HIS HONOUR: On 1 December 2020, the Court issued orders, which included judgment for the plaintiff. Those orders followed a dispute and discussion as to the most appropriate way to deal with the possibility that, in unrelated proceedings, the plaintiff may be entitled to amounts that, had they been determined prior to the judgment, may have reduced the damages.
While that occurrence was and is unlikely, it was a possibility, as a consequence of which undertakings were required of the plaintiff to pay any amount received or allowed to him in those unrelated proceedings, being amounts on account of goodwill relating to the partnership or amounts on account of work in progress paid or credited to the plaintiff in these proceedings. [1]
Following the liability judgment, [2] issues arose in relation to the terms of the orders to be made by the Court and, in particular, whether costs should be assessed on an indemnity basis as a result of an offer of compromise said to have been made on about 28 February 2018. Those issues were dealt with in the second judgment and indemnity costs were ordered on and from 1 March 2018.
In the course of the second judgment, the Court made an order the effect of which was that pre-judgment interest would be paid in accordance with the rate prescribed in the Supreme Court practice note SC GEN 16.
In the first judgment, the Court commented [3] that pre-judgment interest "shall be calculated … at the same rate as prescribed for post-judgment interest". While it was the intention of the Court that all of the issues associated with the judgment to be entered, other than liability and the calculation of the judgment sum, could be and was to be the subject of the leave reserved, the issue associated with pre-judgment interest and the rate upon which it would be calculated was not the subject of submissions, prior to the issuing of the second judgment and the issuing of the orders.
No substantive orders issued with the first judgment. The "orders" that issued with the first judgment were an indication of the judgment sum to be ordered and a direction that a minute of order be filed reflecting the reasons for judgment.
I make no criticism of either party as to the issue now raised. Each of the parties took the view that, given the comments made by the Court in the first judgment at [437], the minute was required to reflect that pre-judgment interest would be calculated at the same rate as post-judgment interest.
Further to the foregoing, it should be noted that no party made submissions on the rate that interest should be calculated prior to the release of the first judgment.
[3]
Ability to alter orders
It is necessary to refer, initially, to the provisions of the Uniform Civil Procedure Rules 2005 (UCPR) and, in particular, UCPR r 36.11, which deals with the entry of judgment. The second judgment issued orders and those orders were entered on the day that the judgment issued, namely, 1 December 2020.
The foregoing results from the fact that the provisions of UCPR r 36.11(2) provides, unless the Court otherwise orders, that the orders are taken to be entered upon their recording in the Court's computerised court record system. On 1 December 2020, the orders issued in the second judgment were recorded on the computerised record and, therefore, entered.
On 16 December 2020, the plaintiff asked for the matter to be relisted pursuant to the provisions of UCPR r 36.17. The computerised entry of judgments is qualified by the provisions of UCPR r 36.16(3A) which allows the Court, for any reason, to set aside or vary a judgment or order in circumstances where a motion for such variation or setting aside is made within 14 days of the entry onto the computer system and to do so as if the judgment order had not been entered.
Unfortunately for the plaintiff, although, ultimately as will be seen, it makes no difference, the application, which I take to be a motion, was made outside the 14 day period to which UCPR r 36.16(3A) refers. The 14 day period prescribed in that rule may not be extended. [4]
As a consequence, the orders issued on 1 December 2020 were entered and must be treated as entered. It is necessary to deal with a general power to set aside or vary a judgment or order both before and after entry. Included in that requirement is the requirement to deal with the variation of reasons for judgment.
The Supreme Court of New South Wales, being a superior court a record of general jurisdiction, which jurisdiction was declared by the Third Charter of Justice in 1824, has inherent jurisdiction. That inherent jurisdiction was continued by operation of ss 22 and 23 of the Supreme Court Act 1970 (NSW) and is embodied in s 23 of the Supreme Court Act.
The first judgment was essentially a judgment that was, as a matter of substance, reasons for judgment. As earlier stated, orders were not entered as a result of the first judgment. Rather, the first judgment dealt with principles of liability and the basis upon which, once a minute was filed and accepted, orders would issue and be entered.
