Patterson v Cohen

D'Orte Ekenaike v Victoria Legal Aid (2005) 79 ALJR 755 CASES CITED : Patterson v Cohen [2005] NSWSC 635

Darcy Reginald Francis Patterson t/as H M Symonds & Britten (P) Yehuda Leon Cohen (D1) PARTIES : Sir Moses Montefiore Jewish Home (D2) Minter Ellison Lawyers (D3)

T J Hancock (P) COUNSEL : M K Rollinson (D1) G Lucarelli (D2 & 3)

H M Symonds & Britten (P) SOLICITORS : Carters Solicitors (D1) Minter Ellison (D2 & 3)

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

2656/05 DARCY REGINALD FRANCIS PATTERSON t/as H M SYMONDS & BRITTEN v YEHUDA LEON COHEN & ORS JUDGMENT 1 HIS HONOUR: In this matter I delivered my substantive judgment and also dealt with the question of costs on 30 June 2005: Patterson v Cohen [2005] NSWSC 635 ("my judgment"). The orders that I made for costs included an order that the second and third defendants pay the plaintiff's costs of the proceedings up to and including 29 April 2005, the proceedings having commenced on 28 April 2005. The reasons for my making that order are set out in my judgment at [25] and [26] as follows: "25 Miss Walker, solicitor, who has appeared before me for the second and third defendants, has valiantly endeavoured to deflect any order for costs. However, the evidence shows that the plaintiff had conversations with Miss Sheena Leibowitz of Minter Ellison before the proceedings were commenced and in those conversations Miss Leibowitz made it plain that the second and third defendants regarded themselves as at liberty to act in defiance of the plaintiff's alleged right, which has now been vindicated, and that the money would only be paid into Court 'if you get an injunction'.

