Nutectime International Pty Ltd v Timentel Pty Ltd

Judgment 1MACFARLAN JA: This is an application by Mr Michael Ehsman for an order varying a costs order made by this Court when it delivered judgment on 5 September 2011 in appeal proceedings in which Mr Ehsman was the third respondent (Nutectime International Pty Ltd v Timentel Pty Ltd [2011] NSWCA 257). The background to those proceedings is sufficiently set out in that judgment and in the first instance judgment of Gzell J from which the appeal was brought (Ehsman v Nutectime International Pty Ltd (No 2) [2009] NSWSC 1096). The order made on 5 September 2011 that is now sought to be varied was that the appeal be allowed "with costs". These words had the effect of requiring each of the respondents, including Mr Ehsman, to pay the appellants' costs of the appeal. The order was entered on 16 November 2011. 2The order was varied earlier this year on the application of another respondent, Mr Francis Frasca, who was the fourth respondent in the appeal proceedings (Nutectime International Pty Ltd v Timentel Pty Ltd [2013] NSWCA 254). The order was varied to add the words "against the first to third respondents" after the words "with costs". This relieved Mr Frasca of an obligation to pay the appellants' costs. The Court varied the order because the inclusion of Mr Frasca in the ambit of the costs order was, so it inferred, an accidental slip or omission. Prior to the appeal hearing Mr Frasca had filed an appearance submitting to such order as the Court of Appeal was disposed to make save as to costs, had not therefore been represented at the hearing and had not been given notice of an intention to award costs against him. Mr Ehsman consented to the order excluding Mr Frasca from liability for costs and flagged his intent to seek a like order, which he did by the Notice of Motion filed on 16 July 2013 which is now before the Court. 3Mr Ehsman applies for a variation of the costs order to exclude him also from its operation, or to provide that he bear less than the whole of the appellants' costs, or that he be only severally, rather than jointly, liable with the first and second respondents for those costs. He contends first that the variation should be made pursuant to the "slip rule" (r 36.17 of the Uniform Civil Procedure Rules ("UCPR")) when read in conjunction with the "overriding purpose" rule in s 56 of the Civil Procedure Act 2005. The former permits variations of orders where, relevantly, there has been an error "arising from an accidental slip or omission". In Flint v Richard Busuttil & Co Pty Ltd [2013] FCAFC 131, the Full Federal Court described the purpose of the slip rule as follows: "[T]o avoid injustice to litigants (Gould v Vaggelas (1985) 157 CLR 215 at 274 - 5) by ensuring that the court's judgment or order reflects its intention at the time the order was made or the judgment was published, or reflects the intention that the court would have had but for the failure that caused the accidental slip or omission: Symes v Commonwealth (1987) 89 FLR 356 at 357" (at [26]). 4Section 56 relevantly requires the Court, whenever it exercises a power under the Act or rules, to give effect to the overriding purpose of facilitating "the just, quick and cheap resolution of the real issues in the proceedings". 5Secondly, Mr Ehsman relies upon the Court's inherent jurisdiction to vary an order which does not reflect the intention of the Court (Newmont Yandal Operations Pty Ltd v J Aron Corporation [2007] NSWCA 195; 70 NSWLR 411 particularly at [77] - [80] per Spigelman CJ). In Newmont, Spigelman CJ emphasised that the Court's inherent jurisdiction is not capable of being confined to defined categories (at [67]) but, subject perhaps to the matters referred to in [15] - [17] below, Mr Ehsman does not suggest that any other aspect of the inherent jurisdiction is presently relevant. 6Even where (unlike what occurred in the present case) application is made prior to the entry of judgment, the jurisdiction to vary orders after judgment is to be exercised "with great caution, having regard to the importance of the public interest in the finality of litigation" (Autodesk Inc v Dyason (No 2) [1993] HCA 6; 176 CLR 300 at 302, citations omitted; Aktas v Westpac Banking Corporation Ltd (No 2) [2010] HCA 47; 241 CLR 570 at [5] - [6]). The position is a fortiori where the application for variation is made, as here, long after an order was made and entered. 7In light of the following circumstances, I do not consider that any inference can be drawn that the Court did not intend its costs order of 5 September 2011 to apply to Mr Ehsman. There is thus no basis for concluding that the order did not reflect the intention of the Court or that the ambit of the order resulted from "an accidental slip or omission". 8Mr Ehsman was named as a respondent to the appeal. Prior to the hearing, a Notice of Contention was filed on his and the first and second respondents' behalf, as was a Notice of Motion seeking leave to adduce fresh evidence, an affidavit in support, and written submissions on the appeal. On the appeal, Mr Ehsman was represented by solicitors, and counsel appeared for him (and the first and second respondents). In these circumstances, Mr Ehsman's submission that he was not an active party to the appeal must be rejected. Furthermore, not only was he active, he was unsuccessful, giving rise to a prima facie entitlement of the appellants to be paid their costs by him (see UCPR r 42.1). He was unsuccessful because the Court found, contrary to his submissions, that a relevant contract existed. This finding led the Court to make a finding, contrary to the submissions of all the active respondents, that there had been no relevant oppression. These findings provided a rational basis for ordering Mr Ehsman to pay the appellants' appeal costs. The fact that the Court awarded only nominal damages for breach of the contract would have been relevant to resistance by Mr Ehsman to a costs order against him but it certainly does not require the conclusion that his inclusion in the costs order must have been accidental. 