Mohareb v Palmer

Supreme Court of NSW|2018-03-22|Before: Lonergan J, Adamson J

Judgment

On 15 November 2017, Mr Mohareb filed a notice of motion seeking orders setting aside the judgment of Adamson J dated 1 November 2017 (Mohareb v Palmer [2017] NSWSC 1491) and costs. The motion also asks this Court to substitute new orders for those made by the Local Court at Manly on 26 May 2017.
Mr Mohareb appeared for himself on the notice of motion and apparently has not had the benefit of legal advice.
The notice of motion is opposed by Mr Palmer.
The notice of motion is misconceived and I dismiss it for the reasons which follow.

Background

Mr Mohareb was involved in proceedings with Mr Palmer in the Local Court in which he was unsuccessful. Certificates of costs assessments against him were filed in the Local Court on 5 May 2017 leading to a judgment of that Court in the sum of $12,905.26.
Mr Palmer served a bankruptcy notice on 9 May 2017 and foreshadowed bankruptcy proceedings.
Subsequently, Mr Mohareb filed a notice of motion in the Local Court seeking orders to set aside the judgment of 5 May 2017, to set aside the bankruptcy notice issued against him by Mr Palmer, and costs.
Mr Mohareb appeared before Robinson LCM on 26 May 2017. After argument, amongst other things, her Honour declined to make a costs order in favour of Mr Mohareb.

Relevant legislative provisions and rules

Rule 36.16 of the Uniform Civil Procedure Rules provides as follows: 36.16 Further power to set aside or vary judgment or order (1) The court may set aside or vary a judgment or order if notice of motion for the setting aside or variation is filed before entry of the judgment or order. (2) The court may set aside or vary a judgment or order after it has been entered if: (a) it is a default judgment (other than a default judgment given in open court), or (b) it has been given or made in the absence of a party, whether or not the absent party had notice of the relevant hearing or of the application for the judgment or order, or (c) in the case of proceedings for possession of land, it has been given or made in the absence of a person whom the court has ordered to be added as a defendant, whether or not the absent person had notice of the relevant hearing or of the application for the judgment or order. (3) In addition to its powers under subrules (1) and (2), the court may set aside or vary any judgment or order except so far as it: (a) determines any claim for relief, or determines any question (whether of fact or law or both) arising on any claim for relief, or (b) dismisses proceedings, or dismisses proceedings so far as concerns the whole or any part of any claim for relief. (3A) If notice of motion for the setting aside or variation of a judgment or order is filed within 14 days after the judgment or order is entered, the court may determine the matter, and (if appropriate) set aside or vary the judgment or order under subrule (1), as if the judgment or order had not been entered. (3B) Within 14 days after a judgment or order is entered, the court may of its own motion set aside or vary the judgment or order as if the judgment or order had not been entered. (3C) Despite rule 1.12, the court may not extend the time limited by subrule (3A) or (3B). (4) Nothing in this rule affects any other power of the court to set aside or vary a judgment or order.

Evidence relied upon and submissions made by Mr Mohareb in support of the application

Mr Mohareb filed an affidavit expressed to be in support of his application "to vary orders filed on 15 November 2018". The affidavit attached the judgment of Adamson J (Mohareb v Palmer [2017] NSWSC 1491), the transcript of Federal Court proceedings regarding a bankruptcy notice issued by Mr Palmer to Mr Mohareb on 7 May 2017 and judgment dated 15 November 2017 (Palmer v Mohareb [2017] FCA 1760). The judgment concluded that the bankruptcy notice issued by Mr Palmer to Mr Mohareb was invalid.
The orders sought in the notice of motion are framed as follows: 1. An order setting aside Orders (1) of the Judgment of the Supreme Court of 1st November 2017 (Mohareb v Palmer [2017] NSWSC 1491). 2. In substitution thereof orders that: (a) Leave is granted to the Applicant to appeal from the judgment of Manly Local Couirt of 26 May 2017. (b) Appeal allowed. (c) Order 3 of Manly Local Court, to decline costs/disbursements in favour of the Applicant (Defendant in the Court Below) is set aside. (d) In substitution thereof, an order that the Respondent (Plaintiff in the court below) to pay the Applicant's costs/disbursements of the notice of motion in the court below, forthwith and on the indemnity basis - or in the alternative; (e) The Respondent to pay the Applicant's costs/disbursements of the notice of motion in the court below, on the indemnity basis - or in the alternative; (f) The Respondent to pay the Applicant's costs/disbursements of the notice of motion in the court below on the ordinary basis. 3. An order setting aside Order (2) of the Judgment of the Supreme Court of 1st November 2017 (Mohareb v Palmer [2017] NSWSC 1491) 4. In substitution thereof an order that: The Respondent to pay the Applicant's costs/disbursements of the summons seeking leave to appeal in this court 5. That the Respondents pay the Applicant's costs/disbursement of this motion
"Particulars" are provided as follows: 1. On Wednesday 15th November 2017 the Federal Court of Australia dismissed the Bankruptcy Notice which the Applicant had sought to set aside in the Manly Local Court proceedings. 2. The Federal Court of Australia's reason for dismissing the Respondent's Bankruptcy Notice was that it was deemed to have been invalidly issued, given that the Costs Assessor's Certificate of Determination of Costs, which was the basis for issuing the Bankruptcy Notice, was at that time suspended and as such there was, at that point in time, no debt owing for which a Bankruptcy Notice could, lawfully, be issued. 3. In view of the above finding by the Federal Court of Australia, none of the Manly Court orders made on 26th May 2017 were open to the Manly Court Magistrate to make them. 4. The Applicant intends to file and serve an affidavit attaching copies of the Federal Court of Australia's judgment and transcript as soon as they become available.

