Victorian Xray Group (Dandenong) Pty Ltd v Malouf t/a Malouf Solicitors (No 4)

Legislation Cited: Civil Procedure Act 2005 (NSW), s 14
Uniform Civil Procedure Rules 2005 (NSW), rr 36.11, 36.15, 36.16

Cases Cited: AT v Commissioner of Police, NSW (No 2) [2010] NSWCA 337
Bailey v Marinoff (1971) 125 CLR 529; [1971] HCA 49
Boateng v Dharamadas [2019] NSWCA 233
Deputy Commissioner of Taxation v Meredith (No 2) (2008) 75 NSWLR 462; [2008] NSWCA 133
DJL v Central Authority (2000) 201 CLR 226; [2000] HCA 17
Gamser v Nominal Defendant (1977) 136 CLR 145; [1977] HCA 7
R v Benbrika (2009) 222 FLR 433; [2009] VSC 21
R v Carroll (2002) 213 CLR 635; [2002] HCA 55

Category: Principal judgment

Parties: Victorian X-Ray Group (Dandenong) Pty Ltd (First Plaintiff)
Victorian X-Ray Group (Boronia) Pty Ltd (Second Plaintiff)
Bevyn Thomas White (Third Plaintiff)
Anthony Malouf trading as Malouf Solicitors (Defendant)

Representation: Counsel:
M Luitingh (Plaintiffs)
A Avery-Williams (Defendant)
Solicitors:
Jane Button & Associates Pty Ltd (Plaintiffs)
Sparke Helmore Lawyers (Defendant)

File Number(s): 2021/139605

Publication restriction: Nil

JUDGMENT

1. On 23 July 2024 I made the following orders:

2. Judgment for the defendant.

3. The plaintiff is to pay the defendant’s costs.

4. I grant liberty to apply on 3 days’ notice should either party seek a variation of the costs order.

5. The orders were entered on the same day (that is, in accordance with Uniform Civil Procedure Rules 2005 (NSW) (“UCPR”), r 36.11, the orders were recorded in the Court’s computerised records system).

6. On 16 August 2024, the plaintiffs filed a Notice of Intention to Appeal. Then on 22 October 2024, the plaintiffs filed a Notice of Appeal. The orders sought in that Notice of Appeal include that the costs order be set aside and in the alternative that issues relating to costs be remitted to me for further determination following a further hearing on costs.

7. On 11 December 2024, the plaintiffs contacted my chambers seeking that the matter be relisted for argument on costs. I then relisted the matter for directions on 17 December 2024 (having received some preliminary submissions from the plaintiffs on the costs issues). On that day, I made further orders to the effect that the plaintiffs should file a motion setting out all the orders that they sought and that I would deal with the question of whether the plaintiffs should be permitted to seek a variation of the costs order as a threshold issue, bearing in mind the extensive evidence on which both parties intended to rely having regard to the different costs orders sought by the plaintiffs.

8. I listed the question of whether leave should be granted to the plaintiffs (order one in the plaintiffs’ motion) for hearing on 1 April 2025.

9. This is the judgment in respect of that preliminary issue, the issue being whether it is now too late for the plaintiffs to seek a variation of the costs order I made on 23 July 2024.

10. Mr Luitingh appeared for the plaintiffs and Ms Avery-Williams appeared for the defendant. Both parties provided helpful extensive oral and written submissions.

11. The plaintiffs relied on affidavits of their solicitor, Jane Elizabeth Button, dated 16 December 2024 and 11 February 2025. The defendant relied on an affidavit of his solicitor, John Anthony Coorey, dated 3 March 2025.

Background

9. For the reasons set out in my judgment, the plaintiffs did not succeed in their action. In accordance with what might be described as the usual rule that costs follow the event, I ordered that the plaintiffs pay the defendant’s costs of the proceedings and also granted liberty to the parties to apply on three days notice should either party seek a variation of that cost order.

10. I did not hear submissions from the parties before making the costs order but recognised that the parties might seek a different costs order through order 3 (granting liberty to apply).

11. At least according to the solicitor for the plaintiffs, there was some discussion between the parties about costs in August 2024 but the plaintiffs took no formal steps to seek a variation of the costs order until they contacted my chambers in December 2024 seeking that the matter be relisted. Instead, during the period from 23 July 2024 to October 2024, the plaintiffs focused on their appeal.

