Symonds v Vass & Ors

Notices of Motion 17 At the same time, the plaintiffs filed a Notice of Motion against all defendants seeking that judgment be entered for the plaintiffs, and costs. The Notice of Motion was returnable on 7 February 2003, that is, two days after the directions hearing. 18 At the same time Ms Giles prepared, but did not file, a Notice of Motion seeking an order that the plaintiffs supply the particulars requested on 18 November 2002. Her affidavit annexed the correspondence.

Before the Directions Hearing on 5 February 2003 19 The directions hearing was listed at 3.00 pm before Deputy Registrar Younes. At 11.01 am (according to the notation on the fax), Ms Giles wrote to Malcolm Johns & Co in these terms: "We assure you that our clients do not intend on delaying these proceedings. As you are aware, our clients have complied with all directions of the Court made to date save for the filing of our clients' defences. We have not filed defences on behalf of our clients as your clients have refused to provide particulars sought. We refer you to our letter of 31 January 2003 in this regard and reiterate our earlier advice to you that our clients are unable to file their defences until such time as the particulars requested of your clients are supplied." 20 Ms Giles asserted, therefore, that the Notice of Motion seeking judgment was inappropriate. Instead, she proposed the following short minutes of order to be handed to the Registrar that afternoon: "1. The Plaintiffs' Notice of Motion filed 3 February 2003 be withdrawn; 2. The Plaintiffs' reply to the request for further and better particulars of Holding Redlich dated 18 November 2002 on or before 19 February 2003; 3. The Defendants file and serve their defences to the Further Amended Statement of Claim on or before 5 March 2003; 4. The Defendants file and serve any cross claim on or before 12 March 2003; 5. Each party is to serve a list of categories for discovery on each other party from whom discovery is sought on or before 19 March 2003; 6. Each party against whom discovery is sought is to serve a list of documents by 16 April 2003; and 7. Listed for further direction on [date]." 21 Mallesons had apparently also furnished Malcolm Johns & Co with its version of the orders which it believed appropriate. Accordingly, Ms Giles added the following: "You will note that these short minutes differ from those proposed by Mr Stephen Hankey of Mallesons. We have therefore copied this letter to him." 22 Mr Malcolm Johns received the fax. He drew it to the attention of Ms Stacey Pell, a law graduate (although not yet a solicitor), she having the carriage of the matter. Mr Johns had already discussed the matter with Ms Pell before 10.00 am. He told her that she should provide the particulars. Ms Pell assured Mr Johns that a draft was in fact in progress. 23 Having received the letter from Holding Redlich at 11.00 am, no response was sent. Rather, Mr Johns and Ms Pell prepared their own short minutes which were as follows: "By consent the Court orders: 1. That the Defendants file and serve their Defences by 19 February, 2003 failing which judgment is entered against each defendant. 2. That subject to order 1 the Defendants have leave to file and serve any cross-claim by 19 February, 2003. 3. Each party is to serve a list of categories of documents for discovery on each other party from whom discovery is sought, by 26 February, 2003. 4. Each party against whom discovery is sought is to serve a list of documents by 2 April, 2003. 5. Further Directions on 9 April, 2003." 24 I should draw attention to three matters. They are all important. First, para 1 of the draft prepared on behalf of the plaintiffs, included a self executing order, in contrast with para 3 of the draft of Holding Redlich (which deals with the same issue). Secondly, although Mr Johns had instructed Ms Pell to supply the particulars, and indeed, although a draft was already underway, the orders proposed did not include an order that the plaintiffs supply such particulars. Thirdly, Malcolm Johns & Co, unlike Holding Redlich and Mallesons, did not circulate their short minutes to their opponents.

