[1986] HCA 84
Rinehart v Welker (2012) 83 NSWLR 347
Source
Original judgment source is linked above.
Catchwords
[1986] HCA 84
Rinehart v Welker (2012) 83 NSWLR 347
Judgment (3 paragraphs)
[1]
[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]
[2]
Judgment
This is an application for the grant of a stay of orders for the payment of moneys out of court, pending an application for special leave to appeal to the High Court. The proposed appeal is from a decision of this Court refusing leave to appeal from the payment out orders as well as a number of earlier judgments and orders (Sebie v Pham (No 3) [2021] NSWCA 277 (Sebie v Pham (No 3)). Most of those judgments and orders concern proceedings involving Mr Sebie as distinct from the corporate applicant in which he maintains he has no indirect financial or controlling interest.
The question for this Court on such an application is stated by Brennan J in Jennings Construction Ltd v Burgundy Royale Investments Pty Ltd (No 1) (1986) 161 CLR 681; [1986] HCA 84 (see Rinehart v Welker (2012) 83 NSWLR 347; [2012] NSWCA 1 at [48] per Bathurst CJ, Beazley and McColl JJA).
Sebie v Pham [2021] NSWCA 326 | Case summary | Zoe
In Burgundy Royale at 684-685, his Honour said:
A stay to preserve the subject matter of litigation pending an application for special leave to appeal is an extraordinary jurisdiction and exceptional circumstances must be shown before its exercise is warranted. …
In exercising the extraordinary jurisdiction to stay, the following factors are material to the exercise of this Court's discretion. In each case when the Court is satisfied that a stay is required to preserve the subject-matter of the litigation, it is relevant to consider: first, whether there is a substantial prospect that special leave to appeal will be granted; secondly, whether the applicant has failed to take whatever steps are necessary to seek a stay from the court in which the matter is pending; thirdly, whether the grant of a stay will cause loss to the respondent; and fourthly, where the balance of convenience lies.
For the reasons which follow, it is my view that there is not a substantial prospect that special leave to appeal will be granted. The subject matter of this Court's order was a matter of practice and procedure, namely whether leave should be granted to appeal from a series of judgments and orders, the earliest of which were made in May 2017. The application for special leave presses challenges to each of those judgments and orders. With the exception of the payment out orders, this Court was unanimous in its conclusion that leave to appeal should be refused.
Those earlier judgments and orders include the principal judgment against Mr Sebie in the underlying proceedings which led to the costs and other orders now challenged (see especially Sebie v Pham (No 3) at [38]-[41]). With respect to the payment out orders, the majority considered that leave should be refused because they were not persuaded that those orders "resulted in any manifest injustice" to ENA Development Pty Ltd (ENA) (Sebie v Pham (No 3) at [16]). The dissenting judge, Brereton JA, took a different view in relation to all but one of those orders which related to a costs liability of ENA to the Phams (at [64]).
There is a separate basis upon which I would otherwise have rejected the present application. ENA was at an earlier time represented by solicitors who have now withdrawn. In email correspondence with Mr Ronald Jemmott, an alternate director of ENA, in early November 2021 the Registrar drew his attention to the requirements of Uniform Civil Procedure Rules 2005 (NSW) (UCPR), rr 7.1(2), 7.1(3) and 7.2. Those requirements provide that if a company is to commence and carry on proceedings in this Court by a director, that person should swear an affidavit addressing the matters in r 7.2(2), including the making of a statement that the director has authority to exercise the powers of the directors and is aware that he or she may be liable to pay some or all of the costs of the proceedings.
At the commencement of the hearing before me, Mr Mazen Zraika sought leave to appear for the company, he being another alternate director of ENA appointed on 29 October 2021. The third director of ENA is Mr Sebie's 80 plus year old mother. Mr Zraika's application was that UCPR rr 7.1(2), 7.1(3) and 7.2(2) should be dispensed with. No evidence was led as to why ENA was not in a position, financial or otherwise, to retain solicitors to act on its behalf, as it had previously done. Nor did Mr Zraika proffer any affidavit in which he addressed the matters in r 7.2(2).
I am not persuaded that rr 7.1(2), 7.1(3) and 7.2 should be dispensed with, in circumstances where: (1) this Court had earlier expressed doubts as to whether Mr Jemmott, rather than Mr Sebie, was "in substance the controlling mind of ENA" (Sebie v Pham (No 3) at [12]); (2) there is commentary in several of the earlier judgments "adverse to Mr Sebie's credit and suggestive that he has been consistently obstructive and deceptive" (Sebie v Pham (No 3) at [50]); and (3) the Court was earlier satisfied that Mr Jemmott and ENA had endeavoured to evade the requirement of the rules that ENA have a solicitor on the record. Those rules are directed to ensuring that people who speak for a company have authority to do so and may therefore be subjected to the orders of the Court, including as to the costs of the litigation (see Bay Marine Pty Ltd v Clayton Country Properties Pty Ltd (1986) 8 NSWLR 104 at 105-6 (Kirby P)).
