Consideration
23 The purpose of the payment into court, as reflected in the terms of order 5 made by the Supreme Court, was to put the funds into the control of the Court to abide the outcome of the proceedings.
24 When a person pays money into court, the circumstances in which that is done can affect the character of the person's rights and interests in the money. Ordinarily, where a person pays money into court by way of security for the outcome of proceedings, the payer retains his or her beneficial interest in the fund up to the time of judgment. In Dwight v Commissioner of Taxation (1992) 37 FCR 178 at 192, Hill J explained that the other party or parties for whom the moneys are held in court as security for any future order in his, her, its or their favour, has or have a defeasible equitable charge or lien over the moneys in respect of that potential order, but no present entitlement to them. Only at the time of judgment might an order for payment from that fund, giving effect to the decision of the Court or arbitrator, change the underlying rights in the fund.
25 Payment of money into court can be made as security for the outcome of proceedings in that or another court or in an arbitration. For example, s 29 of the Admiralty Act 1988 (Cth) which gives courts exercising jurisdiction under the Act power to order that a ship or other property (including a bail bond or P&I club letter of indemnity or guarantee) be held as security for the satisfaction of a judgment of a foreign court or arbitral award that may be made in proceedings that are either extant or prospective and the court may impose conditions for that purpose.
26 In other cases, such as in Chen [2010] NSWSC 808, a trustee appointed simply for sale who had no other connection to the subject matter of the controversy between the parties, will pay the net proceeds of sale into court and, the trustee having recouped the expenses and entitlements of the performance of the trust, will lose all beneficial interest in the trust fund paid into court. Ordinarily, the trustee's beneficial interest in the trust fund to secure its right to reimbursement or exoneration for liabilities properly incurred in the administration of the trust will be satisfied at the time of payment into court: cf Commissioner of Stamp Duties (NSW) v Buckle (1998) 192 CLR 226 at 246-247 [50] per Brennan CJ, Toohey, Gaudron, McHugh and Gummow JJ.
27 In such a case, the interests of the persons involved in the controversy, or who may have a beneficial interest or mere equity to seek the proper administration of a trust, can either exist independently of the outcome of the proceedings, so that the Court declares the pre-existing rights to the property represented by the fund, or the Court can create new rights by a judgment establishing or changing those rights by ordering payment out of the fund. Thus, where a party pays money into court as security, if subsequently judgment is entered in favour of another party, an order for payment out of the fund in court to the judgment creditor will change the underlying beneficial interests in the fund.
28 Here, there are competing claims to the money paid into Court, as order 5e) recognised in its terms. Under r 2.43(1) of the Federal Court Rules 2011 (Cth) money paid into court in a proceeding under r 2.42 (as is the case here) may be paid out or applied only in accordance with an order. Slattery J discussed a three stage test that an applicant had to satisfy to obtain such an order under an analogue of r 2.43(1): Commonwealth Bank of Australia v The Estate of the Late Mahmoud Slieman [2010] NSWSC 661 at [8]-[10]; (see too Yuan v Xie [2015] NSWSC 492 at [10] per Stevenson J), namely that:
(1) the applicant (or someone else) is the person primarily entitled to the funds and the basis of that entitlement;
(2) that person has a beneficial interest in the very funds paid into court; and
(3) all other interested parties are on notice of the application.
29 However, where money has been paid into court pursuant to an order made by consent, the parties will have entered into an antecedent contract where they agreed that they, or one of them, would ask the Court to act by its order in the manner that they had agreed.
