Rumsley v Vegas Enterprises Pty Ltd

The decision on the urgent application 13 The primary Judge found that Mr Rumsley was required to make disclosure to Deputy District Registrar Stanley of the fact that the validity of the assignment of the costs order from Mr Clifford to himself was under challenge in proceeding WAD 17 of 2015. On that ground alone, the primary Judge stayed the debt appropriation order in proceeding WAD 28 of 2009 pending determination of that issue in proceeding WAD 17 of 2015. The crux of the primary Judge's decision was expressed in the following paragraphs of his reasons: 10 Counsel for Mr Rumsley submits his client was entitled to apply for the debt appropriation orders and to do so ex parte. Nonetheless, he was, in my opinion, required, particularly as an officer of the Court, to make disclosure to Deputy District Registrar Stanley that the very basis upon which he was resting his entitlement to the Appropriation Orders, namely, the assignment, was being impugned in the present proceedings. 11 In those circumstances, I do not consider that Deputy District Registrar Stanley would have been obliged to make the orders, had she known that this was the position. The entire basis of the jurisdiction to make such orders was not developed in argument. However, I think it likely that had she been informed of the pending substantive proceedings, then Deputy District Registrar Stanley would have directed that the other parties to this proceeding be informed. Each had a clear interest. The trustees have an interest in ensuring that funds to which they are entitled to be paid, if any, by Vegas are not paid to Mr Rumsley, who it contends has no entitlement to receive them. Vegas has an interest in knowing to whom, if anyone, it is obliged to pay the costs the subject of the Costs Order. It has filed a submitting appearance in the substantive proceeding to that end. 12 Had those other parties been so informed, I consider it likely that one or other or both would have sought relief from the Court failing Mr Rumsley agreeing not to prosecute his claim for the debt appropriation orders. This may have been in the way of an application under section 15(2) of the Act made to Barker J to suspend the Costs Order, or by some alternative form of relief. 13 I will say no more than that it is surprising that, as an officer of the Court, with full knowledge of the substantive proceeding, Mr Rumsley nonetheless, without notice to the other parties, or to the docket judge, applied for these debt appropriation orders. If the Appropriation Orders are not stayed then it seems likely that Westpac, upon whom the orders have been served, will pay the amount of the judgment debt to Mr Rumsley. This is the basis for the urgency attaching to the interlocutory application. I would regard such an outcome as subversive to the administration of justice. 14 Counsel for Mr Rumsley submits that any such stay order ought to be on terms, either by Vegas providing an undertaking as to damages or the funds being paid to Mr Rumsley, and to be held by him in an interest-bearing account until the disposition of the substantive proceeding. There is no basis in my opinion for requiring the imposition of these or any similar terms. There is no evidence that Vegas is unable to pay the judgment debt. More importantly, I would regard it as being offensive to justice to impose such terms in the circumstances in which the Appropriation Orders were obtained. (Emphasis added) 14 The primary Judge also ordered that Mr Rumsley pay Vegas' costs of the urgent application on an indemnity basis. His Honour dealt with that issue in the following terms: 17 Vegas also submits that Mr Rumsley's refusal to desist from that course when invited to do so by Vegas' solicitors is a further reason for the imposition of an order for costs upon an indemnity basis. Counsel for Mr Rumsley submits that he did not know before the matter came on for hearing this morning that non-disclosure of the substantive proceedings to Deputy District Registrar Stanley was a basis for the application, although he accepts, as he must, that he knew about it at the very outset of the hearing, because counsel for Vegas so informed the Court. 18 His response to that by way of submission was that he did not have sufficient time on his feet to consider that submission. I reject both of those submissions made on behalf of Mr Rumsley. As an experienced litigation solicitor Mr Rumsley ought to have known that he should have made such disclosure, yet despite the matters that I put to his counsel, neither he nor his client seemed to understand that the conduct of Mr Rumsley was inimical to the administration of justice in this Court. I have no hesitation in these circumstances in making an order for costs as sought by Vegas. (Emphasis added) 15 Accordingly, the three orders made by the primary Judge were as follows: 1. The second respondent's interlocutory application dated 27 May 2015 be dealt with on an expedited basis and the time for serving this application be abridged. 2. The orders of Deputy District Registrar Stanley made on 20 May 2015 be stayed pending determination of this proceeding (WAD 17 of 2015) or further order of this Court. 3. The first respondent pay the second respondent's costs of the interlocutory application on an indemnity basis to be taxed if not agreed, and to be paid forthwith. 