Mr Mohareb's oral submissions

In oral submissions, Mr Mohareb repeated that he wanted to "set aside the enforcement", not the judgment of Adamson J, and that it was this aspect of Adamson J's decision that was "the problem". He complained that the Magistrate who heard the matter in May 2017 did not understand that he wanted to "set aside the enforcement" (presumably a reference to his request that the Local Court set aside the bankruptcy notice).
The Federal Court, having made its finding that the bankruptcy notice was invalid, means that the Magistrate's decision made in May 2017 should be set aside. That, he reasoned, required me to set aside the decision of Adamson J and to substitute his proposed orders. He argued that this is the way the Local Court should have dealt with this matter in the first place because he was "correct all along" to argue that the bankruptcy notice was invalid, and now it has proven to be so by virtue of the 15 November 2017 judgment (Palmer v Mohareb [2017] FCA 1760).
He argued that based on observations of the Court of Appeal in Mohareb v Kelso (No 2) [2017] NSWCA 173 at [5], the Court should "reopen" the judgment and orders made by Adamson J because there has been "a material change in circumstances relevant to the leave application…" and "a demonstrable misunderstanding by the Court of a material aspect of the applicant's case" noting that he was a litigant in person who had "previously struggled to identify his basis for the grant of leave".
I pointed out to Mr Mohareb that his application was not an application for leave to appeal - which was the situation dealt with in Mohareb v Kelso (No 2) [2017] NSWCA 173 - and if he wished to appeal her Honour's decision, he needed to take that to the Court of Appeal. He responded that he did not wish to follow that course as he was proceeding pursuant to r 36.16. He simply wanted her Honour's orders set aside because of the "material change in circumstances" being the favourable Federal Court decision.
Despite explaining to Mr Mohareb that I had no basis and no jurisdiction to grant the relief he sought in order 2 (that I substitute for the orders of the Manly Local Court the alternative orders in his favour set out in the motion) Mr Mohareb urged that I should do so because he had identified in his affidavit material a material change in circumstances, namely the finding of the Federal Court that the applicant (Mr Palmer) "was not in a position to issue the bankruptcy notice … and it follows that there can be no act of bankruptcy committed to support the petition. Accordingly, the applicant has issued a defective bankruptcy notice founded on a judgment that was not capable of immediate enforcement."

Decision

Whilst it is evident from the decision made by the Federal Magistrates Court that there were issues surrounding the validity of the bankruptcy notice served by Mr Palmer in May 2017, what was before Adamson J was an application for leave to appeal in respect of a determination of the Magistrate in respect of costs. No error is identified in her Honour's judgment - indeed as I understand Mr Mohareb's argument he is not saying there is an error - just a change in circumstances that now activates this Court's power to set aside the orders Mr Mohareb argues should not have been made.
Mr Mohareb's reliance on r 36.16 is misconceived. That rule cannot apply to Adamson J's decision because her orders determined a claim for relief and dismissed the whole of the proceedings. Her orders are therefore excluded by operation of UCPR r 36.16(3). Sub-rule (2) does not apply and is of no assistance to Mr Mohareb.
The framing of the relief sought in the notice of motion and the description of the matters relevant to the Federal Court under the heading "Particulars" both demonstrate that the notice of motion is misconceived.
Mr Mohareb's written submissions seek to re-agitate matters that were raised and determined in the Local Court and reviewed by Adamson J. There is apparent confusion on the part of Mr Mohareb as to this Court's powers in respect of orders made by the Local Court and the operation of UCPR r 36.16.
Mr Mohareb had some success in the Federal Court in having the bankruptcy notice set aside, largely it seems because at the time the bankruptcy notice was issued, one of the essential requirements was not met, namely a judgment debt which was capable of immediate enforcement.
Whilst I understand Mr Mohareb is of the view that this provides a basis for "undoing" all previous order, this circumstance provides no basis at all for setting aside the orders made by Adamson J on 1 November 2017.
The notice of motion is dismissed and I order that the Plaintiff pay the Defendant's costs.

Orders

The orders made were as follows: 1. The Notice of Motion filed by the Plaintiff on 15 November 2017 is dismissed. 2. The Plaintiff is to pay the costs of the Defendant associated with the Notice of Motion.

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: 06 April 2018

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