. This equates to $27,500.00 per month over 23 months from 3 May 2011 to 4 April 2013 and is $632,500.00. Together with the principal of $550,000.00, this is $1,182,500.00 not including my legal costs, court issue and service costs. The default amount of $1,000,000.00 in paragraph 4 of the said Consent Orders was negotiated at the time as a reasonable pre-estimate of my holding fees and costs for lost use of personal money. 6 I seek leave to enter up Judgment for $1,000,000.00 as pre agreed and Ordered in the Terms of Settlement as sealed by the Court or such other amount as may be determined by this honourable Court."
The second of the affidavits of Mr Melhem included: "4 At the time of entering into the Terms of Settlement at Court on 7 August 2013 [sic], the principal of my claim was $550,000.00. The balance was for contractual interest under the deed of loan the subject of the proceedings. The interest rate on the Statement of Claim dated 3 May 2011 was 60%. This equates to $27,500.00 per month over 23 months and is $632,500.00. Together with the principal of $550,000.00, this is $1,182,500.00 not including my legal costs, court issue and service costs. The default amount of $1,000,000.00 was negotiated at the time as a reasonable pre-estimate of my holding fees and costs for lost use of personal money. 5 During the settlement negotiations, on 7 August 2013 [sic] in the conference rooms outside the Court room, my legal team Barrister John Young, Solicitor Graham Fullick and myself were talking amongst other [sic] Mr Joseph Katter and Ms Susan Katter the Defendants and their Solicitor Charles Hockey. Amongst various negotiations over 2 hours, the following conversation ensured: JK: 'Robert, if I can't pay the $400,000.00 or to help with my cash flow, I can offer you a Unit in my development at New Canterbury Road, Petersham.' RM: 'I will only accept that if it's unencumbered, freehold and in my name with an independent valuation that it's worth that amount. Do you own it? JK: 'Yes. It's coming from my development.' RM: 'Then the property you are offering to me as a substitute must be registered with a Certificate of Title. I must be given a Real Property.' JK: 'The Property at New Canterbury Road, Petersham we are developing is well advanced and there's no risk.' RM: 'What stage does that mean?' JK: 'We are doing pre-sales by Christmas [2012]. On the building schedule I expect certificates of title prior to Christmas 2012.' The provision of the alternative Security Property was negotiated on a timeframe allowing sufficient time even for delays in the construction program and issuing of certificates of title. For this reason we negotiated and I instructed my Solicitors to allow until 1 April 2013 for the provision of satisfactory security as the alternative order 5 and the other orders set out in the Terms of Settlement documents of 7 August 2012. 6 I observed that at the option deed offered by the Defendants to me on 14 December 2012 in purported compliance with the Court's Orders 5 through to 8 did not have a current certificate of title reference and there was no actual titled property as constructed being offered. Also I noticed that one of the parties to the Deed was a company not related in any way to the Defendants. 7 On or about 17 December 2012, I received copy of correspondence of 14 December 2012 a proposed Deed and Contract from the Defendants via my solicitors, Consolidated Lawyers. I exhibit and mark 'RGM-1' a true copy of the Deed. At no time was I informed by or on behalf of the defendants that I would have to invest $790,000.00 to secure $400,000.00. 8 I seek leave to enter up Judgment for $1,000,000.00 as a pre agreed and Ordered in the Terms of Settlement as sealed by the Court."
On 22 July 2013 the primary judge made orders in Chambers. The JusticeLink entry relating to those orders is: "Upon reading the two affidavits of Robert George Melhem sworn on 13 June 2013, and pursuant to Order 1 of my orders of 7 August 2012 and to the agreement set out in paragraph 4 of the Terms of Settlement filed in court on that day: (1) Judgment for the plaintiff in the sum of one million dollars ($1,000,000.00) jointly and severally against the defendants. (2) The Registrar to issue a certificate of judgment to the plaintiff forthwith."
Also on 22 July, the associate to Gibson DCJ sent an email to the solicitor for the Katters, informing him of the terms of the orders that had been made that day. It is not clear whether the contents of that email were communicated to the Katters promptly or at all.
On 30 July 2013 the Assistant Registrar of the District Court issued a Certificate of Judgment relating to the judgment of 22 July 2013. The certificate stated that that judgment had been entered on 23 July 2013.
On 31 July 2013 solicitors for Mr Melhem procured the issuing of a bankruptcy notice based on the judgment for $1 million, against each of the Katters. The bankruptcy notice was served on Joseph Katter on 2 August 2013. On 8 August 2013 the Katters filed a notice of change of solicitors in the District Court.
On 20 August 2013 the Katters filed a notice of motion in the District Court, seeking to set aside the judgment for $1 million, or alternatively an order for specific performance of the sale or purchase of the unit offered under the put and call option, or in the further alternative that the Terms of Settlement be set aside.
On 20 August 2013 the Katters filed an application in the Federal Court to set aside the bankruptcy notice, and to obtain an extension of time.
The District Court notice of motion filed on 20 August 2013 came on for hearing before Gibson DCJ on 27 September 2013. Her Honour delivered judgment on 18 October 2013, dismissing the motion. [1]
That judgment noted that UCPR 36.16 was not relied upon, because the view appears to have been taken that, even in relation to the court's power to amend or vary a final judgment that had been given in the absence of the party and had been entered, there was an unextendable 14 day limit for the filing of a notice of motion seeking the amendment or variation, and that limit had not been complied with. Rather, the application to set aside or vary was made solely under UCPR 36.15. The Katters contended that the order was made "irregularly, illegally or against good faith", because they had complied with the terms of settlement by providing the deed conferring the put and call option, that Mr Melham had declined to execute. Alternatively, they submitted that the Mr Melham had acted against good faith by failing to execute the put and call option. No argument was put in favour of the prayers for relief in the notice of motion seeking specific performance of the put and call option, and setting aside of the terms of settlement.
The primary judge held, for various reasons that it is not necessary to go into here, that the Katters had not provided a deed of the type envisaged by clause 5 of the terms of settlement. Her Honour held that in any event nothing in the terms of settlement obliged Mr Melham to enter into an agreement giving rise to a put and call option concerning a unit at 136-138 New Canterbury Road Petersham. Her Honour specifically noted, at [58], that no argument was brought as to the circumstances in which the terms of settlement were agreed, such as submitting that the entry of judgment for $1 million was oppressive, or amounted to a penalty, or that there was duress, mistake, or any other basis upon which entry of judgment in accordance with the terms of settlement could be invalidated.
After that judgment was given, the Katters changed solicitors again, instructing Piper Alderman to act for them.
On 8 November 2013 the Katters filed in the Court of Appeal a Notice of Appeal against the decision of Gibson DCJ given on 18 October 2013. There were two grounds of appeal. The first was that her Honour should have held the judgment was entered against good faith because cl 4 of the Terms of Settlement "operated as a penalty and was void and unenforceable". The second was that her Honour ought to have found that the Katters had complied with their obligations under cl 5 of the Terms of Settlement by providing the Put and Call Option Deed to Mr Melhem on 14 December 2012, and that thereby the Katters' obligation to pay money was released.
On 29 January 2014 Piper Alderman advised the Katters that the prospects of the appeal were weak. In their view Gibson DCJ had not made any appellable error in the way she had interpreted the consent orders, and her Honour was right in deciding that the put and call option was not made on reasonable terms. They advised that an argument that the $1 million judgment was a penalty could not be raised on appeal, because it had not been raised before Gibson DCJ. They also advised that leave would be needed to pursue the appeal, because the refusal to set aside the judgment was an interlocutory decision. They advised that the preferable course was for the Katters to put their resources into challenging the bankruptcy notice, and that the appeal should be discontinued.
The Katters accepted that advice. The appeal was discontinued by filing a notice of discontinuance on 30 January 2014.
The application to set aside the bankruptcy notice was argued before Wigney J on 7 April 2014. His Honour delivered judgment on that application on 6 November 2014, declining to set the bankruptcy notice aside. [2]

The Relief Sought In These Proceedings

After that setback, the Katters changed solicitors once again. On 11 December 2014 the Katters filed, in the Court of Appeal, a summons ("the Judicial Review Summons") initiating one of the sets of proceedings that are the subject of these reasons for judgment. It named as respondents the District Court of New South Wales, and Mr Melhem. It sought a writ of prohibition against both the District Court and Mr Melhem from taking any step to enforce or otherwise give effect to the judgment made on 22 July 2013, and an order in the nature of certiorari quashing that judgment. It sought an order "to the extent necessary" extending the time to bring the proceedings, and an order staying execution of a writ for levy of property that had been issued by the District Court on 16 June 2014, based upon the judgment for $1 million. Other prayers for relief were: "3. Declaration that the District Court Judgment: a. Was entered into without power being a judgment upon a fresh agreement dated 7 August 2012 ["the terms of settlement"] not sued upon in proceedings No 2011/144484; b. Was entered into without notice to the Applicants and in breach of the rules of natural justice; c. Was entered into without power contrary to District Court Act 1973 [NSW] sections 44 and 51. 4. Further or alternatively, Declaration that the terms of settlement between the Applicants and the Second Respondent are void and should be set aside on the grounds that: [i] there was no consideration passing from the Second Respondent to the Applicants for the said agreement; [ii] clause 4 is a penalty; [iii] the agreement was entered into under compulsion or economic duress."
The District Court has entered a submitting appearance, other than as to costs, in those proceedings.
The Katters filed a notice of motion in those proceedings seeking an injunction against Mr Melhem enforcing the judgment pending determination of the proceedings, or alternatively a stay of the District Court judgment. Mr Melhem filed a notice of motion seeking some orders for summary dismissal of the Judicial Review Summons, or in the alternative of certain parts of it. Those notices of motion were settled by consent orders made on 2 March 2015 under which the interlocutory applications of the parties (save in relation to time) were dismissed, with costs of each application reserved. Mr Melhem gave an undertaking that pending determination of the matter he would not take any steps to enforce the judgment. Mr Katter gave an undertaking concerning not disposing of assets pending determination of the matter.
On 25 March 2015 the Katters filed two documents in the Court of Appeal. One was a summons ("the Leave to Appeal Summons") initiating the second of the sets of proceedings that are the subject of these reasons for judgment. It sought an extension of time in which to seek leave to appeal, and leave to appeal against the orders of Gibson DCJ on both 22 July 2013 and 18 October 2013. The other was a notice of appeal ("the Notice of Appeal") against the orders of Gibson DCJ. The substantive order that it sought was to quash the order of the District Court made on 22 July 2013. The Registry treated the Leave to Appeal Summons and the Notice of Appeal as starting separate sets of proceedings.