16 Mr Rumsley's notice of appeal contains seven grounds. However, we consider it is only necessary to address the third ground to dispose of this appeal. That ground is as follows: His Honour erred in law and acted in breach of natural justice by not affording the [Appellant] a fair and proper opportunity to be heard on the substantive order made or the issue of costs in that, the [Appellant]: a. Had no prior notice that non-disclosure to Registrar Stanley in respect of his DAO application would be raised against him at the hearing, as His Honour did; b. Did not have the opportunity to raise with the Court the matters deposed to in his affidavit sworn on 9 June 2015; c. [D]id not have the opportunity to raise with the Court the circumstances that the DOA itself provided for the grounds of objection against enforcement of the DOA available to a debtor-party like the Respondent under section 103 of the CJE Act, after the DOA had been issued and served on the bank, by the latter under sections 51 to 57 of the CJE Act. DOA is an acronym for "debt appropriation order" and CJE Act refers to the Civil Judgments Enforcement Act 2004 (WA) (see above at [1]). 17 Not surprisingly, Mr Rumsley's contentions on this ground focused on Vegas' failure to give him notice that the alleged material non-disclosure was to be the ground upon which the urgent stay order was to be sought. Mr Rumsley emphasised that he and his counsel were taken by surprise as a consequence of this lack of notice and were therefore unable to prepare for, and properly respond to it. As to Vegas' contention that no adjournment was sought from the primary Judge, Mr Rumsley contended that, in the circumstances where the application was being made on an urgent basis, any application for an adjournment was likely to have been refused. 18 In its contentions, Vegas emphasised that Mr Rumsley's counsel was an experienced counsel and, although he was on notice from the outset of the urgent hearing that it intended to rely upon the material non-disclosure ground, he did not seek any adjournment, nor raise any concern that he was unable to obtain instructions from Mr Rumsley on that issue. Instead, Vegas submitted Mr Rumsley's counsel made submissions in which he opposed the substantive application. Vegas also relied on the urgency of the situation and the limited extent of any factual dispute relating to the alleged non-disclosure. In any event, Vegas submitted there was no substantive answer to the primary Judge's ultimate finding that there had been a material non-disclosure to Deputy District Registrar Stanley. 19 At least three things are quite apparent from the transcript of the urgent hearing on 29 May 2015 and the primary Judge's reasons for decision of the same date. First, Vegas gave no notice to Mr Rumsley or his counsel that it intended to found its stay application on the ground that Mr Rumsley had allegedly failed to make disclosure of a material fact to Deputy District Registrar Stanley. Secondly, Mr Rumsley's counsel was plainly taken by surprise to discover that the urgent application was to be based on this ground and he said so openly at the beginning of his submissions to the primary Judge. Thirdly, the primary Judge based both the stay order and the indemnity costs order solely on the alleged material non-disclosure observing in the process that Mr Rumsley's conduct was "subversive to the administration of justice". 20 The obligation imposed on a person to make full and fair disclosure to a court when seeking to have that court make an order ex parte is well-established. It was described recently by Gageler J in Aristocrat Technologies Australia Pty Ltd v Allam (2016) 327 ALR 595; [2016] HCA 3 (Aristocrat Technologies) at [15], in the following terms: It is an elementary principle of our ordinarily adversarial system of justice that full and fair disclosure must be made by any person who seeks an order from a court ex parte, with the result that failure to make such disclosure is ordinarily sufficient to warrant discharge of such order as might be made. The principle is not confined to particular types of interlocutory orders. Its rationale lies in the importance to the administration of justice of the courts and the public being able to have confidence that an order will not be made in the absence of a person whose rights are immediately to be affected by that order unless the court making the order has first been informed by the applicant of all facts known to the applicant which that absent person could be expected to have sought to place before the court had the application for the order been contested. (Footnotes omitted) 21 Failing to make disclosure of a material fact to a court is tantamount to misleading the court. From the perspective of a lawyer, such conduct is contrary to his or her duty of honesty and candour to the court: see Forster v Legal Services Board (2013) 40 VR 587; [2013] VSCA 73 at [162]. It has been described as a "grave impropriety affecting his professional character": see Kennedy v Council of the Incorporated Law Institute of New South Wales (1939) 13 ALJ 563. And it matters not whether the lawyer concerned is at the time pursuing litigation in a personal capacity: see Re Thom; Ex parte Prothonotary (1962) 80 WN (NSW) 968 and New South Wales Bar Association v Cummins (2001) 52 NSWLR 279; [2001] NSWCA 284 at [59] and [63]. 