The Directions Hearing 25 Ms Pell, not being a solicitor, arranged for Mr George Mallos, a solicitor of Malcolm Johns & Co, to attend the directions hearing. Ms Giles attended on behalf of Holding Redlich. She waited inside the courtroom. Mr Mallos found her. They went outside to discuss the matter. Shortly after they were joined by Ms Paula Reid, the solicitor for Mallesons. 26 It is common ground that the discussion was short. It took no more than a few minutes. It was interrupted by the matter being called on. The parties then moved inside the courtroom. Whilst standing at the Bar table, the solicitors for the parties signed the short minutes prepared by the plaintiffs' solicitors. Ms Giles did not print her name because of the rush. The Deputy Registrar did not read out the orders that had been agreed. She simply made orders "in accordance with the short minutes". 27 There is an issue as to whether Ms Giles read the short minutes on 5 February 2003. She says that she did not, beyond glancing at the dates proposed for each procedural step. She also said she was not handed the document until the parties were called into court. She then hurriedly looked at the timetable to ensure that it reflected the agreement reached outside. She did not, before subscribing her signature, read the whole of paragraph 1. She was therefore not aware of the self-executing nature of that order. Indeed, although she was provided with a copy of the short minutes by Mr Mallos as she left court, which she then annotated, she did not otherwise read that document on that occasion. She said that she did not become aware of the terms of order 1 until 28 February 2003. She examined the orders made on 5 February, and the terms of paragraph 1, after judgment had been signed, when she reviewed the file. 28 Mr Mallos says that he handed Ms Giles and Ms Reid (from Mallesons) the proposed short minutes outside court. He told them that, if there was agreement, the Notice of Motion for judgment (of 3 February 2003) could be stood over until a suitable date. According to his evidence, both Ms Giles and Ms Reid appeared to read the document. 29 Ms Giles said that outside court she referred Mr Mallos to the Notice of Motion that she had prepared seeking an order that the plaintiffs supply the outstanding particulars. Mr Mallos said, however, that Ms Giles did not show him the Notice of Motion. He acknowledged that she did assert that particulars were outstanding, and endeavoured to show him documents from her file. He knew nothing about the outstanding particulars. He therefore interrupted Ms Giles and said that he would telephone Ms Stacey Pell, the person handling the matter. He did so by mobile phone. There was, in effect, a four way conversation between those at court and Ms Pell in which it was agreed that the plaintiffs would supply the outstanding particulars by 12 February 2003, and adjustments made to other steps identified in the short minutes. 30 I am satisfied that Ms Giles did show, or attempt to show, Mr Mallos the Notice of Motion. He plainly cut short her explanation, recognising the need to refer the issue to Ms Pell. The more difficult issue is whether Ms Giles was shown, in advance, the short minutes of order proposed by the plaintiffs. 31 It is said by the plaintiffs that it is inconceivable that Ms Giles was unaware of the terms of the proposed order. It was a short document. According to Mr Mallos she appeared to read it. She acknowledged that it was her duty to know and understand the orders which, upon her consent, were to bind her client. She further acknowledged that she was not in the habit of signing documents without reading them. 32 The defendants suggested, on the other hand, that Ms Giles, having proposed orders in one form, would be hardly likely to agree to orders in another and more onerous form, without discussion. The plaintiffs were, after all, acknowledging the force of the defendants' complaint about particulars by agreeing to supply such particulars. It is common ground that there was no discussion about the form of order 1. 33 There is some force in the defendants' argument. I accept the evidence of Ms Giles. Whether the short minutes were provided to her before the hearing, as Mr Mallos said, or after, as she asserted, I am satisfied that she did not read paragraph 1 (and other paragraphs) beyond noting the subject matter (which, in the case of para 1, dealt with the filing and serving of the defence) and the date. I have formed this view for a number of reasons. On any view the discussion outside court was short. It was a hurried conversation. There were a number of issues. There was the Notice of Motion filed by the plaintiffs on 3 February, seeking judgment. There was the proposed Notice of Motion by Holding Redlich seeking particulars, which Ms Giles proposed to file in court if she could not secure agreement. The conversation was interrupted by the need to move into court. With one qualification, it would be unsurprising if a practitioner, in the hurry of negotiations, were to concentrate on the suggested timetable, rather than the wording of the proposed orders. The qualification relates to advance warning concerning the form of orders. If a practitioner has his or her attention drawn to the nature of the orders sought, you would expect that practitioner to attend to the wording of such orders. 34 Here, there was nothing (apart from the terms of the document itself) to alert Ms Giles to the self-executing nature of the orders sought in paragraph 1. First, none of the orders made at previous directions hearings had included self-executing orders. Secondly, the orders proposed by Ms Giles in her fax to Malcolm Johns & Co at 11.01 a.m. were what I might term "the usual orders", that is, not self-executing orders. Thirdly, Malcolm Johns & Co had not responded to Holding Redlich's letter. Unlike Holding Redlich and Mallesons, they had not circulated the form of short minutes which they favoured. Fourthly, Mr Mallos had not been apprised of this history by Mr Johns or, one infers, by Ms Pell. Mr Mallos was not provided with a copy of the Holding Redlich letter of that morning. There was no suggestion that he said anything to Ms Giles or Ms Reid about the self-executing form of the order in paragraph 1 of his draft. 35 Further, nothing was said by the Deputy Registrar about the form of order 1. The interlineation in the copy order provided to Ms Giles (Exhibit 2) altering dates in certain paragraphs, including paragraph 1, were not made in the hand of Ms Giles. That may rather support her account that she was provided with a copy of that document after the consent orders were made, instead of before.