Is An Extension of Time to File the Judicial Review Summons Necessary?

Rule 59.10 of the Uniform Civil Procedure Rules 2005 (NSW) ("UCPR"), provides: "(1) Proceedings for judicial review of a decision must be commenced within 3 months of the date of the decision. (2) The court may, at any time, extend the time for commencing proceedings fixed by subrule (1). (3) In considering whether to extend time under subrule (2), the court should take account of such factors as are relevant in the circumstances of the particular case, including the following: (a) any particular interest of the plaintiff in challenging the decision, (b) possible prejudice to other persons caused by the passage of time, if the relief were to be granted, including but not limited to prejudice to parties to the proceedings, (c) the time at which the plaintiff became or, by exercising reasonable diligence, should have become aware of the decision, (d) any relevant public interest. (4) This rule does not apply to proceedings in which there is a statutory limitation period for commencing the proceedings. (5) This rule does not apply to any proceedings in which the setting aside of a decision is not required."
Mr King submits that the consequence of UCPR 59.10(5) is that an extension of time is not required to bring the Judicial Review Summons. I do not accept that submission.
Insofar as the summons seeks an order quashing the judgment of 22 July 2013, it is clearly proceedings in which the setting aside of a decision is sought. Mr King does not dispute that. However, he submits that insofar as the summons seeks an order for prohibition it initiates "proceedings in which the setting aside of a decision is not required". He submits that, even though an order in the nature of a writ of prohibition aims to stop a tribunal of limited jurisdiction from purporting to exercise, in the future, a jurisdiction it does not have, there is still scope for an order in the nature of prohibition to operate, because Mr Melhem's solicitors have foreshadowed seeking an examination order in the District Court.
In my view, even if one treats the application for an order quashing the judgment as omitted from the Judicial Review Summons, an extension of time is still required to bring the application for prohibition and the declarations. One of the bases upon which Mr King submits that prohibition should be granted is that the judgment of 22 July 2013 was given in circumstances where the District Court lacked jurisdiction to make the order, where the lack of jurisdiction appears on the face of the court's record, and where the lack of jurisdiction is such that this Court would either have no discretion to refuse prerogative relief concerning it, or should grant the relief to the Katters almost as of right.
There is some ambiguity in the wording of UCPR 59.10(5). Whether proceedings are ones "in which the setting aside of a decision is not required" might depend, on one possible construction, upon the text of the orders that are sought in the proceedings. On that view of UCPR 59.10(5) if the prayers for relief do not seek an order that the decision be set aside, UCPR 59.10(5) has no application. If that were the correct construction, if proceedings sought an order for certiorari, or perhaps a declaration of the invalidity of a decision, leave would be required, while if no such order or declaration was sought leave would not be required.
In my view, the rule should not be interpreted in that way. Rather, it should be interpreted purposively, by reference to the substantial nature of the bases upon which the orders are sought. UCPR 59.4 prescribes the requirements for a summons in judicial review proceedings: "The summons must state: (a) the orders sought, and (b) if there is a decision in respect of which relief is sought: (i) the identity of the decision-maker, and (ii) the terms of the decision to be reviewed, and (iii) whether relief is sought in respect of the whole or part only of the decision and, if part only, which part, and (c) with specificity, the grounds on which the relief is sought."
Within the meaning of UCPR 59.10(5) proceedings are ones "in which the setting aside of a decision is not required" if the grounds on which the orders are sought do not include matters that, if made out, would have the consequence that the decision is one that should be set aside. There would be no sense in a rule that required leave for a summons that sought explicitly the setting aside of a decision, but did not require leave if the summons sought, for example, declarations the inevitable consequence of which was that the decision was invalid, or an injunction preventing a party from giving effect to the decision or acting on the basis that it was correct.
The Judicial Review Summons was defective in not identifying explicitly the grounds on which the relief was sought, except in so far as it sought the declarations in paras 3 and 4 of the summons. However, the argument has now exposed those grounds, and no useful purpose would be achieved by requiring an amended summons to be served. One of the grounds on which prohibition is sought is that the judgment for $1 million was given without jurisdiction, and is the type of decision that should be set aside. Thus, insofar as the Judicial Review Summons seeks an order in the nature of prohibition, an extension of time is required to bring it after more than three months.
The declarations sought in para 3 of the Judicial Review Summons are of legal propositions, the logical consequence of which is that the judgment of 22 July 2013 should be set aside. Thus, in so far as the Judicial Review Summons seeks the declarations in para 3, an extension of time is required to bring it after more than three months.
The prayers for relief in para 4 of the summons do not seek the setting aside of any decision of the District Court - they seek the setting aside of the terms of settlement. However, if the prayers for relief in a summons include one that is based upon the ground that there exist circumstances such that a decision is one that should be set aside, the summons as a whole is one to which UCPR 59.10 applies. Thus, it is necessary for an extension of time to be sought to bring the summons in the present case.

Inconsistent Judgments?

In the circumstances of this particular case, where the extension of time is being considered in the same hearing as the substantive merits of the judicial review application, it is both possible, and desirable, to consider the nature of the challenges that the Katters make to the judgment before considering questions about whether the time for commencing proceedings should be extended.
Mr King submits that the orders made on 7 August 2012 were final orders, and that thereafter the court's power and jurisdiction in the matter was at an end. He submits that the liberty to apply that was granted could not be used to make an application for orders that fundamentally altered the judgment for $400,000 that had been pronounced on 7 August 2012. His submits that the "note" that the primary judge made records a contract between the parties, that gave rise to a different cause of action to the cause of action to enforce the deed of loan made on 20 December 2010, which was the cause of action that had been sued on in the District Court proceedings.
In response to that submission, Mr Hogan-Doran submitted that, as a matter of construction of the orders and notes the primary judge made on 7 August 2012, Order 1 should not be treated as a final order giving judgment for $400,000. He draws attention to the difference between the handwritten version of the Terms of Settlement [13 above] and the orders and notes that were actually made ([14]- [16] above), and to how that difference arose from suggestions of the primary judge ([14] and [15] above). He also submits that the only orders entered in the District Court proceedings (until the dismissal of the Katters' motion in the proceedings to set aside the Judgment) were those in the Judgment which had been entered on 23 July 2013.
That last submission is factually inaccurate. To make it good Mr Hogan-Doran referred to the Certificate of Judgment that had been issued on 30 July 2013. [3] However, that document certifies and provides evidence that the judgment for $1 million had been entered on 23 July 2013: [4] it does not constitute the entry of the judgment.
Entry of judgments occurs pursuant to UCPR 36.11: "(1) Any judgment or order of the court is to be entered. (2) Unless the court orders otherwise, a judgment or order is taken to be entered when it is recorded in the court's computerised court record system."
The "court's computerised court record system" is known as JusticeLink. A judgment or order is entered when it is recorded in JusticeLink. The JusticeLink record shows that the orders and notes of 7 August 2012 were entered, and were entered prior to the Judgment of 22 July 2013 being entered on 23 July 2013.
The JusticeLink record set out at [16] above bears the date 7 August 2012, but that is a recording of the date when the orders and notes of 7 August 2012 were made. There is no separate entry that discloses the date on which those orders and notes were entered. The usual practice of the court is for orders to be entered on the day they are made, or within one or two working days thereafter. There is no specific evidence about the date on which the judgment of 7 August 2012 was entered. All that matters, however, is that the judgment of 7 August 2012 was entered, and from the sequence in which the recordings relating to the judgments of 7 August 2012 and 22 July 2013 appear in JusticeLink one can deduce that the order and notes of 7 August 2012 had been entered before the orders of 22 July 2013 were made.
Surrounding circumstances can be used to construe court orders generally, including in particular consent orders. [5] However, Mr Hogan-Doran did not identify any particular surrounding circumstances beyond the Terms of Settlement and the primary judge's remarks at the time of making the orders.
Even if surrounding circumstances are used to construe a court order the task is still one of ascertaining what the words of the order mean. The words of the terms of settlement and the remarks of the primary judge at the time of making the orders do not, in my view, cause the words "verdict and judgment for the plaintiff in the sum of $400,000 inclusive of interest and costs" to have any meaning other than the meaning they would have if they stood alone.
Mr Hogan-Doran submits that clearly the parties intended there would be only one judgment, and it would depend upon what happened during the period up to 1 April 2013 what order was ultimately entered. In my view that submission cannot stand with the indisputable fact that on 7 August 2012 the primary judge, with the assent of the parties, and in accordance with the signed terms of settlement, then and there pronounced a judgment for $400,000.
Mr Hogan-Doran also submits that treating the judgment for $400,000 as a final order was not consistent with the intention of the parties. Even if there were an evidentiary basis for concluding that the words of the judgment did not reflect the common intention of the parties (a topic concerning which no specific submissions were made, and concerning which I express no view), altering the words of the judgment to accord with any common intention that the parties had would involve rectification of the order. No application for rectification is made, so it is not necessary to consider whether such rectification would in principle be possible.
Mr Hogan-Doran points out that the transcript of proceedings on 7 August 2012 ended with the primary judge saying "we will now adjourn". He submits that that shows that the proceedings were not treated by the primary judge as being over.
I do not accept that submission. The primary judge made that remark after saying that she thought it was a good settlement in the circumstances, making an order for exhibits to be returned, and discussing with counsel the manner in which privileged documents could be returned to whoever was entitled to them. Her Honour's final remark of the day was nothing more than an adjourning of the sitting of the court, not an adjournment of the particular proceedings.
Thus, the order made on 7 August 2012 is a judgment for $400,000, that had been entered by no later than 1 April 2013.