The judgment of the Court, once entered, forms part of the record of the proceedings and, at common law, and absent statutory expansion, forms the basis for certain writs. [5]
Reasons for judgment do not form part of the record of the Court, although, in relation to courts, or tribunals, other than the Supreme Court, in New South Wales the reasons for judgment form part of the record for the purposes of writs to be issued by the Supreme Court. [6]
As a consequence of their status as part of the record and the basis for judicial review, there are significant restrictions imposed upon the jurisdiction of a Superior Court, or any Court, to alter judgments, once entered.
There are, however, two quite distinct periods each of which determines the principles that apply to the alteration of judgments or orders. Prior to the judgment being entered, the circumstances in which a court will be persuaded to entertain further argument (and possibly further evidence) are extremely limited. Nevertheless, there are such circumstances. [7] The High Court has summarised the principle of the following way:
"What must emerge, in order to enliven the exercise of the jurisdiction, is that the Court has apparently proceeded according to some misapprehension of the facts or the relevant law and that this misapprehension cannot be attributed solely to the neglect or default of the party seeking the rehearing. The purpose of the jurisdiction is not to provide a backdoor method by which unsuccessful litigants can seek to re-argue their cases." [8]
On the other hand, after judgment has been entered, there are three bases upon which a judgment or order may be reopened and amended. They are:
1. The "slip" rule;
2. The power to amend the rule with the intention of the Court has not manifested in the judgment; and
3. The capacity to allow the opening of orders made in chambers. [9]
In DJL, supra, the High Court [10] said:
[34]. The common law courts, as superior courts of record, had "full power to rehear or review a case until judgment [was] drawn up, passed, and entered". That statement, with citation of supporting authority, was made by Starke J in Texas Co (Australasia) Ltd v Federal Commissioner of Taxation. Even after entry of judgment, an error arising from an accidental slip or omission might be corrected at any time by further order in the action and even without an enabling rule of court. An order also might be made in the action for the correction of the records of the court to make certain that they truly represented what the court had pronounced or had intended to pronounce. It also appears that a judgment might be set aside after entry if the parties to the judgment consented, although in deciding whether to make such an order the court would have regard to the interests of third parties. Finally, where the business of the court was so organised that some orders were made in chambers, those orders may have been open to review by motion in the action, even if they were final orders.
[35]. The Court of Chancery had power to re‑open and rehear cases which had been tried before it, even after the decree had been entered. The right of rehearing in the Court of Chancery had involved the exercise of appellate rather than original jurisdiction. Sir George Jessel MR so concluded in In re St Nazaire Co. However, that peculiar state of affairs in Chancery did not continue with respect to the exercise of equitable jurisdiction by the Supreme Court of Judicature established by the Judicature Act 1873 (UK). The structure it provided included the Court of Appeal." (footnotes omitted)
The principles that apply to alteration of the reasons the judgment were the subject of comment by the Victorian Court of Appeal, which said:
"[49]. The extent to which judges of a superior court may properly alter reasons for judgment subsequent to their being given may depend not only on whether the changes are sought to be made before or after judgment has been entered, but also on the nature and extent of the alterations. A litigant is entitled to a decision that is based on reasons that have led the judge to that conclusion. It would obviously impede the proper administration of justice and work unfairness to the parties if the judge could, at a later time, give different reasons for the decision which were crafted after judgment had been pronounced. Thus, the courts limit the rights of a judge to change the reasons, but they do so consistently with the practical requirements of justice. In the case of a superior court of record, judgment is not relevantly finalised until it is entered in the records of the court. Hence, until that occurs, the judge can recall the order and the reasons and make a different order and give different reasons - Smith v. Australia and New Zealand Banking Group Ltd.; Sherpa v. Anderson; Mulvena; Re Harrison's Shares Under a Settlement. But once judgment is perfected the judge cannot, in substance, re-write the given reasons so as to give different reasons for the decision or, in the words of Willmer, L.J. in Bromley v. Bromley (No.2), "put a different complexion on the issue in dispute". In Nakhla v. McCarthy Woodhouse, J. said that in general a judge cannot alter the reasons so as to modify or change the effect of the judgment once it has been perfected. Similarly, in Bank of Nova Scotia v. Province of Nova Scotia, the Nova Scotia Court of Appeal held that once judgment is entered, the substance of the reasons cannot be changed; if correction is needed it can only be made by a higher court.