Conversation on 24 February 2003 36 The plaintiffs supplied particulars to Holding Redlich on 12 February 2003. Holding Redlich (and Mallesons) were then obliged to file their defence by Wednesday 26 February 2003. 37 On Monday 24 February 2003, Ms Giles spoke to Ms Pell of Malcolm Johns & Co. The conversation was short. According to Ms Giles, it proceeded as follows: "'Hi Stacey, this is Rebekah Giles from Holding Redlich. We act for the Eighth and Twenty-Third Defendants in the Symonds case. I realise that our clients' defences are due on Wednesday but it looks like I will need a few extra days.' She replied: 'Okay.' I then said words to the following effect: 'If I need any more time, I will let you know.' She replied: 'Okay.' I then said words to the following effect: 'Thanks so much. Bye.'" 38 Ms Giles made a contemporaneous note. The note recorded the following: " - will need a few extra days to file defence - will call her if I need more time, OK? OK OK" 39 Ms Pell had a different recollection of that conversation. She gave her recollection in these terms: "RG: Hi Stacey, this is Rebekah Giles from Holding Redlich, I am ringing about the Symonds case. We act for the Eighth and Twenty-third ... SP: Yes. RG: I'm ringing to let you know that the defence is with counsel and is being settled before being filed. If we are having any problems or if we need more time I will call you on Tuesday, okay? SP: Okay. RG: Thanks, Bye." 40 Ms Pell regarded the conversation as insignificant. She did not make a note. She did, however, communicate with her client, Mrs Symonds, by email the next day. On 25 February 2003 at 2.29 p.m., Mrs Symonds send an email to Ms Pell in these terms: "Have the other side indicated whether they are serving the defence tomorrow?" 41 At 3.36 p.m. Ms Pell responded as follows: "Holding Redlich have indicated to me that their clients' Defence will be served tomorrow. I have not heard from Mallesons Stephen Jaques with regard to their clients' Defence at this stage." 42 At 6.24 p.m. Ms Pell sent an email to Mr Johns as follows: "I have heard from both Mallesons and Holding Redlich who have advised that their clients' Defences will be served tomorrow." 43 Mallesons filed its defence on Wednesday 26 February 2003. However, no defence was filed by Holding Redlich on behalf of the eighth and twenty-third defendants. On Thursday 27 February, Malcolm Johns & Co prepared a Minute of Judgment (which bears that date). The judgment was in these terms: "JUDGMENT: That the 8th and 23rd Defendants are liable to the Plaintiffs for damages and for costs. THE COURT ORDERS that the damages be assessed. This Judgment takes effect on 27 February 2003." 44 The judgment was signed by the Registrar on Friday 28 February 2003. The typewritten date was altered by pen to 28 February. A copy was then sent the same day to Holding Redlich by Malcolm Johns & Co. Ms Giles immediately telephoned Ms Pell and protested. She asserted that she had asked for, and had been given, "a couple of extra days". Ms Pell said that that was not her recollection. Each repeated to the other her recollection in the terms set out above. 45 The conversation culminated in Ms Giles saying that she would take steps to have the judgment set aside. She asked Ms Pell to obtain her clients' consent to that course. That consent was not forthcoming. That afternoon Ms Giles filed a Motion, supported by affidavit, seeking a stay in respect of the judgment. 46 Ms Pell, the same day, that is 28 February 2003, sent Mr Johns a memorandum. The memorandum included these words: "Rebecca Giles telephoned today regarding the judgment. You will recall that I sent an email to you on Tuesday saying that I had heard from both Holding Redlich and Mallesons who had informed me that their Defences would be filed on time. She now says that her recollection of the telephone conversation was had on Monday was that I said she could have more time. I DID NOT SAY THAT. I'm sure you know that I would never give any such undertaking without instructions." 47 Both witnesses were called to give evidence. Both adhered to their respective versions of these conversations. 48 A number of matters are clear. First, the eighth and twenty-third defendants have an arguable defence on the merits. That much is acknowledged by the plaintiffs on this application. Secondly, at all times Holding Redlich, as the solicitors for the eighth and twenty-third defendants, intended to defend the action on their behalf. Thirdly, by the time that Ms Giles rang Ms Pell on Monday 24 February 2003, the draft defence was well advanced. It had been prepared in consultation with Mallesons, who similarly intended to defend the action on behalf of the remaining defendants. Fourthly, Ms Giles well knew the date the defence was due, Wednesday 26 February 2003, as the terms of her conversation with Ms Pell make clear. She was not, at the time of that conversation, however, aware of the self-executing order made on 5 February 2003. 49 Again, I accept the evidence of Ms Giles. I prefer her account of the telephone conversation on 24 February to that of Ms Pell. Both were impressive witnesses. However, I find Ms Giles' version more probable. First, Ms Giles, unlike Ms Pell, made a contemporaneous note. Since she plainly knew that the defence was due on Wednesday 26 February, her note supports her account. Ms Pell, on the other hand, when tackled by Ms Giles on 28 February, was under the mistaken belief that she had spoken to Ms Giles the previous Friday, rather than the Monday. Further, her email to Mrs Symonds at 3.36 p.m. the following day did not accurately, or at least comprehensively, capture the substance of the recollection she now gives in respect of her conversation with Ms Giles. On her version, at 3.36 p.m., it was still possible that Holding Redlich may seek the foreshadowed extension. Yet, the email made no reference to that possibility. 50 Secondly, on Ms Pell's version, Ms Giles said that counsel had been briefed to settle the defence. I accept that counsel had not been briefed. I do not believe Ms Giles told a deliberate falsehood in order to win more time. On the Monday Ms Giles still had effectively two days. It is hard, in these circumstances, to see why she would lie. I accept her assurance that she did not do so. 51 Thirdly, I find the plaintiffs' argument that Ms Giles foreshadowed a request for an extension, but did not ask for one, unpersuasive. In written submissions the plaintiffs said this: "... there was good reason for her to make a preliminary approach to the Plaintiffs' solicitors, notifying the possibility of having to seek an extension of time -- and saying: 'if I need an extension I shall let you know on Tuesday'. It is legitimate to infer that her thought processes were: 'it is inadvisable to seek an extension before it is certain that I need it. The sensible tactic is to make a preliminary approach indicating that the preparation of the defence is in hand. I don't want to incur the risk of a refusal at this stage. I'll refrain from making a request until I really need an extension.'" 52 If that were right, given that the defendants intended to defend the matter, why would Ms Giles refrain from asking for an extension when she actually needed one by the close of business on Tuesday? Yet she did not do so. Ms Giles, plausibly in my view, said this: (affidavit 5 March 2003) "16. Had I believed that there had not been given a few extra days to comply with order 1 made on 5 February 2003, I would have taken steps to obtain an extension to comply with that order and would have filed the then current version of the defence in compliance with the order of the Court if no extension could be obtained inter parties or by urgent application to the Court." 53 Ms Giles was not cross examined on that paragraph. 54 It is clear from Ms Pell's work sheet for 24 February 2003, that she was busy throughout that day. I think it likely that she misunderstood the request made by Ms Giles, whether because she was momentarily distracted, or for some other reason. Ms Giles asked for "a few extra days" in the context of a defence due on Wednesday 26 February 2003. Ms Pell agreed. Ms Giles, quite reasonably, believed that the defence could be filed some time on Friday 28 February 2003. Ms Giles was not on notice of any limitation in respect of Ms Pell's authority. Ms Pell had the carriage of the matter. She signed the letters furnishing particulars. She was the person consulted by Mr Mallos on 5 February 2003, in the presence of Ms Giles, who had agreed to a revised timetable.