Effect of a Judgment Being Entered

In Bailey v Marinoff, [6] Barwick CJ said: "Once an order disposing of a proceeding has been perfected by being drawn up as the 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 my opinion, beyond recall by that court. It would, in my opinion, not promote the due administration of the law or the promotion of justice for a court to have a power to reinstate a proceeding of which it has finally disposed."
Bailey v Marinoff concerned the ability of the NSW Court of Appeal to alter a self-executing order that proceedings be dismissed if certain procedural steps were not taken. DJL v The Central Authority [7] similarly concerned the inability of the Full Family Court to reopen an order (apparently duly entered - see DJL at [7]-[8]) dismissing an appeal. However, the principle that an entered final order is beyond recall, except insofar as a statutory provision permits it to be varied or set aside or (pursuant to a power derived from equity) if the order has been obtained by fraud, [8] applies generally, not just to orders that dismiss proceedings. [9]
The reason for this is that once a judgment that states the extent of a defendant's liability on a cause of action has been pronounced and entered it gives rise to a res judicata - Latin for "a thing that has already been judicially decided". So far as that cause of action is concerned, the proceedings are at an end. Spencer Bower and Handley, Res Judicata [10] say (footnote included): "A final judgment perfected by formal entry becomes res judicata in the proceedings. An oral judgment is provisionally effective, but until formally entered it can be withdrawn, altered or modified by the court or judge which pronounced it. As the High Court of Australia said (Burrell v R (2008) 82 ALJR 1221, 1227 para [20]): 'Identifying the formal recording of the order of a superior Court of record as the point at which that Court's power to reconsider the matter is at an end provides a readily ascertainable and easily applied criterion. But more than that, identifying the formal recording of the order as the watershed both marks the end of the litigation in that Court, and provides conclusive certainty about … the end result in that Court.'"
Some remarks in De L v Director-General, New South Wales Department of Community Services [11] might be consistent with the High Court of Australia having a general power to reopen final orders by virtue of its special position as a final court of appeal. However, De L was a case in which the order in question had not been entered, and the fact that it had not been entered was an "important consideration" in the Court's decision to reopen the order. [12] Since those remarks were made, a five member Bench of the High Court has said, concerning them, "there is, as yet, no decision of this Court which turns upon the position after entry of its final orders". [13] The remarks in De L at 215 provide no basis for an argument that any court that falls below the High Court in the appellate hierarchy has power to reopen a final order that has been entered, except pursuant to a statutory power or if the order has been obtained by fraud.
UCPR 36.15, 36.16 and 36.17 are examples of statutory exceptions to the general principle that a final judgment, once entered, is beyond recall. However, they have never been invoked in relation to the judgment pronounced on 7 August 2012 and entered at some time on or before 1 April 2013.
If a final judgment has been given on a cause of action that cause of action is merged in the judgment. [14] That is to say, the cause of action has ceased to exist as a cause of action, and in its place the successful party has the rights that are conferred by the judgment. [15] "Any person in whose favour an English judicial tribunal of competent jurisdiction has pronounced a final judgment, is precluded from recovering before any English tribunal a second judgment on the same cause of action". [16] The same applies concerning Australian tribunals.
There is no "special circumstances" exception to the rule that a cause of action that has merged in a judgment cannot be sued on again: the rule is inflexible. [17] An entered order "marks the end of the litigation in that court and provides conclusive certainty about what was the end result in that court". [18]
The proceedings in the District Court in the present case sued on the causes of action to recover the principal owing under the deed of loan, and the interest that had fallen due up to the time of lodgement of the statement of claim. Once the judgment for $400,000 had been given and entered, those causes of action ceased to exist. It was not possible for the District Court to give a different judgment concerning them in the proceedings that sought to enforce those causes of action. Further, even though the parties had agreed that the court would grant leave to enter judgment for $1 million in certain circumstances, it was not procedurally possible for the court to grant that leave, and for judgment to $1 million be entered in the proceedings in which the judgment for $400,000 had already been given and entered.
Some important practical consequences flow from an entered final order being beyond recall. Section 133(1) of the Civil Procedure Act 2005 (NSW) provides: "a judgment or order of the court may not be enforced until it has been entered in accordance with the uniform rules."
However, once a final judgment has been pronounced and entered, it can be enforced in accordance with the applicable rules without further delay if it is not subject to a stay. The procedures for enforcement of judgments contained in Pt 39 of UCPR all proceed on the basis that a judgment has been given, and entered. For example, under UCPR 39.35 the affidavit in support of an application for a garnishee order "must state the amount payable under the judgment". Similarly, an application for a charging order under UCPR 39.45 must be supported by an affidavit which states "the amount payable under the judgment". Section 40(1)(g) of the Bankruptcy Act 1966 (Cth) provides that one of the elements of a debtor committing an act of bankruptcy is established "if a creditor who has obtained against the debtor a final judgment or final order, being a judgment or order the execution of which has not been stayed, has served on the debtor in Australia … a bankruptcy notice under this Act …".
UCPR 36.12 gives a party who has the benefit of an entered judgment the right to receive from the Registrar, on demand, a sealed certificate stating the terms of the judgment. [19] Once the party in whose favour an order has been made has a sealed copy of a judgment, that party has clear evidence of having a judgment, which gives that party the practical ability to take proceedings to enforce the judgment. Under s 157 of the Evidence Act 1995 (Cth), [20] evidence of a document that is a judgment of an Australian court may be given by producing a document that purports to be a copy of that judgment and purports to be sealed with the seal of that court.
Entry of a final judgment does not completely remove a court's jurisdiction concerning a proceeding. The court continues to have jurisdiction concerning the enforcement of the judgment. If the court that had pronounced a final, entered judgement had jurisdiction to grant a freezing order, it would have jurisdiction to make a freezing order in aid of enforcement. However except where there is a specific statutory power, or there is fraud, what it does not have jurisdiction to do is to enter a final order on the same cause of action that is inconsistent with the final order already entered.