30 Where a final order is made by consent, the Court does not possess a discretion to set it aside, except on proper grounds: Harvey v Phillips (1956) 95 CLR 235 at 242-244 per Dixon CJ, McTiernan, Williams, Webb and Fullagar JJ. There the Court said (95 CLR at 243-244 and see too Berowra Holdings Pty Ltd v Gordon (2006) 225 CLR 364 at 378 [44] per Gleeson CJ, Gummow, Hayne, Heydon and Crennan JJ):
But in the case of a compromise which is made within the actual as well as apparent authority of counsel a court does not appear to possess a discretion to rescind it or set it aside. The question whether the compromise is to be set aside depends upon the existence of a ground which would suffice to render a simple contract void or voidable or to entitle the party to equitable relief against it, grounds for example such as illegality, misrepresentation, non-disclosure of a material fact where disclosure is required, duress, mistake, undue influence, abuse of confidence or the like. The rule appears rather from positive statements of the grounds that suffice (cf. Halsbury's Laws of England, vol. 26, 2nd ed., pp. 84, 85); but there is a dictum of Lindley L.J. which is distinct enough: " … nor have I the slightest doubt that a consent order can be impeached, not only on the ground of fraud but upon any grounds which invalidate the agreement it expresses in a more formal way than usual … To my mind the only question is whether the agreement on which the consent order was based can be invalidated or not. Of course if that agreement cannot be invalidated the consent order is good": Huddersfield Banking Co. Ltd. v. Henry Lister & Son Ltd [1895] 2 Ch 273 at 280. (emphasis added)
31 The court retains control of any interlocutory order that it makes. Ordinarily, a further order will be appropriate when, for example, new facts come existence or are discovered which render the enforcement of an interlocutory order unjust: Adam P. Brown Male Fashion Pty Ltd v Philip Morris Inc (1981) 148 CLR 170 at 178 per Gibbs CJ, Aickin, Wilson and Brennan JJ; see too r 39.05(c).
32 Here, the only persons with an actual or potential interest in the funds in court are Ms Snith and Mr Woodgate as trustee of the bankrupt's estate. The consent order for payment into court was interlocutory. It did not resolve any controversy on a final basis. But, the interlocutory order for payment into court in this matter involved a compromise between the parties as to how the proceeds of sale of the Mosman property would be dealt with both immediately (by 40% being paid to the trustee) and in the period up to final determinations by the Court of the controversies in the three proceedings between the parties.
33 There is no suggestion here that there is any ground to set aside or vary the contract for the making of the consent order for payment in, other than the failure of Ms Snith to anticipate how long the proceedings would take and any finance that she might need. For example, she did not suggest that any other circumstance of which she currently complains, namely her impecuniosity and lack of resources, was not present at the time at which she agreed to the order, but arose subsequently in an unforeseen way.
34 The evidence that Ms Snith has relied on does not enable me to be confident that she would be in a position to repay any money that a final judgment established belonged, or should have been paid out, to the bankrupt's estate for distribution to his creditors. Order 5e) expressly contemplated one possible outcome of the litigation was that none of the 60% of the proceeds of the sale of the Mosman property would be hers or payable to her.
35 Of course, I am in no position to make any finding as to the merits of that dispute. However, the consent order evidences that one of the matters that the parties contemplated when they made their agreement for the consent orders was that very result, as they expressed in the statement in order 5e)(ii) that, "60% paid into court with such amount to be subsequently paid to Mr Woodgate or Ms Snith, or partly to Mr Woodgate and partly to Ms Snith". Thus, at the time that the parties agreed to ask the Supreme Court to make the consent orders, they contemplated that Ms Snith may, I emphasise, not would, be exposed to an ultimate determination that she was not entitled to any of the fund paid into Court.
36 Part of my difficulty with Ms Snith's evidence in support of her application is the non-exhaustive explanation of, first, what her asset and liability position is and, secondly, what, if any, resources outside her own personal financial situation she could resort to, including whether loans may be available from other family members or Northop Hall or Didgeridoo to tide her through the proceedings.
37 In those circumstances, there is a not insubstantial risk that, if the orders that Ms Snith seeks were made, over 20% of the trust fund would be paid out of Court to a person who has no demonstrated capacity to repay any money were she subsequently ordered to do so. That result could put at risk the very purpose for which the fund was paid into court.
38 In my opinion, on the present evidence, the agreement to pay the money into Court on the basis recorded in order 5e) made on 10 November 2014 should not be disturbed.