Power to Set Aside a Judgment 55 The Notice of Motion seeks an order that the judgment against the eighth and twenty-third defendants be set aside. The judgment was entered on 28 February 2003 by the Registrar, exercising the powers of the Court (s121(2) Supreme Court Act 1970; Pt 61; Schedule E). The Court has the power to set aside a judgment given or an order made by a Registrar (s121(3)) (cf O'Donnell v S Abbott [2001] NSWCA 184). Where the Registrar makes an order "or does any act in any proceeding" the Court may, on the motion of a party, review that order or act which it may confirm, vary, discharge, or otherwise deal with as it thinks fit (Pt 61 r3(1)). The present application, however, was not argued by reference to the Registrar's powers. Rather, the application was pressed under Pt 40 r9, being the general power to set aside a judgment. The applicants (being the eighth and twenty-third defendants) were, in terms of Pt 17 r2(c), in default. They rely upon Pt 40 r9(2) and (4). Such powers are additional to other powers given to the Court to set aside a judgment (Pt 40 r9(5)). Under Pt 2 r3 the Court may, on terms, extend (or abridge) any time fixed by the rules or by a judgment or order, and may do so after the time has expired. Referring to these, amongst other, powers, Priestley JA in Southern Cross Exploration NL v Fire & All Risks Insurance Co Ltd (1986) 7 NSWLR 319 made the following comments (with which Hope and Glass JJA agreed): (at 327-328) "... It is very difficult to resist the conclusion that the draftsman of the Act and the rules was setting out to make explicit the extreme width of the Court's powers to dispense with compliance with its own rules, preferring to entrust the Court with a very wide discretion to be exercised as wisely and cautiously as circumstances required, rather than limit the Court's powers by immutable restrictions." 56 The plaintiffs acknowledge the width of the discretion. They point, however, to two matters which they suggest circumscribe that discretion, or, at the very least, are relevant to its exercise. They are: · First, that the judgment entered by the Registrar should be regarded as a final (as opposed to an interlocutory) judgment. The judgment concluded the issue of liability as between the plaintiff and the eighth and twenty-third defendants. · Secondly, the consent order made by the Registrar on 5 February 2003 was the consequence of a contract between the parties which should not be disturbed. 57 I will deal with each issue in turn.