Effect of Reserving Liberty to Apply

Once the judgment of 7 August 2012 had been entered, the reservation of "liberty to apply" in relation to it did not stop it from being a final order. Further, the reservation of the liberty to apply provided no foothold for varying or revoking it. The scope of what can be done pursuant to liberty to apply is no greater when the liberty to apply has been granted concerning a consent order than it would be if it had been granted concerning an order not made by consent. [21] I venture to repeat remarks I made, with the agreement of Tobias JA, in Australian Hardboards Ltd v Hudson Investment Group Ltd: [22] "[50] When final relief has been granted in a suit, an order granting liberty to apply enables further orders to be made which are necessary for the purpose of implementing and giving effect to the principal relief already pronounced or, as it is sometimes called, 'working out the order': Poisson and Woods v Robertson and Turvey (1902) 50 WR 260 at 261; Cristel v Cristel [1951] 2 KB 725 at 729, 730; Nicholson v Nicholson [1974] 2 NSWLR 59 at 63; Hurstville City Council v Renaldo Plus 3 Pty Ltd [2006] NSWCA 248 at [97]. [51] In Abigroup Limited v Abignano (1992) 39 FCR 74 at 88, the Full Federal Court (Lockhart J, Morling and Gummow JJ) held that an order that a particular sum of money be paid to a particular party was a final order, notwithstanding that the order also reserved liberty to apply. Their Honours gave a general indication of where and how reservation of liberty to apply operates: 'The reservation of liberty to all parties to apply to a court is a provision directed essentially to questions of machinery which may arise from the implementation of a court's orders. They include cases where a court may need to supervise the enforcement of orders after they have been made. … Historically orders reserving liberty to apply are for limited purposes. They arise, for example, upon a decree for specific performance where the unsuccessful defendant declines to sign all documents and do whatever is necessary to ensure that the contract the subject of the suit is performed. The reservation of liberty to apply ensures that the court may then make orders to secure that the relevant contract is enforced by the defendant by, for example, appointing the appropriate officer of the court to execute the necessary documents of conveyance so as to give title to the successful plaintiff. Historically the reservation by the Court of Chancery of further consideration of a decree was intended to cover the circumstance where following the pronouncement of the decree (a final decree) a further hearing was necessary for the court to deal with some outstanding issue sometimes requiring taking further evidence and making further declarations or orders. But this did not detract from the initial orders as being final orders. Rather it was a mechanism designed by the Court of Chancery to obviate the necessity of a further suit being instituted to deal with matters that were essentially consequential upon the making of the initial final decree. This demonstrates that there is no inconsistency between the making of final decrees, judgments or orders or declarations and subsequent orders of the court. It all depends upon the circumstances of the case and the particular orders or decrees formulated by the court. …' [52] Liberty to apply cannot be used to alter the substance of an order already made: Dowdle v Hillier (1949) 66 WN (NSW) 155 at 156; Cristel v Cristel [1951] 2 KB 725; Clark Equipment Credit of Australia Ltd v Como Factors Pty Ltd (1988) 14 NSWLR 552 at 559. … [54] In Fylas Pty Ltd v Vynal Pty Ltd [1992] 2 Qd R 593 at 598, McPherson SPJ considered what is involved in 'working out' an order: '… a judgment or order that expressly reserves to parties a leave or liberty to apply can be varied on an application pursuant to such leave only so far as may be necessary for the purpose of working out the actual terms of the order so as to make it more efficacious in matters of detail. What is meant in this context by "working out" the terms of an order is considered in some of the cases on the point. In Cristel v Cristel [1951] 2 K.B. 727, 728, Somervell LJ said it "involves matters on which it may be necessary to obtain the decision of the court. Prima facie, certainly, it does not entitle people to come and ask that the order itself shall be varied". A simple judgment for a money sum requires no "working out" in any sense, so that liberty to apply is quite inappropriate in such a case. …" (Emphasis added.) It was that "quite inappropriate" form of order that was made on 7 August 2012. The primary judge spotted the fundamental problem that arose from the inconsistency of the orders that the terms of settlement provided for, but her suggestion that the parties include liberty to apply was not a solution to the problem.

Not Possible to Enforce Terms of Settlement Without Separate Proceedings?

Mr King submits that there is a separate reason, besides it being impossible to have two inconsistent final judgments in the one proceeding, why the judgment for $1 million could not have been given in the District Court proceedings. He submits, in reliance on Phillips v Walsh, [23] that litigation to enforce a settlement agreement cannot be brought in the same proceedings that the agreement had settled.
In fact in Phillips v Walsh, [24] McLelland J did not deny that there was jurisdiction to seek to enforce a settlement agreement by motion in the proceedings to which the settlement related. Rather, his Honour recognised that there was "some arguable support" for the proposition that a settlement might be enforced by motion in the original proceedings, but said "it would not be proper to do so where substantial matters are involved beyond the ambit of the proceedings as originally constituted or where, in the interests of justice, disposition of the matter on summary application is inappropriate." There is a difference between a court adopting a course that is beyond jurisdiction, and adopting a course that is procedurally improper. That difference is of critical importance in an application, like the present one, for orders in the nature of prerogative relief.
In any event, since the decision in Phillips v Walsh, s 73 of the Civil Procedure Act 2005 (NSW) has been enacted. It states: "(1) In any proceedings, the court: (a) has and may exercise jurisdiction to determine any question in dispute between the parties to the proceedings as to whether, and on what terms, the proceedings have been compromised or settled between them, and (b) may make such orders as it considers appropriate to give effect to any such determination. (2) This section does not limit the jurisdiction that the court may otherwise have in relation to the determination of any such question."
Since the enactment of that section it is clear that questions about whether proceedings have been compromised, and if so what orders are appropriate to give effect to the compromise agreement, can be litigated and decided in the court in which the original proceedings were brought. [25] Depending on the complexity of the questions involved it might sometimes be appropriate for the court to require separate proceedings to be brought, but that is more a question of case management than of jurisdiction. [26]
That s 73 of the Civil Procedure Act 2005 NSW) permits effect being given to a settlement agreement by order in the proceedings that are settled does not mean, however, that the order for $1 million in the present case was permissible. Ordinarily if a cause of action is sued on, and then the parties agree to judgment in a particular amount being given, and the court acts in accordance with that agreement by pronouncing and entering judgment for the agreed amount, the judgment that is given is a satisfaction of the cause of action that had been sued on. However in the present case, even if proper procedures had been taken to invoke the court's powers under s 73 of the Civil Procedure Act 2005 (NSW) and, after proper notice to the Katters, Mr Melham had sought orders to enforce the terms of settlement (a course that was not followed) the court could not have entered a judgment in the proceedings for $1 million, because a judgment for $400,000 had already satisfied the cause of action that had been sued on in the proceedings.

Failure to Accord Natural Justice?

Mr King submits that a further reason why the judgment for $1 million was beyond jurisdiction was that it was obtained in breach of the rules of natural justice. It is elementary that courts must accord procedural fairness to litigants before them. [27] For a court to fail to accord procedural fairness to a litigant is a jurisdictional error. [28] In the present case the Katters were informed in April 2013 that Mr Melham would seek to enforce the judgment, but that is all they were told. They were not notified of the application made by letter to the District Court on 25 June 2013, nor provided with the affidavits of Mr Melham that accompanied that letter.
The note that the primary judge made on 7 August 2012 that appears as Item (3) 4 in the JusticeLink record is not an order granting leave to the parties to enter judgment for $1 million. Rather, it is the recording of an agreement between the parties that they consent to the court granting leave to the plaintiff to enter judgment in the sum of $1 million if particular circumstances arise, namely that payment of the $400,000 has not been made by 1 April 2013, and that the execution of the put and call option, referred to in (3) 5, has not occurred. It is quite clear that the Katters were denied the opportunity to be heard about whether circumstances had arisen in which Mr Melham had a contractual entitlement for the court to grant him leave to enter judgment for $1 million. They were also denied the opportunity to consider the affidavits of Mr Melham, and to provide evidence rebutting those affidavits if they so wished. They were denied the opportunity to put an argument that, notwithstanding the agreement of the parties, the court should not grant leave to enter judgment for $1 million because it had already made and entered a final order in the proceedings. This is a denial of procedural fairness which, if it stood alone, would provide a sufficient reason for setting aside the judgment for $1 million.
Mr Hogan-Doran submits that it does not stand alone. He submits that any breach of procedural fairness was cured by the Katters having an opportunity to put arguments to her Honour in the course of hearing the application to set aside the judgment. I do not accept that that is sufficient to cure the breach of procedural fairness.
In many cases, having the opportunity to put an argument on appeal is sufficient to cure any breach of natural justice that there might have been in the court below when a decision has been made on the basis of an argument not put. [29] But a right of appeal does not always cure a breach of natural justice. [30] Further, an application to set aside an order already made is not the same as an appeal. The questions involved in an appeal are frequently wider than the questions involved in an application to set aside a judgment.
One test for whether a denial of natural justice in the making of a decision has been cured by a subsequent proceeding appears to depend upon whether the body that is deciding whether the first decision was vitiated can conclude that, because of the availability of the subsequent proceeding, the initial failure to comply with the requirements of natural justice could have made no difference. [31] Alternatively, the possibility of a subsequent proceeding curing an initial breach of natural justice has been explained as arising from a decision making process involving different steps or stages before a final decision is made, and the decision-making process, viewed in its entirety, gives procedural fairness. [32]
In the present case, the only application to Gibson DCJ after the judgment had been entered was under UCPR 36.15. I will assume, without deciding, that the opportunity that the Katters took, when arguing the application to vary or set aside, to debate whether the deed of put and call was the type of deed referred to in the Terms of Settlement adequately cures any breach of natural justice that arose through them not having an opportunity to put those particular matters at an earlier stage. However, that does not completely cure the denial of natural justice. It would have been possible for the Katters to submit to her Honour that she had allowed a legally impossible situation to arise through the terms in which the orders and notes were made on 7 August 2012, and denied natural justice by making the orders in Chambers on 22 July 2013 without notice to the Katters. However in my view the fact that the Katters could have made those submissions is not sufficient to cure the breach of natural justice. When the correctness of her Honour's own handling of the matter would have been in issue, there would have been an element of her Honour being a judge in her own cause in deciding the submissions. Being a judge in one's own cause is a species of breach of natural justice so long-recognised that it is expressed in a Latin matim, nemo debet esse judex in propria sua causa.
I recognise that sometimes judges are required to make decisions about the adequacy of their own conduct. For example, an application for a judge to disqualify himself or herself from hearing, or continuing to hear, a case on the ground of ostensible or actual bias should be made in the first instance to the judge himself or herself. [33] However, in circumstances where a judge is asked to recuse because of actual or ostensible bias there is a practical necessity that the judge make that decision himself or herself, because nobody else is in a position to know the relevant facts and to act with the speed that would be necessary if an ongoing hearing were to be terminated. There was no such practical necessity for Gibson DCJ to hear the application to set aside or vary the judgment she had made.
I would not conclude that giving the Katters the opportunity to put evidence and submissions before the primary judge when the judgment for $1 million was first sought could have made no difference. The word "could" requires the court to be satisfied that there was no realistic possibility that according natural justice would have altered the outcome: that is a demanding standard, [34] and is not met in the present case. Further, I doubt that a course of conduct in which a judge makes a decision, and there is then an application to that judge to revoke or vary that decision involves different steps or stages in a single decision making process. Even if I am wrong in taking that view, for the reasons already given I would not regard the combination of the circumstances in which the judgment for $1 million came to be given, and a subsequent application to the same judge to vary or revoke the order, as a process that, viewed in its entirety, gives procedural fairness.

