Rafidi v Commonwealth Bank of Australia Ltd - [2017] NSWCA 96 - NSWCA 2017 case summary — Zoe

Rafidi v Commonwealth Bank of Australia Ltd - [2017] NSWCA 96 - NSWCA 2017 case summary — Zoe

Judgment

BASTEN JA: In 2011 the Commonwealth Bank of Australia Ltd ("the Bank") commenced proceedings against Mr Iyad Rafidi in the Equity Division, seeking judgment on a guarantee of a loan made by the Bank to a company associated with Mr Rafidi. There followed a cross-claim brought by the company and Mr Rafidi against the Bank.
These proceedings came on for trial before Ball J, commencing on 11 October 2016. On 18 October, in the course of his cross-examination, Mr Rafidi was excused from attendance on the basis that he was feeling unwell. The trial did not recommence. Rather, on 2 November 2016 the solicitor acting for Mr Rafidi and the company indicated that Mr Rafidi would consent to judgment in favour of the Bank in the principal proceedings and that both he and the company would accept the dismissal of their cross-claims.
On 4 November 2016, orders were made by consent giving judgment for the Bank in an amount in excess of $9.3 million in the principal proceedings and dismissing the cross-claims. The Bank also obtained an order for its costs of the proceedings, to be assessed on an indemnity basis.
On 17 November 2016 the applicant filed a notice of motion seeking to set aside the judgment of 4 November. The motion was listed before Ball J on 14 December 2016, when leave was granted to file an amended notice of motion. Relevantly for present purposes, order 4 in the amended notice of motion was in the following terms: "4. An order pursuant to Part 36 Rule 1 and 3A, that the judgement of the Court entered by consent and as part of the Court record on 4 November 2016 be set aside, and that the trial of these proceedings continue on a date of convenience to the Court".
The orders made on that day (in a form which leaves something to be desired) included the following: "4. HH orders that the defendants [sic] application to set aside judgment be dismissed with costs." That order was entered on that day.
The judge did not give reasons at the time, but indicated that he would provide reasons if required to do so. On 7 March 2017, the solicitors for the Bank advised the judge's associate that Mr Rafidi had sought leave to appeal against his decision and inquired as to whether he intended to publish reasons. The certified copy of the reasons indicates they were delivered on 14 March 2017; they were uploaded to Caselaw on the same day. [1] The judge accepted that he had power to set aside the consent judgment, pursuant to Uniform Civil Procedure Rules 2005 (NSW), r 36.16, where a notice of motion seeking such an order had been filed within 14 days after the judgment or order was entered. He accepted that Mr Rafidi's notice of motion was filed within the period of 14 days. However, he declined to exercise the power, stating: "[9] In the present case, the only reason advanced by Mr Rafidi for why the judgment should have been set aside was to give him an opportunity to clear his name in light of the application for the court to refer the papers to the appropriate authorities. I concluded that that was not a sufficient basis on which to set aside the judgment. I did so for several reasons. [10] First, there was no evidence from Mr Rafidi that he had not appreciated that the papers could be referred, notwithstanding that he had consented to judgment or that that would have made a difference to his decision to consent to judgment. Indeed, at the time judgment was obtained, Mr Rafidi was legally represented and was on notice through his legal representative that an application would be made for the referral of the papers following entry of judgment."
There is an application before this Court for leave to appeal from that judgment, refusing to reopen the consent orders.
The process adopted by the applicant has been confused, even though he was legally represented at the relevant times. First, a notice of appeal was filed, on the assumption that he was entitled to appeal as of right. For the reasons to be noted shortly, that assumption was fallacious. When that was suggested to him by the Bank, he did not seek to file a summons seeking leave to appeal, being the proper procedure, but sought, by notice of motion dated 2 February 2017 in his incompetent appeal, leave "to file a notice of appeal amending, to the extent necessary, so as to claim an order seeking leave to appeal". It would be clear that, if leave were required, the proceedings commenced by the notice of appeal were incompetent and, no notice of intention to appeal having been served, the summons seeking leave was out of time. However, the Registrar granted an extension of time and the matter may therefore be dealt with on the merits.
It cannot be in doubt that the applicant requires leave. First, s 101(2)(c) of the Supreme Court Act 1970 (NSW) imposes a requirement for leave to appeal from "a judgment given or order made in proceedings in the Court with the consent of the parties …". This was such a case.
