Nauru Phosphate Royalties Trust (Receivers and Managers appointed) & Business Australia Capital Mortgage Pty Ltd (in liquidation) & Ors; Andrew Hugh Jenner Wily in his capacity as liquidator of Business Australia Capital Finance Pty Ltd & Ors v Nauru Phosphate Royalties Trust

Supreme Court of NSW|2008-10-15|Before: Einstein J

CITATION : Nauru Phosphate Royalties Trust (Receivers and Managers appointed) & Business Australia Capital Mortgage Pty Ltd (in liquidation) & Ors; Andrew Hugh Jenner Wily in his capacity as liquidator of Business Australia Capital Finance Pty Ltd & Ors v Nauru Phosphate Royalties Trust (Receivers and Managers appointed) & Ors [2008] NSWSC 1088

JURISDICTION : Equity Division Commercial List

LEGISLATION CITED : Uniform Civil Procedure Rules 2005 (NSW)

Adam & Harvey Ltd v International Maritime Supplies Co Ltd [1967] 1 WLR 445 Arnett v Holloway [1960] VR 22 Commonwealth v McCormack (1984) 155 CLR 273 Elyard Corporation Pty Ltd v DDB Needham Sydney Pty Ltd (1995) 61 FCR 385 CASES CITED : Ex parte Herman; Re Mathieson (No 2) (1960) 78 WN (NSW) 6 Gould v Vaggelas (1985) 157 CLR 215 L Shaddock & Associates Pty Ltd v Parramatta City Council (No 2) (1982) 151 CLR 590 Milson v Carter [1893] AC 638 Tak Ming Co v Yee Sang Metal Suppliers Company [1973] 1 WLR 300 Whitlock v Brew (1968) 118 CLR 445

Nauru Phosphate Royalties Trust (Receivers and Managers appointed (First Plaintiff 50096/07; First Defendant 50135/07) Republic of Nauru Finance Corporation (Second Plaintiff 50096/07; Randwick Nominees Pty Ltd (Receivers and Managers appointed) (Third Plaintiff 50096/07) Central Pacific (Downtowner) Pty Ltd (Receivers and Managers appointed) (Fourth Plaintiff 50096/07) Spencer Investments Pty Ltd (Receivers and Managers appointed) (Fifth Plaintiff 50096/07) Ronsi Business Pty Ltd (Receivers and Managers appointed) (Sixth Plaintiff 50096/07) PARTIES : Ronsi Holdings Pty Ltd (Receivers and Managers appointed) (Seventh Plaintiff 50096/07) Business Australia Capital Mortgage Pty Ltd (in liquidation) (First Defendant 50096/07) Business Australia Capital Finance Pty Ltd (in liquidation) (Receivers and Managers appointed) (Second Defendant 50096/07) HLBC Pty Ltd (Third Defendant 50096/07; Third Defendant 50135/07) Bondedge Pty Ltd (in liquidation) (formerly Business Australia Corporate Finance Pty Ltd) (Fourth Defendant 50096/07) Andrew Hugh Jenner Wily (Fifth Defendant 50096/07; (in his capacity as liquidator of Business Australia Capital Finance Pty Ltd) First Plaintiff 50135/07; (in his capacity as liquidator of Business Australia Capital Mortgage Pty Ltd) Second Plaintiff 50135/07; (in his capacity as liquidator of Bondedge Pty Ltd ) Third Plaintiff 50135/07) Leon Nikolaidis (Sixth Defendant 50096/07) James Miller & Parties trading as Ernst & Young and Ernst & Young Transaction Advisory Services Ltd (Second Defendant 50135/07)

Mr Forster SC (Plaintiffs 50096/07; Defendants 50135/07) COUNSEL : Mr TS Hale SC, Mr DJ Barnett (First, Second, Fourth and Fifth Defendants 50096/07; Plaintiffs 50135/07) Mr Nikolaidis (Sixth Defendant)

Henry Davis York (Plaintiffs 50096/07; Defendants 50135/07) SOLICITORS : HWLS Ebsworths (First, Second, Fourth and Fifth Defendants) MD Nikolaidis & Co (Sixth Defendant)

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION COMMERCIAL LIST

50096/07 Nauru Phosphate Royalties Trust (Receivers And Managers appointed) & Ors v Business Australia Capital Mortgage Pty Ltd (in liquidation) & Ors

