Benefit Strategies Group Inc v Prider - [2007] SASC 250

SUPREME COURT OF SOUTH AUSTRALIA
(Civil: Application)
BENEFIT STRATEGIES GROUP INC & ANOR v PRIDER
[2007] SASC 250
Judgment of The Honourable Justice Gray
4 July 2007
PRIVATE INTERNATIONAL LAW - FOREIGN JUDGMENTS - EFFECT AND ENFORCEMENT
Application to set aside judgments - judgments entered in this Court by way of enforcement of foreign judgment - foreign judgment has since been set aside and declared to be void ab initio by foreign Court - whether judgments by this Court should be set aside - Held: application allowed - a foreign judgment is only binding and conclusive so long as it stands - where a judgment is made entirely on the basis of a foreign judgment, and the foreign judgment is later overturned and set aside, good reason exists to set aside the judgment that relied on it.
Supreme Court Rules 1987 (SA) r 25 and r 84.12; Foreign Judgments Regulations 1992 (Cth), referred to.
Benefit Strategies Group Inc v Prider (2004) 237 LSJS 1; Benefit Strategies Group Inc v Prider (2005) 91 SASR 544; Copping v ANZ McCaughan Ltd (1996) 67 SASR 525; Venquelin v Bouard (1863) 15 CB (NS) 341; Boyle v Victoria Yukon Trading Company (1902) 9 BCR 213; Ainslie v Ainslie (1927) 39 CLR 381; Schnabel & Ors v Lui & Ors [2002] NSWSC 15, considered.