22 The allegation upon which Vegas obtained the stay order from the primary Judge was therefore of the most serious and grave character. Notwithstanding that it was made in litigation which Mr Rumsley was pursuing in his personal capacity, it was an allegation that affected his professional conduct and integrity. We consider it was of such seriousness and gravity that fairness and justice dictated that Mr Rumsley should have been given notice of it by Vegas and given a reasonable opportunity to prepare a response to it. The circumstances of this matter are not markedly dissimilar from those in which Mr Harmer found himself in Ashby v Slipper (2014) 219 FCR 322; [2014] FCAFC 15 albeit that Mr Harmer was acting as solicitor for Mr Ashby and was not pursuing litigation in his personal capacity. Nonetheless, while Mr Harmer was generally on notice of the various allegations against his client and himself that led the primary Judge to make a number of adverse comments about his professional conduct (described by Siopis J at [345]-[357]), the majority still concluded he was entitled to be put on notice in "clear terms" of the conduct to which the adverse comments were to be directed and given a reasonable opportunity to respond to them (see at [141]-[150]). 23 We reject Vegas' contention that Mr Rumsley was given sufficient notice when its counsel made the allegation about material non-disclosure soon after the hearing began before the primary Judge. To raise such a serious allegation orally in circumstances where Vegas' written submissions had put forward an entirely different ground for the application only served to ensure it would come as a complete surprise to Mr Rumsley. By no measure was that fair and proper notice to him of the allegation. 24 We also reject Vegas' contention that Mr Rumsley was represented by experienced counsel and, without seeking an adjournment, he proceeded to make submissions in opposition to the stay application. As we have observed above, it is clear from the transcript of the hearing that Mr Rumsley's counsel was taken by surprise and said so openly at the beginning of his submissions to the primary Judge. In those circumstances, we fail to see how the capacity of counsel to contend such a surprise situation can justify it being created in the first place. To waive the requirement for fair and proper notice of such a serious allegation on that ground would be to compound the injustice occasioned to Mr Rumsley. 25 Vegas' reliance on the urgency of its stay application must also be rejected. In our view, the competing imperatives of urgency and fair and proper notice could have both been accommodated. For example, interim stay orders could have been made and the hearing adjourned for a short, but sufficient period to allow Mr Rumsley to prepare whatever case he wished to make in response to the allegation. 26 Finally, we also reject the contention that there was, in any event, no substantive answer to the primary Judge's finding that there had been a material non-disclosure. Since the question whether there was indeed a material non-disclosure in the circumstances is yet to be determined, it is not appropriate for us to do more than observe that Mr Rumsley has, in both his notice of appeal and in submissions before us, identified a number of matters that may be advanced by him in support of his case on this question. In the circumstances, we consider this is sufficient to establish that Mr Rumsley has suffered the prerequisite "practical injustice": Re Minister for Immigration and Multicultural Affairs; Ex parte Hieu Trung Lam (2003) 214 CLR 1; [2003] HCA 6 at [37]-[38] per Gleeson CJ. In this respect, we would add that, while from Vegas' perspective, the factual component of the allegation may have fallen within a confined ambit, that does not necessarily mean that Mr Rumsley's case in response will be equally so confined. 27 For these reasons, this appeal will be allowed and the stay order (Order 2) made by the primary Judge should be set aside. As to the indemnity costs order (Order 3), since it was equally affected by Vegas' failure to give fair and proper notice of the material non-disclosure allegation, it should also be set aside. In its place, Mr Rumsley has sought an order that Vegas pay his costs of the interlocutory application dated 27 May 2015. However, since those costs could be affected by the outcome of the material non-disclosure issue, insofar as it affects the debt appropriation order in proceeding WAD 28 of 2009, we consider those costs should be costs in the cause of that issue in that proceeding. Finally, we consider Mr Rumsley is entitled to his costs of this appeal. Accordingly, the orders will be: (1) Appeal allowed. (2) Orders 2 and 3 of the orders made on 29 May 2015 in WAD 17 of 2015 be set aside. (3) The costs of the interlocutory application dated 27 May 2015 be costs in the cause of the matter relating to the debt appropriation order dated 20 May 2015 in proceeding WAD 28 of 2009. (4) The respondent pay the costs of this appeal, including the application for leave to appeal. 28 There is one other matter that should be mentioned. During the hearing of this appeal, Vegas applied to amend to include an application for an interim stay pending the further resolution of this matter. That application was rejected. Despite Vegas' urgings, we are not, therefore, prepared to include any such orders as an adjunct to the orders disposing of this appeal. In any event, as Gageler J observed in Aristocrat Technologies, the usual remedy for a non-disclosure (if one occurred) is to discharge the original order, in this case, the debt appropriation order. There are also, as Mr Rumsley points out, provisions of the Civil Judgments Enforcement Act 2004 (WA) that would permit Westpac to challenge that order. No injustice will be occasioned to Vegas by this course because it is not prevented from applying immediately before a single Judge of this Court for such an order, or any other orders, it wishes to seek. I certify that the preceding twenty-eight (28) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justices North and Reeves.