Final or Interlocutory Judgment? 58 Before the Supreme Court Act 1970, and the rules under that Act (which together broadened the powers of the Court in the way described by Priestley JA in Southern Cross Exploration NL (supra)), the distinction between a final judgment and an interlocutory judgment was fundamental. Bailey v Marinoff (1971) 125 CLR 529, concerned a self executing order that an appellant should file and serve appeal books by a particular date, failing which the appeal would be dismissed for want of prosecution. The appeal books were filed by the due date, but not served. The appellant, by Notice of Motion, sought to extend the time for service. The Court of Appeal permitted him to do so. The respondent thereafter appealed successfully to the High Court. The High Court held that the Court of Appeal had no inherent power to deal further with an appeal which had been dismissed, once the order had been entered. Barwick CJ expressed the rule in these words: (at 530) "Once an order disposing of a proceeding has been perfected by being drawn up as the record of a court, that proceeding apart from any specific and relevant statutory provision is at an end in that court and is in its substance, in my opinion, beyond recall by that court. It would, in my opinion, not promote the due administration of the law or the promotion of justice for a court to have a power to reinstate a proceeding of which it has finally disposed." 59 Menzies J, was careful to define the issue in these terms: (at 531-532) "This appeal is not concerned with the power of a court to alter orders in pending litigation. It is concerned with the power of a court to make an order in litigation which, without any error or lack of jurisdiction, has been regularly concluded and is no longer before the court. To recognize the problem is, I think, to solve it. However wide the inherent jurisdiction of a court may be to vary orders which have been made, it cannot, in my opinion, extend the making of orders in litigation that has been brought regularly to an end." 60 In the context of an interlocutory order, on the other hand, Jessel MR in Mullins v Howell (1879) 11 Ch D 763, said this: (at 766) "I have no doubt that the Court has jurisdiction to discharge an order made on motion by consent when it is proved to have been made under a mistake, though that mistake was on one side only, the Court having a sort of general control over orders made on interlocutory applications." 61 (cf Laurena Pty Limited v Vilanti Pty Limited [1999] NSWSC 37, per Hodgson J paras 99 to 101).

62 Since 1970, the Court, under the powers identified, may now set aside a final as well as an interlocutory judgment. The plaintiffs do not suggest otherwise. What, then, is the significance of a judgment being interlocutory? There is still, at a common sense level, a difference between a final judgment and one which is interlocutory. Commenting upon Purcell v F C Trigell Ltd [1971] 1 QB 358, Kirby P said this in Morgan v 45 Flers Avenue Pty Ltd (1987) 11 NSWLR 573: (at 579) "... in Purcell , Lord Denning MR, at least, clearly considered that there was a large discretion to set aside orders, particularly interlocutory orders."

63 Here, there can be no doubt that the judgment entered against the eighth and twenty-third defendants was interlocutory. In Computer Edge Pty Ltd & Anor v Apple Computer Inc & Anor (1984) 54 ALR 767, the Federal Court made a number of orders which were the subject of appeal. Two were final orders and the remaining order was plainly interlocutory. Hence some questions in issue were determined, and others were not. An objection was taken to the competency of the appeal to the High Court. Gibbs CJ (with whom Murphy and Wilson JJ agreed), said this: (at 767-768)