BENEFIT STRATEGIES GROUP INC & ANOR v PRIDER
[2007] SASC 250
Civil
GRAY J

On 21 May 2007, I made an order on the application of the defendant, Trevor Laurence Prider, setting aside judgments entered summarily in favour of the plaintiffs, Benefit Strategies Group Inc and Astrotech Enterprises Inc. The plaintiffs, the defendant and the non-parties have settled all issues between them. This application was not opposed by any party. I now publish my reasons for granting the application.
Background
On 1 May 2002, the Superior Court of California for the County of Orange filed and entered a default judgment against the defendant in favour of the plaintiffs. On 19 November 2004, summary judgments were entered pursuant to Rule 25 of the Supreme Court Rules 1987 (SA) by way of enforcement of the default judgment.[1] The default judgment formed the sole basis for and entire substratum of the summary judgments.
[1] Benefit Strategies Group Inc v Prider (2004) 237 LSJS 1 (Gray J); Benefit Strategies Group Inc v Prider (2005) 91 SASR 544 (Bleby, Vanstone and Anderson JJ); Prider v Benefit Strategies Group Inc [2006] HCATrans 50 (Gummow, Hayne and Crennan JJ – special leave refused).
On 5 July 2005, the defendant instituted proceedings in the California Court against the plaintiffs seeking to set aside the Californian default judgment. On 9 May 2006, the California Court entered a declaratory judgment in favour of the defendant against the plaintiffs in which it was ordered adjudged and decreed that, inter alia, the default judgment was void ab initio and of no force and effect, and that the California Court had not had jurisdiction over the defendant when it made the default judgment.
The defendant now seeks an order setting aside the summary judgments delivered by this Court, on the ground that the basis for and substratum of the summary judgments has been removed.
The Court’s Power to Make the Orders Sought
Rule 84.12 of the Supreme Court Rules 1987 empowers the Court to set aside summary judgments. That rule provides:
The Court may vary or set aside a judgment or order at any time if the justice of the case so requires.
In Copping v ANZ McCaughan Ltd,[2] Lander J observed:[3]
[I]t is clear enough from the authorities to which I have referred that, notwithstanding the absence of an inherent jurisdiction in the court to set aside a perfected judgment, a court may be invested with the power by statute or can by the making of its own rules of practice and procedure arrogate to itself the power to set aside, vary or revoke a judgment, even after that judgment has been sealed.
In my opinion this Court has done that by the passing of r 84.12 …
…
Rule 84.12 was first made at the time of the introduction of the 1987 Rules. It had no corresponding rule in the 1947 Rules. If it did no more than state the common law position, namely that a court had no jurisdiction to vary or set aside a judgment after it was sealed, there was no point in its introduction. Moreover if it was limited in its application to a time before the sealing of a judgment or order it would have said so, and it would not be in terms that talk of an exercise of power “at any time”. The Rule-makers would have been acutely aware of the decisions of the High Court limiting the inherent jurisdiction of the court in the manner described and would therefore have seen this as a remedial rule enabling the court, whether exercising jurisdiction at nisi prius or banco, to vary or set aside sealed judgments or orders if the justice of the case requires.
[2] Copping v ANZ McCaughan Ltd (1996) 67 SASR 525.
[3] Copping v ANZ McCaughan Ltd (1996) 67 SASR 525 at 567.
The Effect of Removal of the Substratum of the Summary Judgments
As the United States of America is not a country listed in the schedule to the Foreign Judgments Regulations 1992 (Cth), the plaintiffs when seeking the summary judgments in this Court relied on common law principles. The summary judgments were made on the basis of the default judgment. The defendant was not entitled to have the merits of the case re-examined before this Court.
The common law principles that were relied upon in making the summary judgments were that:
-The foreign court had exercised a jurisdiction over the judgment debtor that Australian courts recognise;
-The foreign judgment was final and conclusive;
-There was an identity of parties; and
-The foreign judgment was for a certain sum.
Relevant to the present application is the requirement that a foreign judgment be final and conclusive before it can be enforced. During the application for the summary judgments, counsel for the plaintiffs drew attention to the principle that a foreign judgment can be final and conclusive even though it is subject to appeal and even if an appeal is pending. At the time that the summary judgments were made, neither the defendant nor any other defendants in the California proceedings had taken action to have the default judgment set aside or to appeal from the decision. Counsel for the defendant, during the application for the summary judgments, accepted that a default judgment is considered to be a final and conclusive judgment unless or until steps are taken to set aside the judgment. It was accepted that it was not necessary that a decision be correct to be final and conclusive. It was submitted and accepted that a court of competent jurisdiction may correctly or incorrectly decide a case, and that in either case the decision would remain binding unless reversed on appeal.
For the present application, the situation has changed. The default judgment, which was treated as a final and conclusive judgment for the purpose of making the summary judgments, has been set aside by the California Court as void ab initio. It was a condition precedent to ordering the summary judgments in this Court that the default judgment was final and conclusive. At the time that the summary judgments were made it was appropriate to treat the default judgment as conclusive, but now that the default judgment has been set aside one of the conditions precedent for ordering the summary judgments has been removed.
Extensive case law on this topic consistently emphasises that a foreign judgment should be assumed to be final and conclusive, “so long as it stands” – that is, until such a time as it is set aside, if such a time arises.
In Venquelin v Bouard,[4] Erle CJ, with whom Williams and Keating JJ agreed, observed:[5]
I apprehend that every judgment of a foreign court of competent jurisdiction is valid, and may be the foundation of an action in our courts, though subject to the contingency, that, by adopting a certain course, the party against whom the judgment is obtained might cause it to be vacated or set aside. But, until that course has been pursued, the judgment remains in full force and capable of being sued upon.
[Emphasis added]
[4] Venquelin v Bouard (1863) 15 CB (NS) 341.
[5] Venquelin v Bouard (1863) 15 CB (NS) 341 at 367-368.
In Boyle v Victoria Yukon Trading Company,[6] heard by the Full Court of the Supreme Court of British Columbia, Hunter CJ observed:[7]
[A] default judgment may be set aside either absolutely or on terms, but so long as it stands it is a final and conclusive adjudication that a debt is due by the defendant if the claim is for debt. … Now, of course, this judgment is not unalterable in the wide sense, because it can be set aside by a Judge of the Yukon Court, but it is unalterable in the sense that it is conclusive while it stands …
[Emphasis added]
[6] Boyle v Victoria Yukon Trading Company (1902) 9 BCR 213.
[7] Boyle v Victoria Yukon Trading Company (1902) 9 BCR 213 at 223.
In Ainslie v Ainslie,[8] Knox CJ observed:[9]
The effect of the order on which the respondent seeks to rely is that so long as that order stands the respondent, wherever the order is operative, is relieved of the obligation to live with her husband.
[Emphasis added]
[8] Ainslie v Ainslie (1927) 39 CLR 381.
[9] Ainslie v Ainslie (1927) 39 CLR 381 at 388.
In the same case, Starke J observed:[10]
The order remains and is an adjudication of a final and conclusive character until discharged.
[Emphasis added]
[10] Ainslie v Ainslie (1927) 39 CLR 381 at 410.
In Schnabel v Lui,[11] Bergin J observed: [12]
A default judgment may be enforceable as a final and conclusive judgment even though it is liable to be set aside in the very court that rendered it. The approach that has been adopted is that until the steps are taken to set the judgment aside the judgment is enforceable as a final and conclusive judgment.
[Emphasis added]
[11] Schnabel & Ors v Lui & Ors [2002] NSWSC 15.
[12] Schnabel & Ors v Lui & Ors [2002] NSWSC 15 at [77].
The clear principle that has emerged is that a foreign judgment is only binding and conclusive so long as it stands. A corollary of this principle is that where a judgment is made entirely on the basis of a foreign judgment, and the foreign judgment is later overturned and set aside, good reason exists to set aside the judgment that relied on it. In the present case, the default judgment “no longer stands”, and so the summary judgments are no longer supported by a binding and conclusive judgment. They were when they were made, but they no longer are. This provides good reason, in my view, to set aside the summary judgments. No party has identified any factors that might support the summary judgments being maintained.