Excess of jurisdiction by exceeding monetary limit of District Court?

Mr King submits that the fact that the judgment was for an amount of $1 million is in itself a reason why it was given beyond jurisdiction. Section 4 of the District Court Act 1973 (NSW) defines "jurisdictional limit of the Court" as meaning $750,000. At the time of filing the statement of claim on 3 May 201,1 s 44(1) of the District Court Act 1973 (NSW) conferred on that court jurisdiction (subject to some presently immaterial exceptions) to hear and dispose of actions of a type which, if brought in the Supreme Court, would be assigned to the Common Law Division of the Supreme Court, and: "(1) Subject to this Act, the Court has jurisdiction to hear and dispose of the following actions: (a) any action of a kind: … (ii) in which the amount (if any) claimed does not exceed the Court's jurisdictional limit, whether on a balance of account or after an admitted set-off or otherwise …"
It is uncontroversial that an action to recover an unpaid debt and unpaid instalments of interest that have accrued on that debt would, if brought in the Supreme Court, have been assigned to the Common Law Division of the Supreme Court. [35]
Section 44(2) of the District Court Act 1973 (NSW) provides: "(2) Where the amount claimed in an action includes interest (being interest which the Court could, under section 100 (1) of the Civil Procedure Act 2005 , order to be included in the amount for which it could give judgment), that interest shall be disregarded for the purposes of: (a) determining whether the maximum amount for which the action is authorised by this Act to be brought has been exceeded or not, and (b) determining whether or not the Court has jurisdiction to hear and dispose of the action."
Section 100(1) of the Civil Procedure Act 2005 (NSW) is the provision which authorises a court, in proceedings for the recovery of money, to: "… include interest in the amount for which judgment is given, the interest to be calculated at such rate as the court thinks fit: (a) on the whole or any part of the money, and (b) for the whole or any part of the period from the time the cause of action arose until the time the judgment takes effect."
However, s 100(3) of the Civil Procedure Act 2005 (NSW) provides some limitations on the court's power to award interest under s 100. In particular, s 100(3)(b) says that the section "does not authorise the giving of interest on a debt in respect of any period for which interest is payable as of right, whether by virtue of an agreement or otherwise".
In the present case the cause of action sued on was to recover the amount of principal and interest which was due at the time of filing the statement of claim. The prayers for relief in the statement of claim were: "The plaintiff claims the following amounts: (a) $550,000.00 being the unpaid portion of the Final Deed of Loan (b) Interest payable: (i) As per the Final Deed of Loan, in the sum of $195,366.93 calculated as set out in Annexure "A":- Schedule of Interest to this statement of claim; or (ii) If and only if the Court orders otherwise, then (A) According to the Court's order; or (B) In accordance with section 100 of the Civil Procedure Act 2005 (NSW) and the Uniform Civil Procedure Rules 2005 (NSW)."
Thus, there was a claim for interest under s 100 of the Civil Procedure Act 2005 (NSW) only if the court declined to award the amount of interest that had accrued up to the date of filing of the statement of claim. Thus at the time the statement of claim was filed, the claim it made was within the jurisdictional limit of the court.
The deed of loan did not stop interest from running at the contractual rate after an action to recover the principal had been brought. Indeed, it made provision that the Katters would pay "… interest on the principal sum or on so much thereof as for the time being shall remain unpaid, and upon any judegment [sic] or order in which or the preceding covenant may become merged at the rate of Five (5%) per cent per month until the principal sum and interest shall be fully paid and satisfied, the first of such payments computed from 31 January 2011."
Thus, by reason of s 100(3)(b) interest under s 100 could not have been awarded to Mr Melhem on the principal sum. Thus, the claim made by the statement of claim was only for $550,000 plus the amount of $195,366.93 claimed as the contractual rate of interest to the date of the statement of claim. (In fact, the amount of interest claimed in the statement of claim was manifestly more than Mr Melhem's contractual entitlement, because it calculated interest from 20 December 2010 rather than 31 January 2011, and because it calculated the interest as compounding on daily rests. That does not affect the fact that the amount claimed in the statement of claim was comfortably within the jurisdictional limit of the District Court at the time of filing.)
Section 51 of the District Court Act 1973 (NSW) provides: "51 Consent jurisdiction (1) This section applies to an action or cross-claim that, but for this section, the Court would not have jurisdiction to hear and dispose of by reason only of the fact that the amount claimed exceeds the jurisdictional limit of the Court as at the time the action was commenced. (2) The Court has, and may exercise, jurisdiction to hear and dispose of an action or cross-claim to which this section applies: (a) if a party to the action or cross-claim files a memorandum of consent in respect of the action or cross-claim, or (b) if no objection to the Court's jurisdiction has been raised by any of the parties prior to 3 months before the trial of the action commences. (3) For the purposes of subsection (1): (a) the jurisdictional limit of the Court in relation to an action commenced before 1 July 1993 is taken to be $100,000, and (b) the jurisdictional limit of the Court in relation to an action commenced on or after 1 July 1993 but before 18 July 1997 is taken to be $250,000. (4) The maximum amount for which judgment may be given in relation to an action or cross-claim that is dealt with pursuant to subsection (2) (b) is an amount equivalent to 50 per cent above the jurisdictional limit of the Court as at the time the action was commenced. … (7) In this section, "memorandum of consent" in relation to an action or cross-claim means a document signed by each party to the action or cross-claim, or the party's Australian legal practitioner, in which it is stated that each of those parties consents to the action or cross-claim being tried in the Court and is aware that, unless the document is filed, the Court will not have jurisdiction to dispose of the action or cross-claim."
At no time was any memorandum of consent filed. In the construction of s 51(1) of the District Court Act 1973 (NSW), the "amount claimed" is not limited to the amount that was claimed in the initiating process. Rather, it extends to any amount that, in the course of pre-trial communications between the parties, the defendant comes to understand the plaintiff is seeking. [36] Mr Melhem swore an affidavit updating his interest claim on 7 August 2012, which became Exhibit J at the hearing on that day. Thus, by at least 7 August 2012 the Katters were aware that Mr Melhem was claiming that the accumulated principal and interest to which he was entitled was a sum slightly exceeding $1,050,000.
If a court has a strictly and unalterably limited subject matter jurisdiction, jurisdiction beyond that limit cannot be conferred on it by consent, [37] nor can acquiescence or estoppel prevent a party from asserting that the court lacks jurisdiction. [38] However, because of the presence of s 51 of the District Court Act 1973 (NSW), the District Court is not such a court. Jurisdiction can be conferred on it, in excess of the jurisdictional limit, not only pursuant to s 51, but also if the parties, by waiver or estoppel, act in such a way that they cannot take the point that the jurisdiction has not been enlarged. [39]
In the present case, the terms of settlement of the action on 7 August 2012 were agreed on the conventional basis that the court would be able to grant leave to enter judgment for $1 million if the $400,000 was not paid in time and no deed of put and call option of the requisite type was proffered in time. For that reason, if the judgment for $400,000 had not already been entered, and if procedural fairness had been accorded to the Katters, the court would have had jurisdiction to enter a judgment for $1 million.
In Richards v Cornford, this Court held that the District Court had jurisdiction to give a judgment for approximately $950,000, notwithstanding that no memorandum of consent had been filed, because the defendant had become aware more than three months before the trial of the action that the claim of the plaintiff exceeded $750,000. This Court held, pursuant to s 51(4) of the District Court Act 1973 (NSW), that in those circumstances the maximum amount for which judgment could be given was 50 per cent above the $750,000 that had been the jurisdictional limit of the court at the time the action was commenced.
However, no argument was raised in Richards v Cornford that there was a waiver or estoppel concerning jurisdiction having been validly conferred upon the court. In the present case the conventional basis upon which the settlement was entered was that the court would have jurisdiction to grant leave to enter judgment for $1 million in the agreed factual circumstances. The conventional basis did not specify whether that jurisdiction arose under one limb of s 51(2) or the other. Thus there is no occasion for the court to enter into consideration of whether the jurisdiction arises under one limb or the other. In consequence there is no need to consider whether the Katters knew, more than three months before the hearing, that more than $750,000 was being claimed, nor to consider on whom an onus of proof would lie concerning the time at which the Katters acquired knowledge that more than $750,000 was being claimed.

Penalty as a Vitiating Factor?