9Negating any inference that the Court's order that Mr Ehsman pay the appellants' costs of the appeal was accidental was the Court's careful statement of its order concerning costs at first instance (which excluded Mr Ehsman from liability) and its direction that Mr Ehsman (and his wife) have a Suitors' Fund Act certificate for the costs of the appeal. The latter was consistent only with an appreciation by the Court that it was rendering Mr Ehsman liable for the appellants' appeal costs. 10In my view Mr Ehsman's application amounts to no more than an attempt to put now submissions that, if put at the hearing in 2011, may or may not have persuaded the Court to make a different costs order. The submissions concerning the appropriateness of ordering Mr Ehsman to pay the appeal costs are at best arguable. They fall well short of indicating that the Court would almost certainly have made an order such as Mr Ehsman now seeks. In any event, the time for them to be put has long since past. As the plurality observed in D'Orta-Ekenaike v Victoria Legal Aid [2005] HCA 12; 223 CLR 1 at [34], "[a] central and pervading tenet of the judicial system is that controversies, once resolved, are not to be reopened except in a few, narrowly defined, circumstances". Those circumstances do not include ones such as the present where a party seeks, long after an order is made, to put no more than arguable contentions as to why that order should not have been made and where the party was represented at the hearing which led to the order being made and had the opportunity to make relevant submissions if he thought it appropriate. Even if Mr Ehsman had sought variation of the order, pursuant to r 36.16 of the UCPR, within 14 days of it being made, he would probably not have succeeded in having the Court revisit the order (see Aktas v Westpac Banking Corporation at [6] - [7]; Bird v Bird (No 2) [2013] NSWCA 380 at [9]). The passage of over 18 months before he filed his Notice of Motion renders his application entirely without merit. 11Again putting Mr Ehsman's submissions at their highest, the question of whether the 2011 Court would have made an order of the type now sought is a matter upon which a "real difference of opinion" would exist and the making of any such order would involve the exercise of an independent discretion. These features preclude the making of any variation order (Flint v Richard Busuttil at [32] citing Storey & Keers Pty Ltd v Johnstone (1987) 9 NSWLR 446 at 453 per McHugh JA). 12The present case is unlike L Shaddock & Associates Pty Ltd v Parramatta City Council (No 2) [1982] HCA 59; 151 CLR 590 where no order for interest on a damages award was made because counsel inadvertently failed to seek it. An order for interest was subsequently made under the slip rule because it was clear that, if it had been sought, it would have been awarded in the first place. The most that can be said in Mr Ehsman's favour in the present case is that it is possible that the Court would have made a different costs order if the arguments he now seeks to advance had been advanced at the 2011 hearing. 13The present case is also unlike Newmont Yandal v J Aron where it was plain that the Court's earlier order had the unintended consequence of arguably resolving an issue upon which there had not been an adjudication ([81] - [83], [115]). 14It is also different from this Court's decision earlier this year in Nutectime International, dealing with Mr Frasca's application. As Mr Frasca did not appear at the appeal hearing, the costs of the appeal could not rationally have been awarded against him without him being given the opportunity to be heard. The inference could be, and was, readily drawn that it was only through oversight that the earlier court made an order requiring Mr Frasca to pay the appellants' costs of the appeal. 15At the hearing of the present application, Mr Ehsman sought to support his application by an entirely different argument from that, contained in his written submissions, which I have addressed above. He submitted that one or other of the orders he sought in his Notice of Motion should be made because after the order for costs was made and entered in 2011, the appellants engaged in impropriety which should be treated as disentitling them from enforcing the costs order. Counsel for Mr Ehsman went so far as to accept that what he was seeking was that the appellants be punished for engaging in the impropriety. He did not apply to amend the Notice of Motion to seek any further orders such as a stay. 16The impropriety that Mr Ehsman alleged through his counsel was the participation by the appellants in an agreement in mid-2012 between the appellants and the first to third respondents that the appellants would seek to recover costs first from Mr Frasca at a time when they knew, at least through their solicitors, that the Court had made the costs order against Mr Frasca by mistake. 17This argument must be rejected, at least for the reason that the alleged impropriety, assuming it occurred, does not render it unjust for the appellants to enforce the costs order against Mr Ehsman. The allegedly improper agreement only impacted on that costs order by postponing, perhaps indefinitely, the appellants' right to enforce it against the first to third respondents. If that agreement is disregarded, which is the most that Mr Ehsman could achieve by his allegation of impropriety, it would leave the appellants' right to costs from Mr Ehsman unqualified. In these circumstances, what Mr Ehsman is in reality seeking, as his counsel frankly recognised, is that the Court punish the appellants. This is obviously not a purpose for which the Court would make an order rescinding or varying the costs order against Mr Ehsman. 18Other reasons for rejecting the basis upon which Mr Ehsman's case was put orally include that the alleged impropriety was not proved and that the appellants were not given sufficient notice of Mr Ehsman's intent to make the allegation on this application for them to have a reasonable opportunity to respond to it. 19For these reasons, Mr Ehsman's Notice of Motion should be dismissed with costs. 20I add in conclusion my view that the parts of the affidavit of Mr Ehsman sworn on 18 December 2013 to which objection was taken should be rejected on the grounds of form. On the approach I have taken above, the subject with which that affidavit dealt is not in any event relevant. 21MEAGHER JA: I agree with Macfarlan JA. 22GLEESON JA: I agree with Macfarlan JA.