12. The plaintiffs now seek different costs orders to the effect that the defendant should be paying some of the plaintiffs’ costs on an indemnity basis having regard to the way in which the defendant conducted the case, including the said to be service of voluminous irrelevant documents and abandonment of a substantial part of his defence. The plaintiffs had complained about this conduct during the course of the hearing, and I made some reference to this in paragraphs [10] and [11] of my judgment.

13. The defendant maintains that it is now too late for the plaintiffs to seek a variation of the costs order made in their favour on 23 July 2024. He submits that:

14. The costs order made on 23 July 2024 was a final order and the Court has no power to vary or set aside that order other than as provided in the C**ivil P**rocedure A**ct 2005 (NSW) (“CPA”) and/or the UCPR. The power to set aside or vary the order is set out in UCPR, r 36.16. The defendant submits that the plaintiffs had 14 days after entry of the order to file a motion seeking to vary the costs order. They did not do so and there is no basis in which time can now be extended to allow them to do so;

15. Contrary to the plaintiffs’ submissions, the Court has no inherent power to set aside its own order in the circumstances of this case; and

16. Prior to contacting my chambers and filing their motion, the plaintiffs had already filed a Notice of Appeal in which they sought that the costs order be set aside such that this Court may no longer vary any order it made.

The plaintiffs’ submissions

14. The plaintiffs pursue a number of alternative arguments in support of their proposition that they should be allowed to pursue a variation of the costs order at this time including that:

15. Rule 36.16 of the UCPR does not apply as the costs order made on 23 July 2024 was conditional rather than final. This is illustrated by my granting leave to apply to vary the costs order and is reflective of the fact that I had not at that point afforded the plaintiffs an opportunity to be heard on costs. Further, the plaintiffs say that there is a practice of the Court providing a warning to parties in a final judgment as to the effect of r 36.16. This was not done which suggests that the orders were not intended to be final;

16. Order 3 (liberty to apply) was a standalone order, the effect of which was to grant leave to the plaintiffs to seek to vary the costs order provided they gave three days notice of their intention to do so;

17. Irrespective of r 36.16, the Court has an inherent power to make orders to ensure fairness and prevent an abuse of process, such that the Court may deal with the application despite any failure to comply with r 36.16; and

18. Procedural fairness requires that the plaintiffs be given an opportunity to be heard on costs. The lodging of an appeal does not prevent the Court from determining issues that need determination, particularly when, as the trial judge, I am best placed to hear an application which requires an understanding of how the hearing was conducted.

Determination

15. Unconstrained by authority, the submissions made on behalf of the plaintiffs might have had some attraction. I determined that costs should follow the event, prior to hearing from the plaintiffs, but intended that they would be given an opportunity to be heard should they seek a variation of that cost order. They now seek that variation.

16. However, the difficulty for the plaintiffs is that most of the arguments they pursue have already been considered and rejected by the Court of Appeal. As I said to Mr Luitingh, it may be that the plaintiffs could complain about not being heard on costs or seek to convince the Court of Appeal that the Court really does have an inherent jurisdiction to ensure fairness, despite the provisions of the UCPR, but these are propositions which the Court of Appeal has already considered and rejected (in certain circumstances).

17. UCPR r 36.16 is in the following terms:

36.16 Further power to set aside or vary judgment or order (cf SCR Part 40, rule 9)

(1) The court may set aside or vary a judgment or order if notice of motion for the setting aside or variation is filed before entry of the judgment or order.

(2) The court may set aside or vary a judgment or order after it has been entered if—

(a) it is a default judgment (other than a default judgment given in open court), or

(b) it has been given or made in the absence of a party, whether or not the absent party had notice of the relevant hearing or of the application for the judgment or order, or

(c) in the case of proceedings for possession of land, it has been given or made in the absence of a person whom the court has ordered to be added as a defendant, whether or not the absent person had notice of the relevant hearing or of the application for the judgment or order.

(3) In addition to its powers under subrules (1) and (2), the court may set aside or vary any judgment or order except so far as it—

(a) determines any claim for relief, or determines any question (whether of fact or law or both) arising on any claim for relief, or

(b) dismisses proceedings, or dismisses proceedings so far as concerns the whole or any part of any claim for relief.

(3A) If notice of motion for the setting aside or variation of a judgment or order is filed within 14 days after the judgment or order is entered, the court may determine the matter, and (if appropriate) set aside or vary the judgment or order under subrule (1), as if the judgment or order had not been entered.

(3B) Within 14 days after a judgment or order is entered, the court may of its own motion set aside or vary the judgment or order as if the judgment or order had not been entered.