[50]. An example of a case where it was held that the judicial officer had impermissibly changed the reasons for the decision is Lam v. Beesley. In that case, the magistrate announced the verdict and convicted the defendant for reasons which he gave orally. He then sentenced him and subsequently published "Reasons for Decision" in which he made a finding of fact that was inconsistent with his earlier finding as expressed in his ex tempore reasons. On appeal, Owen, J. held that the two findings could not stand together and that, in the circumstances, the magistrate was not entitled later to formulate reasons which were, in substance, different from those which had been pronounced. His Honour held that, in the circumstances, the conviction could not stand. More recently, in Todorovic v. Moussa leave to appeal from the decision of the District Court was granted by the New South Wales Court of Appeal seemingly for the reason that after delivery of an oral judgment the District Court judge inserted in his corrected judgment an additional sentence, namely, "I do not accept [X] as an accurate witness". It would appear that there was no other reference in the reasons to the acceptability or otherwise of X's evidence which in fact was corroborated by other evidence. Furthermore, it was at least arguable that the addition of a broad statement that was unconnected with the rest of the reasons, namely, that the judge did not accept the witness, went beyond what could be done when revising an oral judgment.
[51]. It seems, however, that ordinarily, even after judgment has been entered, it is permissible to change the given reasons provided that in substance they do not become different reasons as a result of the changes and provided the alterations are made within a period that is not unduly long in all the circumstances. Thus, it is clear enough, for example, that a judge can alter the transcript of the reasons at any time to remove an error brought about by an administrative act which related to the compiling of the reasons - Nakhla; Bromley. In Bar-Mordecai v. Rotman it was held that ex tempore reasons can be altered by a judge provided the substance of them is not changed, nor are the orders which they sustain. There is no reason in principle why a like position should not apply to written judgments that have been published. It is common practice for judges to make changes not only to reasons that have been given ex tempore, but also to written reasons and in the latter case to make changes to them between the time they are published and when they become the subject of an authorised report. For example, in Duke of Buccleuch v. Inland Revenue Commissioners Lord Reid and Lord Guest did not question the correctness of the action of Sankey, J. in deleting in the version that was later published in the Law Reports a paragraph of his reasons in Ellesmere (Earl of) v. Inland Revenue Commissioners, which had been published in the Law Times. In fact, Lord Reid considered that Sankey, J. was wise to have deleted that paragraph, given that his Honour must have had a reservation about its correctness." [11] (citations omitted)
Further, the inherent jurisdiction of the Court was dealt with by the Court of Appeal at length. [12]
As a consequence of the principles outlined above, it was, it seems, open to any of the parties to deal with the issue of the rate at which interest will be calculated prior to the making of orders or the entry of orders and, therefore, prior to the issuing of the second judgment on 1 December 2020. Neither party exercised that opportunity.
Initially, the plaintiff sought to vary the orders made on 1 December 2020 on the basis of the "slip" rule, submitting that the order was a clerical or administrative error. During the course of discussion, it seemed that, in truth, the plaintiff was relying upon the orders not manifesting the intention of the Court as originally adumbrated. For present purposes the difference in reliance matters little.
The defendant opposes the alteration on the basis that it is not a "slip". If the intention of the Court was to give effect to a final view outlined in the first judgment by the issuing of the orders on the second judgment, there was no "slip".
If the statement as to the interest rate was a final view then the orders issued on 1 December 2020 did not manifest the intention of the Court expressed in the first judgment. I apply the principles already described in determining the issue before the Court.
[4]
The original intention of the Court
A check of the Court's notes reveals that the initial statement as to the pre-judgment interest rate being the same as the post-judgment interest rate was intended to reflect the fact that there should be no differential between pre-judgement interest rate and post-judgment interest rate, because each was, on the face of it, covered by the provisions of Clause 5.1(f) of the Put and Call Option Agreement. That provision is in the following terms:
"For as long as any Internal Debt Amounts remain outstanding those debts will, from the Completion Date, carry an annual interest rate calculated at the prevailing bank overdraft interest rate for the bank with which the Business Entity that owes the debt holds the majority of its accounts and with that interest charge being calculated on a daily basis."