Mr King submits that the agreement that the Court noted on 7 August 2012 was a penalty, because on its face the provisions noted provided for a default payment of $1 million if the sum of $400,000 was not paid before 1 April 2013.
If the District Court otherwise had jurisdiction to enter the judgment for $1 million, the fact that the figure of $1 million arose from a contractual clause in the terms of settlement that amounted to a penalty would not deprive it of that jurisdiction. A clause that is penal is not void at law: it is merely voidable in equity. Further, if equity grants relief concerning it, there is always a question about whether the relief should be granted on terms.
Mr King appears to accept [40] that the clause being a penalty would not go to the jurisdiction of the District Court. He continues: "yet it being on the face of the record of the Court and there being no appeal rights, having been abandoned or lost through no delay or personal fault of the Applicants, the only choice open to the Applicants was to seek prerogative orders in this Court …"
Section 69 of the Supreme Court Act 1970 (NSW) confers on this Court jurisdiction to grant an order in the nature of (relevantly) prohibition or certiorari. Section 69(3) and (4) provide: "(3) It is declared that the jurisdiction of the Court to grant any relief or remedy in the nature of a writ of certiorari includes jurisdiction to quash the ultimate determination of a court or tribunal in any proceedings if that determination has been made on the basis of an error of law that appears on the face of the record of the proceedings. (4) For the purposes of subsection (3), the face of the record includes the reasons expressed by the court or tribunal for its ultimate determination." Section 69(3) makes it clear that the court has jurisdiction to quash a determination of a court if the determination is made on the basis of an error of law that appears on the face of the record. The extension that 69(4) gives to what would otherwise count as "the record" of the District Court (explained in Kirk v Industrial Court of New South Wales [41] ) is not of present relevance because the primary judge gave no reasons for the entry of the judgment for $1 million. However, the record of the court includes the initiating process, and the recorded orders of the court.
Perhaps overgenerously to the Katters in light of the decision in Lachlan v H P Mercantile Pty Ltd, [42] I will assume, without deciding, that the court's orders and notes of 7 August 2012 record an agreement that is voidable in equity because the provision for entry of judgment for $1 million constitutes a penalty. I will also assume without deciding, that one can deduce from the face of the record that the judgment for $1 million was granted in performance of cl 4 of the terms of settlement that had been noted. However, for the primary judge to give effect to that agreement by entering judgment for $1 million does not reveal any error of law on her Honour's part that arises from the provision for judgment for $1 million being penal. A court that gives effect to an agreement that is susceptible to being set aside on the ground that it is a penalty commits no error of law when no claim has been made that the agreement is penal. No such claim had been made to her Honour before the judgment for $1 million was made.

Entry of Judgment an Exercise of Court's Equitable Jurisdiction?

Mr King submits that in entering the judgment for $1 million the court was giving effect to the contract contained in the terms of settlement, not the contract that had been sued on (namely the deed of loan). He submits that the judgment for $1 million was in the nature of specific performance of that agreement. The District Court has an equitable jurisdiction under s 134 of the District Court Act 1973 (NSW) to make orders for specific performance "… of any agreement for: (i) the sale or purchase of any property at a price not exceeding $20,000, or (ii) the lease of any property the value of which does not exceed $20,000, as determined by the Court. " He submits that the contract in the Terms of Settlement is of a type that falls outside the type of contract concerning which the District Court can grant specific performance.
There is one respect in which I agree with the submission. Section 51 of the District Court Act 1973 (NSW) allows a consensual extension of the jurisdiction of the District Court only concerning an action "that, but for this section, the Court would not have jurisdiction to hear and dispose of by reason only of the fact that the amount claimed exceeds the jurisdictional limit of the Court …"
Section 51 could not be used to extend the District Court's jurisdiction to grant specific performance beyond that conferred by s 134, because the jurisdiction to grant specific performance does not have its limit imposed by reference to any "amount claimed". Rather the limitation on the District Court's jurisdiction to grant specific performance arises by reference to three different factors - the claim being one for specific performance, the subject matter of the contract concerning which specific performance is sought being of a particular type (contracts for sale or purchase of property or contracts for the lease of property) and by reference to the purchase price (for sale and purchase contracts) or value of property leased (for lease contracts).
Notwithstanding that, the submission fails. When a court orders specific performance of an agreement the court orders one of the parties to an agreement to carry it out according to its terms. The relevant agreement in the terms of settlement was that in a particular factual situation (non-payment of the $400,000 by 1 April 2013 and non-execution of the put and call option) the court would grant leave to Mr Melhem to enter judgment in the sum of $1 million. In giving effect to that agreement the court would not be ordering any of the parties to it to carry out any action that they had agreed to carry out; the only action that would be required to carry it out would be an action of the court itself. That would not involve any exercise the equitable jurisdiction to grant specific performance.

Injunction as an Alternative to Prerogative Relief?

Mr King submits that, even if there was an error in giving effect to a penal provision, and that error was not jurisdictional, and not an error on the face of the record, it is still open to this Court to grant an injunction to prevent the judgment for $1 million from being acted upon. He made mention in his written submissions of Cooney v The Council of the Municipality of Ku-ring-gai Corporation, [43] and in particular the observations of Menzies J at [604] that "the courts have granted injunctions or mandatory orders to protect benefits or advantages … that could not be regarded as having any resemblance at all to proprietary rights", and of Batemans Bay Local Aboriginal Land Council v Aboriginal Community Benefit Fund Pty Ltd, [44] where mention was made of the public interest in the observance by statutory authorities of the limitations upon their activities which the legislature has imposed.
In Kuru v State of New South Wales, [45] the High Court urged intermediate appellate courts to consider whether to deal with all grounds of appeal, even if the appeal could be disposed of without deciding them all. There are sometimes significant reasons why it is not desirable for an appellate court to consider all the grounds that have been raised. [46] In the present case the argument on this topic in the written submissions was scarcely developed, and was not further explained in oral submissions. Whether an injunction is available in these circumstances is a topic of some difficulty, and considerable importance. In my view it is preferable not to embark on the topic when a clear basis exists for setting aside the judgment for $1 million.