(3C) Despite rule 1.12, the court may not extend the time limited by subrule (3A) or (3B).

(4) Nothing in this rule affects any other power of the court to set aside or vary a judgment or order.

18. UCPR r 36.15 provides that the Court has power to set aside an order of the Court or judgment given or entered irregularly, legally or against good faith. It is not suggested that r 36.15 applies. Rule 36.16 is headed “Further power to set aside or vary judgment or order”. As set out in r 36.16(4), nothing in the rule affects any other power to set aside or vary a judgment or order. In other words, r 36.16 is not intended to limit the application of any other power which might arise where the Court might set aside or vary a judgment or order, as is demonstrated by r 36.15. There are other provisions of the UCPR which also afford such a power.

19. Having said that, on the plaintiffs’ case, despite r 36.16(4), the Court has an inherent jurisdiction to make orders to prevent injustice or ensure fairness. I will come back to this.

20. Neither r 36.16(1) nor r 36.16(2) apply.

21. The effect of r 36.16(3) is to preclude the Court from setting aside or varying a judgment that determines any claim for relief or determines any question on any claim for relief, except insofar as there is compliance with (3A) or the Court of its own motion, sets aside or varies the judgment in accordance with (3B).

22. It follows that, if the costs order is an order that determines any question arising on any claim for relief, r 36.16(3A) applies and the Court may only set aside or vary the order if a motion is filed within 14 days after the order is entered. Further, there is no power for the Court to extend the 14 day period.

23. The plaintiffs did not file a motion or even give notice within the 14 days. As such, the plaintiffs cannot rely on r 36.16 as a basis for their application to set aside or vary the costs order. Rule 36.16 precludes an extension of time and they are now out of time to make the application.

24. It follows that unless I accept that the Court has some other power to make the orders sought or that r 36.16 does not apply in the circumstances of this case, it is now too late for the plaintiffs to be seeking a variation of the costs order.

Inherent jurisdiction

25. The plaintiffs maintain that this Court has an inherent jurisdiction which can be used to prevent abuse of process, ensure a fair trial and regulate proceedings (see R v Benbrika (2009) 222 FLR 433; [2009] VSC 21).

26. They suggest that the statute should not be interpreted in such a way as to deprive the Court of its inherent jurisdiction (R v Carroll (2002) 213 CLR 635; [2002] HCA 55). They even suggest that an aspect of the Court's inherent jurisdiction is constitutional in character and may “be protected from legislative encroachment”.

27. They suggest that the overriding purpose of the CPA is to ensure fairness and justice between the parties and that the Court must have a jurisdiction to make orders to preclude an injustice between the parties.

28. It is not necessary that I conduct a wide-ranging review of the Court’s jurisdiction. It is only necessary to say that there are two fundamental problems with theses submissions being:

29. Whilst the plaintiffs correctly assert that they were not given an opportunity to be heard before the costs order was made, the suggestion of unfairness is somewhat overstated because they were given an opportunity to be heard after the costs order was made. It is just that they did not comply with the time limit imposed by the rule, perhaps taking a different view of the “liberty to apply”.

30. The question raised by the plaintiffs on this application (being that r 36.16 does not preclude the plaintiffs’ application because of the Court's inherent jurisdiction) has already been considered and determined by the Court of Appeal in Deputy Commissioner of Taxation v Meredith (No 2) (2008) 75 NSWLR 462; [2008] NSWCA 133 (“Meredith”).

31. In Meredith, the respondent filed a motion three months after orders made by the Court of Appeal had been entered, seeking to make further submissions on the question of costs and a variation of the costs order made by the Court of Appeal. The Court (per Basten JA with Giles JA and Ipp JA agreeing), dismissed the motion referring to Bailey v Marinoff (1971) 125 CLR 529; [1971] HCA 49 (“Bailey”) at 530. Basten JA observed that the power of the Court to entertain an application to vary costs depended on whether the orders were entered prior to the application to vary them, and if so, whether there was some statutory authority conferring power on the Court to reopen entered orders (at [7]). His Honour went on to observe (at [15]) that the clear purpose of r 36.16 was to allow a window of only 14 days after entry of judgment to apply for a variation.

32. Further, his Honour observed at [16]: “It is not open to this Court to arrogate to itself some inherent power, absent statutory authority, which is denied by the judgments of the High Court in Bailey v Marinoff, Gamser and DJL”, referring to the decisions in Gamser v Nominal Defendant (1977) 136 CLR 145; [1977] HCA 7 and DJL v Central Authority (2000) 201 CLR 226; [2000] HCA 17.