It follows that the present application, insofar as it is made on behalf of ENA, has not been carried on in accordance with the rules. That is a sufficient basis for rejecting it, in circumstances where Mr Sebie does not identify any particular interest of his which would justify the application of moneys from the fund in satisfaction of his liabilities to ENA rather than to the respondents, Mr and Mrs Pham.
That said, I will now proceed to address the position on the basis that ENA's application was properly brought. To enable that to occur, I indicated to Mr Zraika that I would hear argument from him in support of ENA's application. As matters turned out, almost all of the argument was made by Mr Sebie.
Mr Sebie and ENA seek to stay orders made by Sackar J on 18 March 2021 and 30 April 2021 for the payment of funds out of court and to Mr and Mrs Pham in satisfaction of various costs orders made in their favour and against Mr Sebie and/or ENA. (There was one costs order made only against ENA for $64,562. That was the only payment out order in respect of which Brereton JA would not have granted leave to appeal.) The fund represents the proceeds of sale of a property owned by Mr Sebie, and ENA claims a security interest in that property for moneys advanced to Mr Sebie. Although Mr Sebie denies that he has any indirect financial interest in ENA, the majority in this Court considered the likelihood to be that he does have such an interest (Sebie v Pham (No 3) at [13], [20]).
In the underlying proceedings, Mr and Mrs Pham sought specific performance of a contract for sale with Mr Sebie. In breach of that contract, Mr Sebie transferred the property to an entity of which his brother was the sole director. That transfer was found by Pembroke J to be fraudulent and was set aside (Pham v Enterprise ICT Pty Ltd [2017] NSWSC 446). The purchase moneys were paid into Court and the property eventually transferred to Mr and Mrs Pham (Pham v Enterprise ICT Pty Ltd (No 2) [2017] NSWSC 583). ENA claims that the property secured repayment of two advances totalling about $1.8 million. That claim is contested by Mr and Mrs Pham, and the cross-claim by which it is made is currently part heard before Sackar J.
The amount currently in the fund is approximately $1.7 million, and the amount which, in the absence of a stay, would be paid to Mr and Mrs Pham is about $200,000. In early 2019, approximately $263,000 was paid out of the fund and to Mr and Mrs Pham in satisfaction of their costs of the principal hearing before Pembroke J. The payment was made following the judgment of Slattery J of 20 February 2019 (Pham v Enterprise ICT Pty Ltd and Others; Pham v Sebie (No 11) [2019] NSWSC 115). In considering whether it should be made, his Honour noted (at [16]):
The other potential claims over the funds in Court have fallen away. The caveats of Enterprise ICT and ENA were removed from the title to the [property] before it was sold. The Cross-Claim that ENA filed has now been stayed for want of provision of security for costs to pursue that Cross-Claim.
On 29 March 2018, Slattery J had dismissed a motion by ENA to file a cross-claim in support of its caveat. That enabled the transfer of the property to proceed. In July 2018, Slattery J permitted a cross-claim to be filed and prosecuted provided security of $100,000 was paid. That security was not provided until 29 March 2019.
By a summons filed in this Court on 12 May 2021, the applicants sought leave to appeal from the following judgments and orders in the underlying proceedings: orders made by Pembroke J on 15 May 2017 (cited above at [12]); orders made by Slattery J on 29 March 2018 (Pham v Enterprise ICT Pty Ltd and Others; Pham v Sebie (No 3) [2018] NSWSC 381) and 20 February 2019 (cited above at [13]); orders made by Sackar J on 19 August 2020 (Andy Vuong Duc Pham v Enterprise ICT Pty Ltd [2020] NSWSC 1089); and the payment out orders made on 18 March 2021 (Pham v Enterprise Pty Ltd; Sebie v Pham [2021] NSWSC 542, which is not available on Caselaw) and 30 April 2021. The payment out orders which are the subject of the present stay application are orders 3 and 4(a) made on 18 March 2021, and orders 1 and 7 made on 30 April 2021. The "immediate history" leading to the making of those orders is summarised by Brereton JA in his earlier judgment in Sebie v Pham [2021] NSWCA 115 at [10]-[19].