Extension of Time to Commence Prerogative Relief Proceedings

The judgment for $1 million was entered on 23 July 2013. UCPR 59.10 required that a summons seeking prerogative relief against that judgment be filed by 23 October 2013. In fact the summons seeking the relief was filed on 11 December 2014. Thus the filing was a little less than 14 months late.
Usually an application for an extension of time in which to bring proceedings is determined in advance of any hearing of the proceedings that an applicant seeks to bring. It was in the context of an application for extension of time before any hearing of the proceedings that Basten JA in Tomko v Palasty (No 2) [47] identified the factors relevant to a decision whether to extend time as including the length of delay, the reasons for the delay, whether the applicant has a fairly arguable case, and the extent of any prejudice suffered by the respondent.
Whether to grant an extension of time is also affected by the purpose for which the time limits exist, and the purpose for which courts are given the discretion to extend time limits. The purpose of the time limits for which time limits exist is that there is a benefit, both for the public generally [48] and for the particular litigants involved in a dispute, for courts and tribunals to be able to achieve finality in the decisions they reach, such that after a comparatively limited time a successful litigant can have a measure of assurance that the victory achieved will not be undone. McColl JA (Campbell JA agreeing) identified the purpose of provisions enabling time to be extended in Nanschild v Pratt. [49] "The discretion to extend time is given for the sole purpose of enabling the court to do justice between the parties. This means that the discretion can only be exercised upon proof that strict compliance with the rules will work an injustice upon the applicant. In order to determine whether the rules will work an injustice, it is necessary to have regard to the history of the proceedings, the conduct of the parties, the nature of the litigation, and the consequences for the parties of the grant or refusal of the application for extension of time: Gallo v Dawson [1990] HCA 30; (1990) 64 ALJR 458 (at 459) per McHugh J."
The reasons I have given so far show that the judgment for $1 million was arrived at through a jurisdictional error of a fundamental kind. There is considerable public importance in such court judgments not being permitted to survive. That is a powerful factor in favour of extending the time in which to bring the proceedings. The Katters have more than a fairly arguable case - subject to the extension of time being granted, and any discretionary factors, they have a winning case.
I place particular weight upon the fact that the judgment for $1 million arose from Mr Melham's legal advisors communicating with the District Court, with no notice to the Katters, at a time when the correspondence between the solicitors made quite clear that the Katters were contending that they had proffered a deed of put and call option of the type called for by the terms of settlement, and that therefore they were not vulnerable to having a judgment of $1 million entered against them.
The Katters started legal proceedings against Mr Melhem less than a month after the judgment had been obtained. However, they were placed into a position of needing to take those proceedings by Mr Melhem's extremely swift action in issuing a bankruptcy notice based upon the judgment for $1 million. While both the application made to Gibson DCJ and the application to set aside the bankruptcy notice were unsuccessful, and the Notice of Appeal was discontinued, the time taken in running those actions accounts for most of the delay that there was in filing the Judicial Review Summons. In particular, the Federal Court reserved its decision for seven months before delivering its judgment concerning the setting aside of the bankruptcy notice. For nearly the whole of the period of the delay, Mr Melham must have been aware that the Katters were contesting his entitlement to enforce the judgment for $1 million. Mr Melhem does not seek to make any case that he has sustained prejudice through acting in the belief that the Katters did not contest his entitlement to the $1 million.
The proceedings that the Katters brought, which either failed or were discontinued, were all brought upon legal advice. In hindsight, one can recognise that it would have been possible for proceedings like the present ones to be brought earlier. The solicitors for the Katters have not engaged in the sort of blameworthy conduct that one often encounters in applications to extend time, where solicitors have done nothing and time has slipped away. Rather, they have made some litigious choices that, as things have eventuated, have been unsuccessful.
The personal blamelessness of a solicitor's client for delay having occurred is not in itself a sufficient reason why a failure to bring or conduct proceedings timeously should be excused. However that the applicant for an extension of time has not been personally responsible for the time slipping by is a relevant factor to take into account in an application for extension of time [50] and also in the somewhat analogous case of an application to dismiss a proceeding for want of prosecution. [51]
Mr Melham has not had the benefit of payment of the $1 million judgment for the whole of the time since it was entered. As well, Mr Hogan-Doran submits that Mr Melham has suffered prejudice through not receiving an amount of about $100,000 in interest that has accrued on the $1 million judgment. However, in circumstances where that judgment should never have been pronounced or entered, it is difficult to attach great weight to that. Mr Melham has not attempted to enforce the judgment for $400,000 that was pronounced on 7 August 2012 - but that is a decision he has made for himself. That judgment sum has, in any event, been accruing interest.
Mr Melham has expended legal fees in defending and seeking to enforce the judgment for $1 million. Those fees arose from the District Court notice of motion to set aside the judgment, the discontinued Court of Appeal proceedings, the Federal Court bankruptcy proceedings, and various proceedings in the District Court seeking to enforce the judgment. The amount he has expended is a little over $146,000. An affidavit of a solicitor employed by Mr Melham's lawyers deposes to that figure being calculated on a party party basis. The enforcement proceedings have so far resulted in Mr Melham recovering a little over $33,000, pursuant to some garnishee orders. Concerning these legal costs, other than those concerning the enforcement proceedings of the judgment, Mr Melham already has the benefit of an order for costs against the Katters. The quantum of those costs has not yet been assessed. In the ordinary course the costs of enforcing a judgment debt are also payable by the judgment debtor. However the quantum of those enforcement costs has likewise not yet been ascertained.
There is some evidence of the financial circumstances of Mr Katter. A company of which he is director and shareholder is one of two owners of the development site at Petersham that was referred to in the terms of settlement. There is a co-owner, but the evidence does not disclose the respective proportionate interests of the co-owners. Solicitors for the developers hold approximately $4 million in trust, being proceeds of sale of units in the development, but there is a dispute about payment of expenses of the builder from that sum. Units in the development that are unsold are said to be worth several million dollars. However there is no evidence of the liabilities of Mr Katter. There is no evidence whatever about the financial circumstances of Ms Katter. In all these circumstances it has not been established that it is likely that the Katters will be unable to pay these various items of costs.
The Katters' former solicitors, Piper Alderman, have charged them over $250,000 for their services, and that amount has not been paid. There is no evidence about the reason for non-payment. Mr Hogan-Doran submits that Mr Melham will compete with Piper Alderman in any bankruptcy. That would be correct, if one or both of the Katters were to become bankrupt. However, it has not been shown that a bankruptcy is more likely than not.
In all these circumstances, I am satisfied that a case has been made out to extend the time for bringing the Judicial Review Summons to seek orders quashing the judgment for $1 million, prohibiting the defendants from taking any further steps concerning it, and orders ancillary to those orders.
Different considerations apply concerning the prayers for relief in para 4 of the Judicial Review Summons. [52] No submissions were made in support of the prayers for relief seeking to set aside the terms of settlement on the basis of lack of consideration, and compulsion or economic duress. Even if clause 4 of the Terms of Settlement were a penalty, that would not provide a basis for declaring the terms of settlement were void and setting them aside. Rather, it would provide a basis for declining to enforce that particular term of the terms of settlement, subject to the imposition of appropriate terms so that he who sought equity also did equity.
The question of penalty was not raised in the application to set aside that Gibson DCJ heard. Importantly, because it was not raised some evidence of Mr Melham that sought to justify the $1 million figure was not read in that application. It was raised by the notice of appeal that the Katters discontinued. It was also raised in the Federal Court, on the application to set aside the bankruptcy notice. The argument was unsuccessful in the Federal Court, for two reasons. One was that, because there had been the opportunity to raise it earlier, the court would not use it as a discretionary basis to go behind the judgement for $1 million. The other was that the effect of success on that argument would only be at the Katters had liability for an amount less than $1 million, which would provide insufficient basis for setting aside the bankruptcy notice. In all the circumstances, it would not be appropriate to permit the question of penalty in the terms of settlement to be litigated now.
As well the declarations that are sought in clause 4 of the Judicial Review Summons are not a remedy in the nature of judicial review at all. In these circumstances I would not grant an extension of time to file a summons insofar as clause 4 was concerned.
There would be two ways in which to make orders to give effect to the substantive conclusion that an extension of time would not be appropriate concerning clause 4 of the summons, but was appropriate concerning the rest of the summons. One way might be to require the filing of a fresh summons, which omitted clause 4. However, that might raise questions, upon which we have not received submissions, about whether anything relevant to the extension of time has happened in the period between the filing of the Judicial Review Summons and now. It would also involve extra trouble and expense in preparing and filing an additional document. The second way is to grant an extension of time to file the whole of the summons, but to do it on terms that clause 4 of the summons not be relied upon. The court has a general power to make its orders on terms. [53] The preferable form of order is to grant an extension of time to file the Judicial Review Summons, up to the time it was actually filed, on terms that clause 4 not be relied upon.

Discretionary considerations

The entering of inconsistent judgements is a jurisdictional error which appears on the face of the record of the District Court. The failure to accord natural justice is also a jurisdictional error, though not one of apparent from the face of the record. Each provides a basis on which the court might, in the exercise of its discretion, quash the judgment for $1 million.
Mr King submits that there is no discretion in the Court to refuse a writ of prohibition if it appears on the record of an inferior court subject to its jurisdiction that a jurisdictional error has occurred. In Yirrell v Yirrell [54] a writ of prohibition was granted against the order of an inferior court notwithstanding that the order had been made some 14 years previously. Various of the High Court judges stated that when the lack of jurisdiction appears on the face of the court order the Court has no discretion and is bound to issue prohibition. [55]
Since then there have been repeated statements in the High Court that its own power under the Constitution to issue writs of prohibition is discretionary. [56] Those statements are not determinative of the power of this Court to make an order in the nature of prohibition against the District Court. However some High Court judges, though not a majority in a case, have expressed the view that ordinary prerogative relief is also discretionary. [57] In New South Wales section 69 of the Supreme Court Act 1970 (NSW) has replaced the common law jurisdiction to issue prerogative writs (other than habeas corpus) with a jurisdiction to make orders under section 69. In Solution 6 Holdings Ltd v Industrial Relations Commission of New South Wales, [58] this change in the authority to make the orders led Spigelman CJ to "proceed on the basis that, in New South Wales, an order in the nature of prohibition is discretionary in all cases, but should issue "almost as of right". I shall proceed on the same basis.
The same factors bear upon the exercise of discretion to grant certiorari and prohibition as bear upon the decision whether to grant an extension of time. The balance of those factors favours the grant of relief, of both types.
In my view it is not appropriate to grant the declarations sought in para 3 of the Judicial Review Summons. In general, a declaration should not be made if it "will produce no foreseeable consequences for the parties". [59] The making of the declarations in the present case will produce no consequences beyond those that would be produced by the making of orders in the nature of prohibition and certiorari. As well, the terms of the declarations do not capture every aspect of the reasoning by which I have concluded that it is appropriate to grant relief, so making them could be misleading. It is better to leave these reasons for judgment to speak for themselves.

Reserved Costs of the Notices of Motion

Costs of the interlocutory notices of motion filed in the Judicial Review Summons proceedings were reserved. [60] No submissions were made about those costs. There is no reason why they should not become part of the costs of the Judicial Review Summons.

The Appeal Proceedings

The appeal, and application for leave to appeal that have been filed by the Katters are relied upon by Mr King only if the Court should refuse in its discretion to provide judicial review but is prepared to consider the matter by way of appeal. [61] No separate substantive argument was put concerning the appeal proceedings. In these circumstances it is unnecessary to decide any separate issue concerning the appeal proceedings. When the Katters instituted those proceedings as a precaution against circumstances that have not arisen, the appropriate order is that the appeal proceedings be dismissed.
In accordance with his duties as counsel, Mr King drew our attention to Woodward Pty Ltd v Kelleher. [62] Gleeson CJ said, at 2, that a claim that a judgment given in the District Court was beyond the jurisdiction of the District Court "could not properly be made the subject of an appeal, and should be the subject of a challenge to jurisdiction by way of an application either for declaratory relief or for an order in the nature of prohibition or certiorari". In light of that authority, the appeal was always an inappropriate vehicle to raise the question of whether the judgment for $1 million should be quashed. Quashing that judgment was the only substantive relief sought in the appeal. The application for leave to appeal, and the appeal itself, should each be dismissed.
In principle Mr Melhem should pay the costs of the Judicial Review Summons, and the Katters should pay the costs of the application for leave to appeal and the appeal. However, it would be seriously inconvenient, and unnecessarily expensive, to have separate assessments of the costs of the summons, and of the application for leave to appeal and the appeal, and to then set those two amounts off. The vast bulk of the submissions was directed to judicial review questions. The appropriate order is that the Katters should receive 90 per cent of their combined costs of the three proceedings.