"The test for determining whether a judgment is final, which has been laid down in a number of cases including Carr v Finance Corporation of Australia Ltd (No 1) (1981) 147 CLR 246, 34 ALR 449, is whether the judgment finally determines the rights of the parties, and the authorities have held that the court in applying the test must have regard to the legal rather than the practical effect of the judgment. So that the question in the present case is whether the whole judgment finally determined, in a legal sense, all the rights of the parties that were at issue in these proceedings. And the answer is, plainly, that it did not, because it left undetermined the question whether any, and what, damages were payable." 64 In Triden Properties Ltd v Capita Financial Group Ltd (unreported, NSWCA, 26.11.93) Clarke JA (with whom Meagher and Sheller JJA agreed), said this: "In my opinion it is settled law in Australia that a judgment determining issues of liability but leaving open the assessment of damages is not a final judgment." 65 (See also, Cox Bros (Australia) Ltd v Cox (1934) 50 CLR 314; Thomas v Bunn [1991] 1 AC 362; and Halsbury's Laws of Australia, para 325-11635.) Was there a Contract? 66 In Siebe Gorman Ltd v Pneupac Ltd [1982] 1 WLR 185, Lord Denning (at 189) made an important distinction concerning the nature of consent orders. An order entered by consent may be based upon a contract between the parties, or it may signify no more than that the other party consents (in the sense of not objecting) to an order without intending to enter a formal binding contract. He added, that where there is a contract, the Court would only interfere with that contract on the same grounds that it would interfere with any other contract. Where, on the other hand, there was no contract, the discretion to vary or set aside an order was significantly broader. Such an order could be set aside on the same basis as any other order. 67 The distinction drawn by Lord Denning remains important (R D Werner & Co Inc v Bailey Aluminium Products Pty Ltd (1988) 80 ALR 134, per Woodward and Foster JJ at 136). However, this Court, in the context of our rules, has not embraced the rule suggested by Lord Denning where there is a contract. In Paino v Hofbauer (1988) 13 NSWLR 193, McHugh JA said this: (at 198) "I am not prepared to adopt the English approach to consent orders based on contracts. The discretion conferred by Pt 2 r3 is not to be equated with the extent of the Court's powers to vary or set aside contracts." 68 Nonetheless, a contract underpinning the consent order, whilst not determinative, is relevant to the discretion to set aside that order (or judgment). In Morgan v 45 Flers Avenue Pty Ltd (supra), Kirby P said this: (at 579) "The agreement between the parties may or may not give rise to private causes of action in contract for a breach. The terms of that agreement may or may not, in the particular circumstances, be relevant to the exercise of the Court's discretion conferred by the rules." 69 In Paino v Hofbauer (supra), McHugh JA made the following comment: (at 198) "Nevertheless, when a party asks that a consent order based on a contract should be set aside or varied and the underlying contract could not be set aside or varied, the case would need to be exceptional before the Court would exercise its discretion in favour of an applicant." 70 That was a case in which the parties had negotiated a settlement. The Terms of Settlement provided for payment of the verdict by instalments on nominated dates. If the instalments were paid on time, interest would not run. If there was default, the whole verdict which remained unpaid became payable. Interest on that sum would then become payable. An order was made by consent embodying these terms. 71 The defendant then defaulted. It sought to vary the instalments regime, to extend the period for repayment. The trial Judge, in the exercise of her discretion, permitted the defendant to do so. On appeal it was said that her discretion had miscarried. Clarke JA, in the same case, made the following remarks: (at 200-201) "In my opinion an applicant for relief from the terms of a consent order embodying a compromise agreement is bound, as a general rule, to make out a case for the setting aside of the contract or the granting of relief from the consequences of non-compliance with its terms, in his application for the variation, or setting aside, of the consent order." 72 His Honour added: (at 201) "I should not be taken as saying that the Court has no power to make an appropriate order in the absence of proof of a circumstance which might entitle a party to relief in respect of his failure strictly to comply with the terms of a contract which was reflected in a court order. I simply suggest that it would be a rare case in which it would be a judicial exercise of the discretion to grant an indulgence the effect of which is to vary an agreement between the parties ... National Benzole Co Ltd v Gooch (at 1491; 1101) per Diplock LJ." 73 National Benzole Co Ltd v Gooch [1961] 3 All ER 1097, was a case in which the appellant, in consideration of a waiver of costs by the successful respondent, had agreed to abandon its appeal. Diplock LJ, in these circumstances, said this: (at 1100-1101) "... Here ... there was an agreement entered into between the parties for good consideration similar to an agreement compromising an action. ... It was one which would stand. While I agree with my Lords that this court has a full discretion as to what it will do until the final order is drawn up, I find it difficult to conceive of any case where it would be a judicial exercise of that discretion to allow a party to go on with an appeal after having entered into a binding contract for good consideration not to do so. That is this case; and I agree that this application should be dismissed." 74 In R D Werner & Co Inc v Bailey Aluminium Products Pty Ltd (supra), there were negotiations between the parties as to security for costs to be provided by the plaintiff. A number of letters were exchanged. There were a number of meetings and discussions. The parties reached agreement on an appropriate sum for security and the form of that security. A consent order embodying the terms of that agreement was then made. The form of the order included a self executing order that, should the plaintiff fail to provide the appropriate security, the appeal would be dismissed. The appellant then failed to provide security. It sought, by Notice of Motion, relief against the consequences. The Court held, however, that the consent order embodied a contract between the parties. Woodward and Foster JJ said this: (at 137) "It is, we think, significant that the agreement in this case was entered into two days before Ryan J was asked to make the consent order. This was not a case where agreement was reached in discussions at the door of the court: cf Siebe Gorman , supra. Other factors which we think are significant are that a money sum for the security had to be negotiated, along with a method of providing security, that such negotiations occurred in writing and were spread over a period of time, and that a particular order for costs was also negotiated." 75 Here, the plaintiffs asserted that the consent order made on 5 February 2003 embodied a contract. The contract was made by the parties, through their agents, their solicitors, agreeing upon terms and subscribing their signatures to the Short Minutes of Order prepared by the plaintiffs. The consideration was the compromise reached on the competing claims and counter claims. Each party had suggested the other was at fault. The plaintiffs were asserting that the defendants had not filed their defence. The defendants, or at least the eighth and twenty-third defendants, were asserting that the plaintiffs had wrongly refused to supply particulars. The plaintiffs submitted they each abandoned their claims, opting instead for the regime embodied in the court order. 76 The plaintiffs further asserted that it was an implied term of the contract that one party should not do anything to deprive the other of a fundamental benefit to which the other was entitled (Mackay v Dick (1881) 6 AC 251 at 263; Secured Income Real Estate v St Martin's Investments (1979) 144 CLR 596 at 607.) The following submission was made in respect of the implied term: "Here the implied term, necessary to give business efficacy to the contract, was that if the Plaintiffs exercised their contractual right to sign judgment, the Defendants would not seek to disturb or displace that right by applying to set aside that judgment or to extend the time for filing a defence. The Defendants' present application constitutes a breach of that implied term. This court, it is respectfully submitted, will not lend its aid to the commission of such a breach." 77 The case was, according to the plaintiffs, not unlike Paino v Hofbauer (supra). The Court should, as in that case, decline to interfere with the agreement which the parties had themselves made. 78 It is convenient to begin by addressing the issue concerning the implied term. An implied term that the defendants would not seek to disturb or displace rights accruing under the agreement to the plaintiffs is not reasonable in my view. It can hardly be said to be so obvious that "it goes without saying" (BP Refinery (Westernport) Pty Limited v The Shire of Hastings (1977) 180 CLR 266 at 282-3). Indeed, a number of cases suggest a quite different and contradictory term that may be implied. In Morgan v 45 Flers Avenue Pty Ltd (supra), Kirby P said this: (at 579) "To the extent that an order is made pursuant to a contract, that contract may, in turn, impliedly incorporate the power under the rules to vary the order, as the justice of the particular case may require." 79 In Werner, having found there was a contract embodied in the consent order, Woodward and Foster JJ said this: (at 138) "However, this is not the end of the matter. The court has an overriding power to control its own proceedings. The existence of that inherent power of courts has long been recognised and acted upon. The power to fix and extend times within which interlocutory steps are to be taken is a most common manifestation of the general power. It is now made explicit in rules of court to be found in all relevant jurisdictions. The power is discretionary and is exercised with due regard to all relevant circumstances. If it be legally open to the parties to oust this jurisdiction by agreement, then such ouster could be effected only by clear and express terms in the agreement and court order." 80 Neither the "agreement" reached outside court, as related by the parties, nor the terms of the consent order, suggest an exclusion of the Court's power to vary the order, as the justice of the case may require. 81 Here, I believe there was no contract. Rather, the description by Lord Denning of what occurred in Siebe Gorman (supra) is apt to describe the circumstances of this case. In Siebe Gorman Lord Denning said this, in the context of a self executing order: (at 190) "It often happens in the Bear Garden that one solicitor or legal executive says to the other, 'Give me 10 days.' The other agrees. They go in before the master. They say, 'We have agreed the order.' The master initials it. It is said to be 'by consent.' But there is no real contract. All that happens is that the master makes an order without any objection being made to it. It seems to me that that is exactly what happened here. The solicitors for the plaintiffs were saying, 'We do not object to the order. Give us the extra 10 days from the time of inspection, and that is good enough.' It seems to me quite impossible in this case to infer any contract from the fact that the order was drawn up as 'by consent'." 82 Templeman LJ agreed with Lord Denning (at 194) that there was no contract, and Eveleigh LJ doubted there was a contract (at 192). 83 Here, the consent order was not the product of lengthy and detailed negotiations. It was agreed at the court door. It was, therefore, quite different from that made in Werner (supra) or Paino (supra). It was not in the nature of a final compromise (cf Paino). The supposed consideration was quite dissimilar from that in Paino (supra), Werner (supra) and Benzole (supra). 84 Even if there were a contract, it should not, because of these differences, operate as a significant inhibition upon the Court setting aside a judgment entered as a result of the consent order, if it were just to do so.