Following the filing of an Amended Summons, on Mr Jemmott's application in proceedings before the Registrar on 30 August 2021, he was substituted for ENA as second applicant and the company was named as a respondent to the application.
The Amended Summons was heard on 21 October 2021. The first application was an application by Mr Jemmott, seeking to act on behalf of ENA, to reinstate the company as an applicant in the proceeding. That application was dealt with before the substantive application for leave and was refused unanimously (Sebie v Pham (No 2) [2021] NSWCA 274 (Sebie v Pham (No 2)).
In his judgment addressing that first application, Brereton JA (at [14]) described that "exercise" of removing ENA as an applicant as undertaken for the purpose of:
… [evading] the requirement of the rules that ENA have a solicitor on the record. Most unfortunately, that exercise was participated in and perpetuated by a firm of solicitors who chose to act without proper instructions, where they were in no position to provide any assistance whatsoever to the Court. The fact that the Court has been trifled with is also apparent from the inability of Mr Jemmott to provide timely answers - and in some cases any answer at all - to questions based on correspondence purportedly sent by him to the Court.
The Court then proceeded to hear the application for leave to appeal which, in relation to all of the challenged orders, was well out of time. By majority the Court dismissed the application (Sebie v Pham (No 3)). Their Honours were unanimous in refusing leave to appeal with respect to all of the judgments and orders other than the payment out orders.
With respect to the payment out orders, the majority (Bell P and Basten JA) noted that following the Court's decision in Sebie v Pham (No 2), the position remained that ENA was not an applicant for leave to appeal, and that (Sebie v Pham (No 3) at [16]):
… when the application for leave to appeal to which it was a respondent was heard, its sole director, Mr Jemmott, did not remain on the line or seek to participate in or otherwise be heard on the application.
In addressing the merits of ENA's application, the majority noted that although "counsel for the Phams has conceded that ENA's claim is not unarguable, it undoubtedly faces significant obstacles, both as to the factual circumstances said to give rise to the debt, and legal obstacles to the enforcement of the alleged charge" (Sebie v Pham (No 3) at [8]). Their Honours also noted that ENA remained able to litigate its debt claim against Mr Sebie "without relying, for payment in the event of success, on moneys presently payable to the Phams out of the fund in court" (at [15]).
The majority was not satisfied that the payment out orders made resulted in manifest injustice given that, among other things (at [11], [16]):
… the application for leave to appeal was prosecuted solely by Mr Sebie. It proceeded without ENA appearing to seek leave to appeal. Its status as an unrepresented respondent to the application did not entitle it to the orders sought in the summons for leave to appeal. Accordingly, to grant leave to appeal in the present circumstances would be not merely to allow ENA the benefit which it failed to obtain by its unsuccessful Notice of Motion, but to allow it a benefit in respect of which the motion was apparently unnecessary. This would undermine, if not contradict, the unanimous order of the Court that it not be joined as an applicant.
In considering whether leave to appeal should be granted, Brereton JA (dissenting) described the "final and significant argument" in opposition to the granting of leave as being that, having the only competing claim on the fund, ENA had chosen to be removed as an applicant complaining about the payment out orders (at [58]). Notwithstanding that he joined in the decision to dismiss the motion to reinstate ENA as an applicant because "the Court was being trifled with in the persistent attempts to evade the requirement that ENA act by a solicitor", his Honour considered that, as ENA remained a party to the proceedings, it should have the opportunity to press what he regarded as a "bona fide and arguable claim" in relation to which it would be "seriously prejudiced if the payment out orders were to stand" (at [64]).
The difference between the majority and dissenting views turns on assessments as to the significance given to various relevant factors in determining whether in the interests of justice, considered broadly, leave to appeal should be granted. The subject matter of that determination was one of practice and procedure, in relation to which no obvious question of principle arises.
For that reason, and because the applicants, principally Mr Sebie, seek to pursue as part of their application for special leave challenges which are not shown to have any merit, it is my view that the application for special leave has no substantial prospects of success.
This conclusion makes it unnecessary for me to consider the extent to which ENA might suffer any real prejudice if payments out of the fund are made in accordance with orders 3 and 4(a) of 18 March 2021 and orders 1 and 7 of 30 April 2021. The position appears to be that, after the making of those payments, there will remain a fund of more than $1.5 million which would be available to satisfy any charged liability of Mr Sebie to ENA. The evidence before me does not permit any assessment as to the likelihood that the charged liability will exceed that amount, as ENA asserts.
In the result, the amended notice of motion dated 27 November 2021 is dismissed with costs.
[3]
Amendments
16 December 2021 - [21] - Amend typographical error.
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Decision last updated: 16 December 2021