33. Despite the comprehensive submissions of Mr Luitingh, it is not now open to me to come to a different view on essentially the same point. I do not accept that I should invoke some inherent jurisdiction to ensure procedural fairness as a means of overcoming a specific statutory provision which limits the circumstances in which the plaintiffs’ current application might be made.

Section 14 CPA

32. While s 14 provides a general power to dispense with the rules if satisfied that it is appropriate to do so in the circumstances of the case, again, the proposition that the Court may extend the time for the filing of a motion to vary a costs order having regard to s 14 has been rejected by the Court of Appeal in AT v Commissioner of Police*, NSW* (No 2) [2010] NSWCA 337 (per Basten JA at [7]-[12], Beazley and Macfarlan JJA agreeing). His Honour observed (at [9]) that the Court could hardly rewrite r 36.16 and, even if it could, the plaintiffs would need to fall back on the general law which would not permit the varying of the order once it had been entered.

Does r 36.16 apply at all?

33. This is really the plaintiffs’ alternative position. That is, if the Court does not have power to dispense with r 36.16, then I should find that r 36.16 does not apply. The effect of the submission is that:

(i) in circumstances in which the plaintiffs had not been heard on the question of costs, the costs order should be viewed as conditional and thus not determining any final relief; or (ii) the effect of granting liberty to apply on three days’ notice, was to make the costs order conditional and conditional only on the party giving three days’ notice of an application to seek to vary the costs order. Having regard to the granting of leave to apply on three days’ notice, it must be that I contemplated that there might be an application to vary the costs order. In that sense it may be that the costs order could be viewed as conditional in the sense of not intending to determine any order on a claim for final relief.

34. There are two problems with the plaintiffs’ submissions being:

35. Whilst I might have thought or contemplated that the parties might seek to vary the costs order, there is nothing on the face of orders 2 and 3, which suggests that the costs order was conditional until something else occurred. That is, the costs order was not conditional upon a party making an application. Rather it was a final order, subject to a party making an application to vary it (which may or may not have occurred); and

36. Further, there is nothing in order 3 which might suggest that its effect was to extend or overcome any time limit set out in the UCPR.

37. In Boateng v Dharamadas [2019] NSWCA 233 at [18]-[24], the Court of Appeal considered and rejected a similar submission made by the plaintiffs in this matter. Macfarlan JA (with whom Gleeson JA agreed), held that the effect of a grant of liberty to apply is not to obviate the need for a party to file a motion in accordance with r 36.16, but rather, at most, to impose some additional requirement on a party applying. His Honour stated at [21]:

“[21] This approach is supported by Australian Hardboards Ltd v Hudson Investment Group Ltd (2007) 70 NSWLR 201; [2007] NSWCA 104 at [50]-[52] where this Court held that (i) the grant of liberty to apply does not preclude orders being final, (ii) the manner of invoking liberty to apply is by a substantive motion on notice and (iii) liberty to apply cannot be used to alter the substance of an order already made (see also Ross v Lane Cove Council (2014) 86 NSWLR 34; [2014] NSWCA 50 at [70]). Thus, in the present case, the primary judge’s power to vary his costs order was derived from r 36.16(3A), assuming that the subrule was properly invoked.”

36. While I accept that the granting of liberty to apply in respect of a costs order may create some confusion (that is, why is the order necessary at all), I do not accept that, by granting liberty to apply, the costs order was rendered conditional or that the requirements of r 36.16 were dispensed with.

37. Nor do I accept that the absence of any warning to the parties that they must comply with r 36.16 supports the proposition that the order was conditional. Unlike some of the recent judgments to which I have been referred, in which the existence of r 36.16 is expressly brought to the attention of the parties, I did not direct the parties to r 36.16 in my judgment. Perhaps I should have but that does not give rise to an approach not otherwise available or expressly already rejected by higher authority.

38. There may (or may not be) merit in some of the plaintiffs’ complaints about excessive costs having regard to the way the case was conducted by the defendant. The plaintiffs have already produced some evidence about this, although the defendant has not yet been afforded an opportunity to respond with his own evidence.

39. I am not determining the merits of what might have been the plaintiffs’ application to vary the costs order. I am only determining whether the plaintiffs’ are now out of time to make the application. In my view, they are.

40. I make the following orders:

41. The plaintiffs’ motion seeking a variation of the costs order is dismissed.

42. The plaintiffs are to pay the defendant’s costs of the motion.

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