To the extent that the appeal was sought to be brought, not from the consent orders, but from the refusal to reopen the consent orders, leave was required on two bases. First, where leave is required from a judgment or order, the unsuccessful party cannot obtain a stronger entitlement to appeal by seeking to reopen the order and failing to do so. Further, the application to reopen the judgment was itself an interlocutory judgment and therefore required leave under s 101(2)(e). So much has been accepted at least since the judgment of the High Court in Carr v Finance Corporation of Australia Ltd [No 1]. [2] In that case, which involved an application to set aside a default judgment, Gibbs CJ stated: [3] "The test now applied in this Court for determining whether a judgment is final or not is whether the judgment or order appealed from, as made, finally determines the rights of the parties…. An order refusing to set aside a default judgment does not as a matter of law finally dispose of the rights of the parties, for it is open to the disappointed defendant to apply again to have the judgment set aside: …."
One might add that the rights of the parties were relevantly decided by the judgment entered by consent (or, as in Carr, by default); those rights were not affected by an unsuccessful application to reopen the judgment or orders.
The principles on which this Court will grant leave to appeal include, but are not limited to, the following propositions. First, the applicant must establish an error, whether of fact or law, which is more than reasonably arguable. Further, the issue raised should give rise to an issue of principle, or to a demonstrated need for the intervention of this Court to avoid a substantial injustice to one party. [4]
None of these criteria is satisfied in the present case. Further, because the purpose of the application is not to pursue a different outcome in relation to the litigation, but rather to avoid some misapprehended collateral consequence, there is much to be said for the view that the application for leave was an abuse of process.
The collateral purpose identified by Ball J was that by pursuing the litigation the applicant would avoid a referral of the papers to law enforcement authorities. However, as the judge noted, he had decided not to refer the papers. [5]
In this Court, the applicant submitted that the trial judge should have found that the consent was vitiated by the conduct of the Bank in seeking to have the papers referred without that application being foreshadowed before the applicant gave instructions to consent to judgment, or indeed had the opportunity to read the documents. This is not consistent with what happened, as recorded in the transcript of 4 November 2016. But in any event, the point sought to be raised is not different in substance from that raised on the reopening application. No error has been identified in the reasoning of the trial judge in rejecting the reopening application.
A decision "to refer papers" to some regulatory or policing agency (or on occasion the Australian Taxation Office) is, as the judge noted "an independent administrative decision by the court" and not part of the judicial process. [6] That is an apt description of the process and one which casts doubt upon the propriety of the Bank's application. There may be circumstances in which, for example, the parties to litigation appear to have been involved in a scheme designed to defraud the revenue. It is likely to be in the interests of neither for the attention of the Australian Taxation Office to be drawn to the circumstances revealed in the litigation. In such cases it may be appropriate for the Court to arrange for the Registrar to send a copy of the judgment to the ATO, or take any other more formal step in that regard; that is not a matter which arises in the present case. In this case, the Bank, through senior counsel, made an application in open court, supported by written submissions, that the Court should "refer certain of the papers in these proceedings (contained in the attached bundle, together with the entire transcript and the telephone records - which are not in the attached bundle - referred to in paragraph 25 below) to the Attorney-General for consideration as to whether charges should be laid …". The allegations were then particularised.
In the course of the submissions before the trial judge reference was made to a judgment of Brereton J in Paycorp Payment Solutions Pty Ltd v Chai (No 3), [7] where a principle was set out as to the circumstances in which such a referral was appropriate. It has also been thought necessary in such cases to give notice to the affected parties so that they may be heard in opposition to such a "referral".
No doubt there may be circumstances in which documents have been obtained by discovery and a party may be unable to use them for purposes beyond the purposes for which they were obtained, merely on the basis that they appear to disclose criminal activity. In such a case, the party may wish to be released from the general undertaking relating to discovered documents. Indeed, such an application was made and granted in the present case on 14 December 2016. Whether the Bank had an acceptable justification for seeking such extrajudicial orders from the Court, in circumstances where the Bank itself was able to draw the matters to the attention of prosecuting authorities, is unclear.
None of this affects the outcome in the present case, but rather demonstrates the futility of the present application. The best that can be said for the applicant is that, although his response was misconceived, it was inspired by the unnecessary and arguably inappropriate application made by the Bank.
The Court should make the following orders: 1. Dismiss the notice of motion filed in the appeal and the appeal as incompetent. 2. Dismiss the summons seeking leave to appeal. 3. Order that Iyad Rafidi pay the costs of the Commonwealth Bank of Australia Ltd in both proceedings in this Court.
EMMETT AJA: I agree with the orders proposed by the presiding judge. I also agree with the reasons he has given.