SIOPIS J: 29 I have had the benefit of reading the reasons of North and Reeves JJ. For the reasons given by North and Reeves JJ, I agree that the appeal should be allowed; and I agree that the orders which they propose should be made. 30 The appellant relied upon seven grounds of appeal, but it was necessary to determine only one of the grounds of appeal, namely, ground three, in order to dispose of the appeal. However, in my view, some mention should be made of the first ground of appeal to which the parties devoted some considerable time during the appeal hearing. 31 The first ground of appeal was, in essence, that the primary judge had erred in finding that there was a duty on the appellant to disclose that the judgment debt was under challenge in proceeding WAD 17 of 2015. 32 In support of this ground of appeal, the appellant contended that there was a difference in principle, which affected the incidence of any duty of disclosure, between ex parte applications made prior to final judgment, on the one hand; and applications by a judgment creditor made in the absence of the judgment debtor, for orders in aid of execution upon a final judgment, on the other. 33 The appellant contended that the basis for there being a duty of disclosure in ex parte applications made prior to final judgment was founded on the fundamental premise that all parties to a proceeding would be notified in advance of a proceeding, and have an opportunity to be heard before any orders were made which affected that person's rights. An ex parte proceeding was a departure from that premise, because one of the parties whose rights may be affected by the orders to be made in the ex parte proceeding was not given prior notice of that proceeding. Therefore, because the absent party, ignorant of the proceeding, was not in a position to protect his or her interests, any matters favourable to the absent party were to be disclosed by the party before the court. 34 However, said the appellant, the position in relation to execution upon a judgment after it was entered, was materially different. 35 First, unlike the position before judgment, there was no fundamental premise that a judgment debtor was to be given notice by a judgment creditor of an application for an order in aid of execution on the judgment, and was to have the right to be heard on that application. This, said the appellant, was reflected in s 19(3) of the Civil Judgments Enforcement Act 2004 (WA) which specifically provided for the making of an enforcement order without first notifying the judgment debtor or any person to whom the order is addressed. 36 Secondly, it was a general principle of law that a judgment creditor was entitled to the fruits of a judgment, and to execute thereon, unless that judgment was stayed. It was also a general principle of law that the institution of an appeal challenging the judgment did not in itself operate as a stay. Rather, there was an onus on the judgment debtor to apply for, and to persuade, a court to stay the execution of the judgment under challenge. 37 The appellant also pointed out that in this case the respondent, namely, the judgment debtor, was aware of the appellant's intention to enforce the judgment but had made no attempt to stay the execution of the judgment. 38 The appellant contended that the statutory scheme, together with the general principles of law referred to above, and the fact that the respondent knew of the appellant's intention to enforce the judgment but had not applied for a stay, meant that there was no duty on the appellant, as a judgment creditor, to disclose the challenge to the judgment - it being a judgment in respect of which the judgment debtor had not applied for, or been granted, a stay of execution. 39 In any event, contended the appellant, full disclosure by the appellant as a judgment creditor would have called for the appellant to disclose not only that the judgment was under challenge, but also that the judgment debtor was aware of the appellant's intention to enforce the judgment, but had not applied for, or been granted, a stay. In those circumstances, contended the appellant, the failure to make that disclosure was not a material non-disclosure. This is because, said the appellant, on the application of the general position at law, a judgment creditor was entitled to execute upon a judgment, even if the judgment was under challenge but the judgment debtor had not obtained a stay of execution of the judgment. Accordingly, said the appellant, even if there had been full disclosure, the disclosed facts would not have constituted a reason why an order for execution on the judgment should not be granted. 40 In Aristocrat Technologies Australia Pty Ltd v Allam (2016) 327 ALR 595; [2016] HCA 3 (Aristocrat), Gageler J made orders on the basis that, at least on the facts in that case, the same duty of disclosure as applied in ex parte applications before final judgment also applied to an application by the judgment creditor in that case for orders in aid of execution on the judgment. The facts in this case were different. Also, the application before Gageler J appears, on its face, to have been determined on the papers and at [16], Gageler J observed: No reason has been advanced as to why that principle of candour did not apply in relation to the ex parte order for which Mr Allam and Tonita applied on 17 December 2015 and as to why its vindication should not result in the writ for levy of the property of Aristocrat issued on 23 December 2015 being immediately set aside. (Emphasis added.) 41 As I have outlined above, in this case, however, in contrast to the position in Aristocrat, reasons were advanced by the appellant as to why the duty of disclosure in relation to ex parte applications made before judgment, did not, on the facts in this case, apply to the application made by the appellant, as a judgment creditor, in the absence of the respondent, a judgment debtor, for the debt appropriation order. 42 There is, in my view, much to be said for the arguments advanced by the appellant. However, as I have said, it was not necessary for the Court to determine the first ground of appeal in order to dispose of this appeal. I certify that the preceding fourteen (14) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Siopis.