Orders

I propose the following orders:
Extend the time for bringing the summons filed in proceedings 2014/364845 to and including 11 December 2014, on terms that clause 4 of that summons not be relied on.
Quash the orders given on 22 July 2013 in proceedings 2011/144484 in the District Court of New South Wales.
Prohibit the District Court of New South Wales from taking any further steps in proceedings 2011/144484 on the basis that the orders given on 22 July 2013 in those proceedings are valid.
Dismiss the summons seeking leave to appeal filed in this court in proceedings 2015/89863.
Dismiss the appeal filed in this court in proceedings 2015/89841.
Order Robert George Melham to pay 90 per cent of the costs of Joseph Katter and Susan Vera Katter in proceedings 2014/364845, 2015/89863 and 2015/89841 in this Court.

Endnotes

Melhem v Katter [2013] NSWDC 203.
Joseph Katter & Susan Vera Katter v Robert George Melhem (No 2) [2014] FCA 1176; 319 ALR 646.
[29] above.
See [80] below.
Kirkpatrick v Kotis [2004] NSWSC 1265; 62 NSWLR 567 at [38]-[45]; Athens v Randwick City Council [2005] NSWCA 317; 64 NSWLR 58 at [28]-[29], [36]-[37] (Hodgson JA), [129]-[140] (Santow JA), [141] (Tobias JA).
[1971] HCA 49; 125 CLR 529 at 53.
[2000] HCA 17; 201 CLR 226.
DJL v The Central Authority at [36].
Gamser v The Nominal Defendant [1977] HCA 7; 136 CLR 145 at 146 (Barwick CJ), 147 (Gibbs J), 150-151 (Murphy J), 153-154 (Aickin J); Smith v New South Wales Bar Association [1992] HCA 36; 176 CLR 256 at 265; DJL v The Central Authority at [38]; Burrell v R [2008] HCA 34; 238 CLR 218 at [18]-[21]; Rockcote Enterprises Pty Ltd v FS Architects Pty Ltd (No 2) [2008] NSWCA 205 at [8]; AT v Commissioner of Police, NSW (No 2) [2010] NSWCA 337; Achurch v The Queen [2014] HCA 10; 88 ALJR 490 at [17]; Goater v Commonwealth Bank of Australia [2014] NSWCA 382 at [17]; Donnelly v Australia and New Zealand Banking Group Ltd (No 2) [2015] NSWCA 41 at [5].
(4th ed 2009, LexisNexis) at [5.03].
[1997] HCA 14; 190 CLR 207 at 215.
De L v Director-General, New South Wales Department of Community Services at 216.
DJL v The Central Authority at [44].
Thoday v Thoday [1964] P 181 at 197-198.
Blair v Curran (1939) 62 CLR 464 at 532 (Dixon J); Chamberlain v Deputy Commissioner of Taxation [1988] HCA 21; 164 CLR 502 at 510-511 (Deane J, Toohey and Gaudron JJ).
Spencer Bower and Handley, Res Judicata (4th ed 2009, LexisNexis) at [19.01], identical to words in earlier editions cited in The Indian Grace [1993] AC 410 at 417, and Zukowski v Royal Insurance Co of Canada (2000) 189 DLR (4th) 476 at 482.
Chamberlain v Deputy Commissioner of Taxation at 504-505 (Brennan J).
Burrell v R at [20].
"36.12 Registrar to furnish copies of judgments and other documents (1) Unless the court orders otherwise, on payment of the fee prescribed by the regulations under the Civil Procedure Act 2005, the registrar must: (a) furnish a sealed copy of any judgment or order that has been entered in the proceedings to any person who applies for such a copy, or (b) seal a document provided by the person that, in the opinion of the registrar, accurately sets out the terms of the judgment or order."
Which applies to proceedings in all Australian courts by reason of s 5 of that Act.
Thwaite v Thwaite [1981] 2 All ER 789 at 795; Abigroup Limited v Abignano [1992] FCA 871; 39 FCR 74 at 88.
[2007] NSWCA 104; 70 NSWLR 201.
(1990) 20 NSWLR 206.
at 210.
Grave v Blazevic Holdings Pty Limited [2012] NSWCA 329 at [3]-[5].
Ibid.
Adamson v Ede [2009] NSWCA 379 at [53]-[63].
Kirk v Industrial Court of New South Wales [2010] HCA 1; 239 CLR 531 at [60]; Reznitsky v Director of Public Prosecutions (NSW) [2014] NSWCA 79; Wang v Farkas [2014] NSWCA 29; 85 NSWLR 390 at [41] (Basten JA); Mulder v Director of Public Prosecutions (Cth) [2015] NSWCA 92 at [7], [35] (Gleeson JA).
Riverina Wines Pty Ltd v Registrar of the Workers Compensation Commission of NSW [2007] NSWCA 149 at [64]-[65]; Hayek v Trujillo [2007] NSWCA 139 at [73]; Doyle v Hall Chadwick [2007] NSWCA 159 at [41], and the only somewhat analogous principles applied concerning curing a breach of natural justice on appeal in administrative tribunals in Calvin v Carr [1979] UKPC 1; [1980] AC 574 at 592-593; [1979] 1 NSWLR 1 at 10-12; Minister for Local Government v South Sydney City Council [2002] NSWCA 288 ; 55 NSWLR 381 at [19] ff; Hill v Green [1999] NSWCA 477; 48 NSWLR 161 at [54]-55], [155] ff.
Twist v Randwick City Council [1976] HCA 18; 136 CLR 106 at 111, 116; Hill v Green at [158]-[159].
Stead v State Government Insurance Commission [1986] HCA 54; 161 CLR 141 at 145; Re Refugee Tribunal; ex parte Aala [2000) HCA 57; 204 CLR 82 at [4] (Gleeson CJ), [80] (Gaudron and Gummow JJ), [102], [104], [122] (McHugh J) (dissenting as to the result but not as to the test) [131]-[132] (Kirby J), [211] (Callinan J).
Hill v Green at [150] and cases there cited.
Bainton v Rajski (1992) 29 NSWLR 539 at 544 (Mahoney JA), 548 (Cripps JA); Bakarich v Commonwealth Bank of Australia [2010] NSWCA 43 at [12]-[23].
Day v Harness Racing New South Wales [2014] NSWCA 423 at [119].
Supreme Court Act 1970 (NSW), s 53.
Richards v Cornford [2010] NSWCA 99; 76 NSWLR 572.
PT Garuda Indonesia Ltd v Australian Competition and Consumer Commission [2012] HCA 33; 247 CLR 240 at [16].
Farquharson v Morgan [1894] 1 QB 552; Secretary of State for Defence v Warn [1970] AC 394; Essex Incorporated Congregational Church Union v Essex County Council [1963] AC 808; Honnery v Smith (1957) 57 SR (NSW) 298 at 599-600.
Woodward Pty Ltd v Kelleher [1989] NSWCA 82; Eyres v Butt [1986] 2 Qd R 243.
In [60] of his written submissions.
at [81]-[89].
[2015] NSWCA 130.
[1963] HCA 47; 114 CLR 582.
[1998] HCA 49; 194 CLR 247 at 267.
[2008] HCA 26; 236 CLR 1 at [12].
Rebenta Pty Ltd v Wise [2009] NSWCA 212 at [9]-[12] (Basten JA, Ipp JA and Sackville AJA agreeing); Shimokawa v Lewis [2009] NSWCA 266 at [194]-[196]; Nominal Defendant v Saleh [2011] NSWCA 16 at [316]; Environment Protection Authority v Condon as Liquidator for Orchard Holdings (NSW) Pty Ltd (In Liq) [2014] NSWCA 149; 86 NSWLR 499 at [69]-[70].
[2007] NSWCA 369; 71 NSWLR 61 at [55].
Gould v Vaggelas [1984] HCA 68; 157 CLR 215 at 275.
[2011] NSWCA 85 at [38].
Sophron v The Nominal Defendant [1957] HCA 27; 96 CLR 469 at 474, 475; Martin v The Nominal Defendant [1954] 74 WN (NSW] 121; Jackamarra v Krakouer [1998] HCA 27; 195 CLR 516 at [66], [68] (Kirby J).
Stollznow v Calvert [1980] 2 NSWLR 749 at 752-753.
[41] above.
Civil Procedure Act 2005 (NSW), s 86.
[1939] HCA 33; 62 CLR 287.
Yirrell v Yirrell at 297, 301 (Latham CJ), 304 (Rich J), 309 (Starke J), 313 (McTiernan J).
Re Refugee Review Tribunal; ex parte Aala at 105-109 (Gaudron and Gummow JJ), 136-137 (Kirby J) and 144 (Hayne J); Glennan v Commissioner of Taxation [2003] HCA 31; 198 ALR 250 at [17].
Dranichnikov v Minister for Immigration and Multicultural Affairs (2003) 197 ALR 389 at [33] (Gummow and Callinan JJ).
[2004] NSWCA 200; 60 NSWLR 558 at [134]-[135].
Ainsworth v Criminal Justice Commission [1992] HCA 10; 175 CLR 564 at 582.
[43] above.
Written submissions at [67]
[1989] NSWCA 82. 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: 29 July 2015

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