26 In those circumstances, there is no doubt that it was necessary for the plaintiff to join the second and third defendants in the proceedings and it is my view that those defendants should also pay the plaintiff's costs until they became, in effect, submitting defendants. The order will therefore be that the second and third defendants pay the plaintiff's costs of these proceedings up to and including 29 April 2005." 2 There is now an application by motion by the second and third defendants to set aside this costs order against them. The orders have not been entered. The general discretion of the Court to set aside judgments and orders under Part 40 r 9(1) of the Supreme Court Rules 1970 ("the SCR") is therefore available. 3 As is apparent from what was said in my judgment, the second and third defendants were legally represented at the time the order now sought to be set aside was made. However, it must be noted that no application was made on their behalf for an adjournment on that occasion. Such an application would have been readily granted, if made on the ground of surprise. But, it is said that the failure to apply for an adjournment also arose out of the situation of surprise. 4 There are two matters which were not then raised which have now been raised: (1) Further evidence has been given of what passed between the second and third defendants on the one hand and the plaintiff on the other before action was brought. (2) Attention has been drawn to the fact that in the originating process there was an order sought by the plaintiff concerning the costs of the second and third defendants, but that was in the form that the first defendant pay the second and third defendants' costs. The same course was followed in the plaintiff's written submissions on costs. It was only during oral submissions, following on something I said, that the plaintiff applied for a costs order in his favour against the second and third defendants. The absence of a prayer did not preclude the making of the order: SCR Part 7 r 1(3), Part 40 r 1. But the absence of the prayer and the absence of any request for such an order in the written submissions did operate to mislead the second and third defendants as to whether the plaintiff's costs would be claimed against them. 5 This application raises a question of balancing the interests of finality of litigation against any injustice done to the second and third defendants. The importance of the principle of finality of litigation has been most recently adumbrated in the High Court in D'Orte Ekenaike v Victoria Legal Aid (2005) 79 ALJR 755 at [34]. The principles as to setting aside judgments under Part 40 r 9 are stated as follows in Ritchie's Supreme Court Procedure at [40.9.1]: "[40.9.1] Variation where judgment has not been entered This rule confers a discretionary power to review, correct or alter any judgment that has not been entered: De L v Director-General of Community Services (No 2) (1997) 190 CLR 207 at 215; 143 ALR 171 at 176; Harvey v Phillips (1956) 95 CLR 235; 30 ALJR 140 (power to set aside a judgment ordered, but not yet entered, pursuant to a compromise between the parties). But the power is subject to the significant limitation imposed by the public interest in maintaining the finality of litigation. That public interest requires great caution in the exercise of the power, especially where the variation sought would have the practical effect of re-opening the proceedings to enable a significant rehearing: Autodesk Inc v Dyason (No 2) (1993) 176 CLR 300; 111 ALR 385; Wentworth v Woollahra Municipal Council (1982) 149 CLR 672; 42 ALR 69; Wentworth v Rogers (No 9) (1987) 8 NSWLR 388; Re Barrell Enterprises [1972] 3 All ER 631; [1973] 1 WLR 19; Watson v Metropolitan (Perth) Passenger Transport Trust [1965] WAR 88; Murray v Figge (1974) 4 ALR 612. Generally speaking, the power will not be exercised to permit a general re-opening of the case: Smith v New South Wales Bar Assn (No 2) (1992) 176 CLR 256; 108 ALR 55; State Rail Authority v Codelfa Construction Pty Ltd (1982) 150 CLR 29; 42 ALR 289; Texas Co (A'asia) Ltd v FCT (1940) 63 CLR 382 at 457; 14 ALJR 32; Re St Nazaire Co (1879) 12 Ch D 88; Harvey v Phillips (1956) 95 CLR 235; 30 ALJR 140; Winrobe Pty Ltd v Sundin's Building Co Pty Ltd (No 2) (CA(NSW), Kirby P, Sheller and Cripps JJA, No 40614/91, 24 December 1992, unreported, BC9201383); Raybos Australia Pty Ltd v Tectran Corp Pty Ltd (No 15) (CA(NSW), Full Court, 8 July 1993, unreported, BC9301787); Government Insurance Office (NSW) v Rosniak (1992) 27 NSWLR 665. Furthermore, the power will not usually be exercised in favour of an applicant who was at fault in failing to raise the matter in issue at an earlier stage: Autodesk , above; Wentworth v Woollahra Municipal Council , above; R v Giri (No 2) BC200103326; [2001] NSWCCA 234 at [17]." 6 The second and third defendants have the advantage that they are not asking for a general reopening of the proceedings. The extra evidence they wish to bring forward took only half an hour on the present application. They contributed to the situation by not raising those matters or asking for an adjournment on the earlier occasion, but explained this by the surprise that is the gravamen of their complaint. They have certainly established, by adverting to documents previously available, but not referred to during the earlier argument, that the plaintiff had made a sudden and radical change of direction, which they had not come prepared to meet. Had they been forewarned of this change of direction, they would not have been represented by a solicitor, but would have brought counsel, as they now have. 7 On the other hand, it is not only the principle of the finality of litigation, but the question of whether there will be any different result if the order be set aside. There is obviously no utility in setting aside an order, if the same order would be made again. The plaintiff argues that the same order would be made. He says that the extra evidence is to the same effect as that which was in anyway. He says that the prejudice arising from surprise has now been cured by the opportunity this motion has given to the second and third defendants to be represented by counsel and to agitate the matter fully. 8 In my view the second and third defendants' difficulty is that the evidence of the earlier conversations now brought forward is to the same effect as what was always in evidence, namely, that it was stated on behalf of the second and third defendants that they held themselves at liberty to pay the money to the first defendant, unless the plaintiff commenced proceedings and obtained relief. They say the problem was the plaintiff's and he, not they, should in any event have incurred the costs, including the filing fee, necessary to regulate the situation. This rather ignores the fact that they had their own problem: they held or controlled a fund to which two persons made conflicting claims. In those circumstances, it was open to them simply to hold the fund and await events or to take interpleader proceedings under Part 56 of the SCR, which is especially designed to deal with situations such as these. The incidence of their costs could have been dealt with in those proceedings. In those circumstances, it is highly unlikely that there would be any different result if the orders were set aside. 9 In the light of all of the above matters, including the principle of the finality of litigation and unlikelihood of any different result, I exercise my discretion to refuse the application to set aside the order. 10 Costs of the motion would normally follow the event. However, subject to any argument that is put, in view of the fact that the plaintiff's sudden change of direction without any prior notice caused the situation which has arisen, I propose to order that there will be no order as to the costs of the motion. 11 The orders I propose are: (1) The second and third defendants' motion filed 30 June 2005 is dismissed. (2) I order that there be no order as to the costs of the motion. (3) Order 1 of the orders made on 30 June 2005 is vacated as of today. …oOo… 12 Mr Rollinson, of counsel for the first defendant, asks that the second and third defendants, who joined his client as a respondent to the motion, should be ordered to pay his client's costs of the motion. It is true, as has been said, that they had to be joined as persons who would potentially be affected if the costs order against the second and third defendants were revoked, as this would leave the first defendant alone ordered to pay the costs of the relevant days. But the motive of the joinder does not affect the fact that the second and third defendants for their own necessary purpose effected that joinder. In addition, they were asking for a costs order against the first defendant, although they withdrew that application on 15 July, the day the motion was argued. But nothing alters the fact the first defendant was brought here at the second and third defendants' instance and had to be present to defend his situation in relation to this motion. The motion has not in any way succeeded against the first defendant, as it has not succeeded at all. There is not the consideration in relation to the first defendant which, in the plaintiff's case, has precluded me from ordering the second and third defendants to pay the costs of the motion. The plaintiff created the situation which principally necessitated this motion. The first defendant, Rabbi Cohen, did nothing to cause the situation or bring the motion about. The motion did not in any way succeed against the first defendant. Whatever other purpose the first defendant may have had in attending, his attendance was necessitated by the service of the motion upon him. In those circumstances, it is appropriate that I order that the second and third defendants pay the first defendant's costs of the motion. 13 I shall reformulate the orders on the motion. The orders that I make are: (1) I order that the second and third defendants' motion filed on 30 June 2005 be dismissed. (2) I order that there be no order as to the costs of the motion as between the plaintiff and the second and third defendants. (3) I order that the second and third defendants pay the first defendant's costs of the motion. (4) I order that order 1 of the orders made on 30 June 2005 be vacated as of today. **********

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