The Discretion 85 The applicants are required to demonstrate two things: first, that they have a defence on the merits, and, secondly, that justice requires that the default which led to the judgment being entered should be excused (Jordan CJ in Vacuum Oil Pty Co Limited v Stockdale (1942) 42 SR (NSW) 239 at 243). In the context of Pt 40, and referring to Sir Frederick Jordan's judgment, Street ACJ in Reinehr Industrial Lease & Finance Pty Ltd v Jordan (unreported, NSWCA, 04.06.74) said this: "It will be observed that reference is made in these statements to the requirements of justice. The jurisdiction that a court exercises on an application of this nature will be significantly affected by what might be demonstrated to be the requirements of justice ..." 86 Here, I believe, justice plainly requires that the judgment be set aside: · First, it is acknowledged that there is a defence on the merits. The eighth and twenty-third defendants are blameless. They wish to contest the plaintiffs' right to damages. · Second, the delay was short. The defence was due on Wednesday 26 February 2003. The default judgment was prepared on Thursday 27 February 2003. It was entered by the Registrar on Friday 28 February 2003. The solicitors for the eighth and twenty-third defendants immediately sought, and were given, a stay. The draft Defence has been prepared and is available for filing. · Third, the delay (ignoring the cause for the moment) did not occur against a background of other significant delay. Holding Redlich had requested particulars of the Amended Statement of Claim on time (17.7.02). The only thing that can be said against them is that they took rather longer than Mallesons to complain about the inadequacy of particulars supplied by the plaintiffs (18.11.02 cf 11.10.02). The request was made, nonetheless, before the Defence was due (13.12.02). The plaintiffs then took some time to refuse to furnish those particulars (11.12.02). Ultimately, the plaintiffs implicitly acknowledged the force of Holding Redlich's position by agreeing to furnish the particulars by 12.02.03. · Fourth, the difficulties of the eighth and twenty-third defendants are partly the result of the form of order entered at the directions hearing on 5 February 2003, namely a self executing order. The solicitor for the defendants, Ms Rebekah Giles, was not aware of the terms of that order. It was said against her that she ought to have been aware, and, indeed, she acknowledged that she should have read the short minutes which she signed. However, her ignorance of the nature of the order can be traced to a number of causes. There was nothing to alert her to the self executing order, apart from the terms of the document itself. The plaintiffs' solicitors had not provided Holding Redlich in advance with a copy of the short minutes they proposed, unlike Holding Redlich and Mallesons who furnished their proposed short minutes to Malcolm Johns & Co. It was obviously desirable that all short minutes should have been circulated. Mr Mallos, solicitor, who was given the task of attending the directions hearing, was not told that the plaintiffs were proposing a self executing order in respect to the filing of the Defence in circumstances where at least Holding Redlich was not. He, therefore, said nothing to Ms Giles on that issue. Again, I think it was desirable that Mr Mallos should have been acquainted by those who had the carriage of the matter with that difference, lest the issue be overlooked. Ms Giles was provided with a copy of the short minutes at some point, whether inside or outside the court, in circumstances of urgency. Her failure to notice the form of Order 1 was a small lapse, if it was a lapse at all. The conduct of the plaintiffs' solicitors in the respects I have identified contributed to that lapse. · Fifth, Ms Giles rang Ms Pell on 24 February 2003. She sought "a few extra days". She did so in the context of a Defence due on Wednesday 26 February 2003. She plainly meant a few extra days beyond the Wednesday. Ms Pell said, "OK". I accept that, for whatever reason, Ms Pell misunderstood that request. Nonetheless, the terms were plain, the ostensible authority of Ms Pell evident, and her acquiescence given (cf Legione v Hately (1982-83) 152 CLR 406, per Mason and Deane JJ at 438-439). Ms Giles was entitled to rely upon the fact that judgment would not be entered before the elapse of two days, that is, at the end of Friday. · Sixth, no warning was given to Holding Redlich by the plaintiffs' solicitors that they intended to enter judgment. I believe it would have been appropriate to provide such a warning, as a matter of courtesy. Mr Johns, solicitor, said that he would do so in circumstances of a default judgment. This, however, to his mind, was a matter of contract. He therefore did not believe a warning was appropriate. I disagree. · Seventh, the "agreement" made between the parties at the court door on 5 February 2003, embodied in the short minutes submitted to the Registrar, was not a contract. Even had it been a contract, justice would require setting aside the judgment, the product of that agreement. · Eighth, the judgment was interlocutory rather than final. · Ninth, the plaintiff did not suggest prejudice. Rather, the judgment gave them an advantage, which they wished to retain. 87 It should be noted that the defendants other than the eighth and twenty-third defendants (represented by Mallesons) filed their Defence on time. They plainly regarded themselves as having a defence on the merits which they wished to pursue. All partners of Dunhill Madden Butler at the relevant time have been sued on the basis of joint liability for the actions of one of their number (cf s10 Partnership Act 1982). Were the judgment against the eighth and twenty-third defendants allowed to stand, it may potentially compromise the issue of liability so far as the other partners are concerned. That was not a matter raised by any party, nor relied upon by the plaintiffs. I have therefore left it out of account.