As has been remarked on a number of occasions, the Put and Call Option Agreement, and the other documents relating to the Partnership, are not well drafted. Nevertheless, there is a definition of "Internal Debt Amount" and it is defined as "the amount of any debt owed by a Business Entity to any of the parties to this Deed or to any Associate of a party to this Deed".
A Business Entity, as a term, is also defined and is the Partnership. Utilising the ordinary rules of construction, reference to which has been provided in the previous judgments in this matter, it would seem that the amount that is required to be paid under the provisions of Clause 5 of the Put and Call Option Agreement are included in the term "Internal Debt Amount" and the amount that was payable on the 30th day after the six month period, if not paid, was required to be the subject of interest, calculated daily, at the rate payable by the Partnership on its overdraft.
As a consequence, the loss occasioned by the failure to exercise the option, and give notice of its operation, was a loss that included the interest that was required to be paid on the amount, at least between the Completion Date and the date of judgment.
Having clarified the intention of the Court, it is necessary to deal with whether it is appropriate to vary the orders that issued on 1 December 2020.
[5]
The overdraft interest rate
There is no evidence before the Court as to where the majority of the Partnership's accounts were held. There is evidence that there was an overdraft with Westpac and the evidence of banking seems to have involved bank accounts with Westpac. I draw the inference that Westpac is the bank at which the Partnership accounts were held or a majority of them.
I also draw the inference that the overdraft of the Partnership was not secured on the residential premises of either one of the partners. An examination of the publicly available interest rates for overdraft lending that are provided by banks, albeit on average, and published by the Reserve Bank of Australia discloses that, on average, the overdraft lending rate, unsecured, is approximately 4.4% above the cash rate and has, historically, been at that rate or about that rate since at least 2016.
The rate prescribed for pre-judgment interest under the Practice Note [13] is 4% above the cash rate. While there is a minor discrepancy that discrepancy may be as much a result of the line of best fit the Court has utilised in deriving the figure of 4.4% to which earlier reference has been made.
Further, it may be that one of the other overdraft rates was used, being one that related, for example, to larger businesses, or that a rate was fixed by the lending institution on the basis that the amount was secured, given the level of trust funds that no doubt were deposited as a result of the operation of the Partnership.
Whatever be the circumstance, it seems that the difference between the pre-judgment lending rate and the overdraft rate to which Clause 5.1(f) of the Put and Call Option Agreement relates is not such that the Court ought to order a rate other than that prescribed in the Practice Note, notwithstanding the provisions of Clause 5.1(f) of the Put and Call Option Agreement.
[6]
Conclusion
As a consequence of the foregoing, and notwithstanding that the orders issued and entered on 1 December 2020 did not manifest the stated intention of the Court's reasons for judgment in the first judgment, it is inappropriate for the Court to alter the judgment issued and entered on 1 December 2020.
I am grateful to the parties for having raised the issue. The Court makes the following orders:
1. Motion dismissed;
2. No order for costs.
[7]
Endnotes
Paltos v Bartier Perry Pty Ltd (No 2) [2020] NSWSC 1706 ("the second judgment").
Paltos v Bartier Perry Pty Ltd [2020] NSWSC 705 ("the first judgment").
Paltos v Bartier Perry Pty Ltd [2020] NSWSC 705 at [437].
UCPR r 36.16(3C).
Craig v South Australia (1995) 184 CLR 163; [1995] HCA 58.
Supreme Court Act, s 69.
Autodesk Inc v Dyason (No 2) (1993) 176 CLR 300; [1993] HCA 6
Autodesk Inc v Dyason (No 2) supra, at CLR 303.
Bailey v Marinoff (1971) 125 CLR 529; [1971] HCA 49; DJL v Central Authority (2000) 201 CLR 226; [2000] HCA 17; R v Jones; R v Hili (2010) 79 NSWLR 143; [2010] NSWCCA 195.
Per Gleeson CJ, Gaurdon, McHugh, Gummow and Hayne JJ at [34] and following.
Fletcher Construction Australia Ltd v Lines Macfarlane & Marshall Pty Ltd [2001] VSCA 167, per Chernov JA, with whom Charles and Vincent JJA agreed.
Newmont Yandal Operations Pty Ltd v The J Aron Corporation and the Goldman Sachs Group Inc (2007) 70 NSWLR 411; [2007] NSWCA 195.
Practice Note SC GEN 16.
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 January 2021