50135/07 Andrew Hugh Jenner Wily in his capacity as liquidator of Business Australia Capital Finance Pty Ltd & Ors V Nauru Phosphate Royalties Trust (Receivers And Managers JUDGMENT The suggested liability of Mr Nikolaidis 1 The most recent judgment given in these proceedings [2008] NSWSC 1071 is the last of a series of judgments dealing with the many issues which separated the parties. A simple recitation of the identification of the parties serves to make the point that these were complex proceedings. The parties were identified in the cover sheet to the latest judgment as follows: Nauru Phosphate Royalties Trust (Receivers and Managers appointed (First Plaintiff 50096/07; First Defendant 50135/07) Republic of Nauru Finance Corporation (Second Plaintiff 50096/07; Randwick Nominees Pty Ltd (Receivers and Managers appointed) (Third Plaintiff 50096/07) Central Pacific (Downtowner) Pty Ltd (Receivers and Managers appointed) (Fourth Plaintiff 50096/07) Spencer Investments Pty Ltd (Receivers and Managers appointed) (Fifth Plaintiff 50096/07) Ronsi Business Pty Ltd (Receivers and Managers appointed) (Sixth Plaintiff 50096/07) Ronsi Holdings Pty Ltd (Receivers and Managers appointed) (Seventh Plaintiff 50096/07) Business Australia Capital Mortgage Pty Ltd (in liquidation) (First Defendant 50096/07) Business Australia Capital Finance Pty Ltd (in liquidation) (Receivers and Managers appointed) (Second Defendant 50096/07) HLBC Pty Ltd (Third Defendant 50096/07; Third Defendant 50135/07) Bondedge Pty Ltd (in liquidation) (formerly Business Australia Corporate Finance Pty Ltd) (Fourth Defendant 50096/07) Andrew Hugh Jenner Wily (Fifth Defendant 50096/07; (in his capacity as liquidator of Business Australia Capital Finance Pty Ltd) First Plaintiff 50135/07; (in his capacity as liquidator of Business Australia Capital Mortgage Pty Ltd) Second Plaintiff 50135/07; (in his capacity as liquidator of Bondedge Pty Ltd ) Third Plaintiff 50135/07) Leon Nikolaidis (Sixth Defendant 50096/07) James Miller & Parties trading as Ernst & Young and Ernst & Young Transaction Advisory Services Ltd (Second Defendant 50135/07) 2 In the above described recent judgment the Court was called upon to determine issues concerning the costs of the proceedings. Reasons for the decision were given. The costs orders as notified to the parties and intended to be made in the NRPT proceeding, but as it turns out not yet entered, were to have been as follows:

Except as provided for by order 2, the defendants pay the plaintiffs' costs on a party-party basis.

The defendants pay the plaintiffs' costs thrown away by reason of their change of Counsel, such costs to be assessed on the indemnity basis.

The defendants are to pay interest on the amount of costs paid by the plaintiffs from the dates of payment. [The reference to the defendants included Mr Nikolaidis] 3 Following the handing down of the reasons Henry Davis York notified my associate of what was described in the letter as 'an apparent administrative error'. 4 There were a number of drafts of the costs judgment and I am the first to concede that a mistake was made by me in paragraphs 19 and 20 when dealing with whether, and if so to what extent, Mr Nikolaidis was jointly and severally liable for the adverse costs orders to be made in relation to the NRPT proceeding. Indeed so much is quite obvious from the fact that that particular subject was dealt with in paragraph 23 where the reasons given were as follows:

There is no substance in the proposition put by the Nauruan Entities that Mr Nikolaidis should be found jointly and severally liable with all of the other defendants for the whole of the Nauruan Entities cost of the NRPT proceedings. He was joined as a defendant because he, together with Mr Atkins, were signatories on the account into which the reserve sum was paid. He had no interest in the proceedings. There was no issue concerning him raised in the pleadings. There was no defence by him in the NRPT proceedings. He did not seek to actively defend the proceedings and his presence on the record did not add in any way to the cost of the proceedings or the length or complexity of the trial." 5 Clearly the reasons given in paragraphs 19 and 20 should have excluded Mr Nikolaidis from having any liability in the NRPT proceeding. 6 As the orders, although notified to the parties as proposed, have not yet been entered, the Court still has power to revoke or to amend part of the reasons and to propound a new set of orders. 7 In consequence, I revoke so much of paragraphs 19 and 20 of the judgment as indicated that Mr Nikolaidis was liable to pay any of the plaintiff's costs or interest on the plaintiff's costs, of the NRPT proceeding. 8 The orders of the Court previously announced to the parties as appropriate to be made in the NRPT proceeding will not be made. In their place the orders of the Court are as follows: In the Wily Proceeding (50135 of 2007): 9 The Court orders that:

Except as provided for by order 2, Andrew Hugh Jenner Wily in his personal capacity pay the first defendants' costs on a party-party basis.

Andrew Hugh Jenner Wily in his personal capacity pay the first defendants' costs thrown away by reason of their change of Counsel, such costs to be assessed on the indemnity basis.