Costs 88 The plaintiffs asked that the issue of costs should not be determined until the parties have had the opportunity of considering these reasons. I am prepared to allow that opportunity. However, it is appropriate that I should state certain matters which I consider relevant to the issue of costs. 89 First, part of the difficulty in this case arises from the plaintiffs' use of a self executing order. Most orders made by consent are not self executing orders. Self executing orders may have their place. However, I believe that where a party insists upon a self executing order, their opponents' attention should be drawn to that fact. That was not done in this case. 90 Secondly, the plaintiffs chose not to provide a warning to their opponents that they intended to sign judgment. There may be cases where such a courtesy is unnecessary or inappropriate having regard to the subject matter of the litigation or the conduct of other parties (cf Emmett v Hornsby Shire Council & Anor [2002] NSWCA 75, per Sheller JA, para 24). No doubt, in some cases it will be a matter for instructions. In most cases, extending the courtesy of a warning would be a matter within the implied authority given by a client to a solicitor. Here, the plaintiffs had not instructed Mr Johns not to extend that courtesy. Nothing had been done by Holding Redlich that made it inappropriate, in my view, to provide such a warning. 91 Thirdly, and most importantly, having signed judgment, Ms Giles immediately stated that she would seek to have the judgment set aside. She asked Ms Pell to obtain instructions to consent to that course. That consent was not forthcoming. I believe that was unreasonable. The delay was short. The default could have been rectified at once. I also believe it was reasonably obvious that there had been a misunderstanding. The refusal of the plaintiffs' solicitors was consistent with their attitude throughout, which, colloquially, can be described as "hard ball". Such an attitude is undesirable. 92 Subject to argument, I believe the appropriate order in respect of costs is that the costs should be the eighth and twenty-third defendants' costs in the cause. 93 The parties have seven days within which to notify my Associate if they wish to argue that I should make a different order. The matter will then be relisted for argument. In the absence of objection, I will, after seven days, make the costs order foreshadowed. Orders 94 I therefore make the following orders:

1. That the judgment entered against the eighth and twenty-third defendants on 28 February 2003 should be set aside.

2. The eighth and twenty-third defendants should file their Defence within 7 days.

3. The parties have leave to submit, within the same 7 day period, Short Minutes in respect of other procedural steps which remain.

4. Costs reserved pending notification within 7 days of an intention to make further submissions on that issue. **********

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