Andrew Hugh Jenner Wily in his personal capacity is to pay interest on the amount of costs paid by the first defendants from the dates of payment. In the NPRT Proceeding (50096 of 2007): 10 The Court orders that:

Except as provided for by order 2, the defendants otherwise than Mr Leon Nikolaidis, pay the plaintiffs' costs on a party-party basis.

The defendants otherwise than Mr Leon Nikolaidis, pay the plaintiffs' costs thrown away by reason of their change of Counsel, such costs to be assessed on the indemnity basis.

The defendants otherwise than Mr Leon Nikolaidis, are to pay interest on the amount of costs paid by the plaintiffs from the dates of payment. The slip rule 11 Whilst the Court has not required to invoke the slip rule it is perhaps convenient by reason of the context to examine the position had that rule required to be deployed, which position makes clear that the Court would in any event have been able to invoke that rule had this been necessary. 12 The Court has long held an inherent jurisdiction to correct a mistake; the so called 'slip rule.' A Court possesses an inherent power to correct mistakes in its orders arising from inadvertence: Milson v Carter [1893] AC 638 at 640 per Lord Hobhouse, approved in L Shaddock & Associates Pty Ltd v Parramatta City Council (No 2) (1982) 151 CLR 590 at 594. A power to a like effect is to be found in part 36.17 of the Uniform Civil Procedure Rules 2005 which reads:

If there is a clerical mistake, or an error arising from an accidental slip or omission, in a judgment or order, or in a certificate, the court, on the application of any party or of its own motion, may, at any time, correct the mistake or error. 13 As emphasised by Lockhart J in Elyard Corporation Pty Ltd v DDB Needham Sydney Pty Ltd (1995) 61 FCR 385 at 392, the purpose of the application of the slip rule is to avoid injustice. The scope of the Court's ability to correct inadvertent mistakes may be elucidated by consideration of some of the more recent and pertinent authorities.

14 In Ex parte Herman; Re Mathieson (No 2) (1960) 78 WN (NSW) 6 Kinsella J applied the slip rule to amend an ambiguous costs order so as to ensure that costs were not awarded against a respondent magistrate who had made only a submitting appearance, this being his Honour's clear intention. In Arnett v Holloway [1960] VR 22 at 35 the Full Court of the Supreme Court of Victoria rejected the view of the trial judge that the slip rule was confined to cases where the order of the Court failed to express an intention that the Court in fact had, the Full Court holding that the rule also encompassed an order which failed to express an intention the Court would have formed if the parties had not inadvertently failed to draw a matter to its attention. See also Tak Ming Co v Yee Sang Metal Suppliers Company [1973] 1 WLR 300.

15 The English Court of Appeal applied the slip rule in Adam & Harvey Ltd v International Maritime Supplies Co Ltd [1967] 1 WLR 445 where Harman LJ had unintentionally expressed his order so as to provide for an immediate taxation as to costs. Drawing upon his own recollection of the proceedings, Harman LJ held that this was not the intention of the Court and applied the slip rule to pronounce an order which did not provide for the immediate taxation of costs. 16 The slip rule was applied by the High Court in L Shaddock & Associates Pty Ltd v Parramatta City Council (No 2) (1982) 151 CLR 590 where Mason ACJ, Wilson and Deane JJ applied the rule to allow a plaintiff to claim interest on an award of damages for the period between the assessment of the trial judge and the conclusion of an appeal to the High Court. Counsel for the plaintiff had failed to advert to the matter during the appeal and the undisputed evidence was that this was a result of an accidental omission. This distinguished the case from Whitlock v Brew (1968) 118 CLR 445 where it was not suggested that the plaintiff's counsel intended, but forgot, to make an application for an award of interest. 17 The slip rule was again applied by the High Court in Commonwealth v McCormack (1984) 155 CLR 273 where the Court omitted to order the respondent to repay money paid by the appellant under the terms of a judgment from which the appellant had successfully appealed, because the parties had failed to draw that matter to the Court's attention.

18 The High Court once more applied the slip rule in Gould v Vaggelas (1985) 157 CLR 215 to amend the rate at which interest on a judgment was to be paid. Gibbs CJ, Wilson, Brennan and Dawson JJ considered that the fact that the omission was due to an inadvertent mistake and not an afterthought, the fact that the award of interest was fair and just - there being no doubt that if the matter had been raised at the time of hearing the Court would have awarded interest on the revised rate - and the fact that there was no undue delay by the party seeking the application of the slip rule, were factors which supported its application in this case. 19 The Court stated that the power granted to a Court under the slip rule was to be exercised sparingly, in view of the public interest in the finality of litigation. The slip rule is a jurisdiction granted to the Court to prevent injustice caused to parties as a result of the actions of the Court: Elyard Corporation Pty Ltd v DDB Needham Sydney Pty Ltd (supra). Nevertheless, the competing interest in the finality of litigation dictates that the power be used sparingly: Gould v Vaggelas (supra). *************

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