Bucic v Arnej Pty Ltd (No 4)
[2019] VSC 527
•13 August 2019
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
PERSONAL INJURIES LIST
S CI 2015 05539
| MARIN BUCIC | Plaintiff |
| v | |
| ARNEJ PTY LTD | Defendant |
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JUDGE: | ZAMMIT J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 5 August 2019 |
DATE OF RULING: | 13 August 2019 |
CASE MAY BE CITED AS: | Bucic v Arnej Pty Ltd (No 4) |
MEDIUM NEUTRAL CITATION: | [2019] VSC 527 |
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PRACTICE AND PROCEDURE – Application by third party to reopen proceeding – Proceeding dismissed by consent on the day fixed for trial – Orders regular and perfected – Whether inherent jurisdiction – Whether exceptional circumstances – Bailey v Marinoff (1971) 125 CLR 529; Lollis v Loulatzis (No 3) [2008] VSC 231 followed.
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APPEARANCES: | Counsel | Solicitors |
| For the Defendant | Mr S A Smith QC | Moray & Agnew |
| For the Third Party | Ms R Annesley QC with Mr D Myers | Meridian Lawyers |
HER HONOUR:
This ruling assumes familiarity with my principal reasons for judgment in this proceeding delivered on 20 May 2019.[1] In brief compass, the substantive proceeding concerned a self-employed brick cleaner, who fell approximately four-and-a-half metres from a raised scaffolding bay on to a pile of discarded bricks. The defendant, Arnej Pty Ltd, was the sole-trader responsible for the construction of the house on the building site. The scaffolding was erected by a hire company, C & N Scaffolding Hire Pty Ltd, which was joined as a third party to the proceeding.
[1]Bucic v Arnej Pty Ltd [2019] VSC 330 (‘Principal Reasons’).
The evidence is that the defendant and the third party reached a negotiated settlement on 15 February 2019. On 18 February 2019, the day fixed for trial, I pronounced orders that the proceeding as between the defendant and the third party be dismissed by consent with no order as to costs. The trial then ran for a total of 12 sitting days. The jury was discharged on day four of the trial because of an impermissible prejudice that arose out of cross-examination of the plaintiff.[2]
[2]Transcript of Proceedings, Bucic v Arnej Pty Ltd (Supreme Court of Victoria, Zammit J, 21 February 2019) 264-8 (‘T’).
On 20 May 2019 I entered judgment for the plaintiff and heard the parties on costs. I was informed that the third party wished to be heard on costs despite no longer being a party to the proceeding. Counsel for the third party submitted that, in furtherance of the Civil Procedure Act 2010, I should order that the third party’s costs be limited to 21 per cent of $550,000. It was said that the defendant had gone off on a frolic of its own and contested the matter when the third party had no appetite for litigation. Senior counsel for the defendant replied that the third party had no standing in the proceeding and that, as such, the Court was functus officio.
I adjourned the third party’s application until such time as I had ruled on costs as between the plaintiff and the defendant. On 17 June 2019 I delivered my ruling as to costs, allowing damages in the nature of interest, and ordering that the defendant pay the plaintiff’s costs, including any reserved costs, on an indemnity basis to be taxed in default of agreement.[3] I then received written submissions from the third party and the defendant and, on 5 August 2019, heard oral submissions as to whether this Court is functus. I reserved my decision and indicated that I would provide brief written reasons. These are those reasons.
[3]Bucic v Arnej Pty Ltd (No 2) [2019] VSC 394.
In short, I agree with the defendant that this Court should not now disturb its own regularly perfected orders, as to do so would undermine the fundamental principle of the finality of litigation. While this Court has an inherent jurisdiction to vary or set aside its own orders, it is to be used sparingly and in exceptional circumstances, which are not made out on the evidence. The application must therefore be dismissed.
Procedural History
The third party relies upon the affidavits of James Hand and David Myers, solicitor and counsel for the third party respectively, both dated 17 June 2019. Their affidavits are unchallenged and disclose the following matters.
On 12 February 2019 Clayton JR presided over an application by the third party to adjourn the trial date. She considered that the application should be determined by the trial judge and adjourned the application to the day fixed for trial. She further ordered that the defendant pay the plaintiff and the third party’s costs of the 12 February 2019 appearance.
On 13 February 2019 Mr Hand served an offer on the solicitors for the defendant, by which the third party offered to contribute 21 per cent to any settlement, verdict or judgment of the plaintiff’s claim. That offer was open until 10am on 18 February 2019. Shortly after serving that offer, Mr Hand sent an email to the defendant’s solicitors, which reads relevantly as follows:
Further to the [13 February 2019 offer], for the avoidance of any doubt should your client accept the offer to contribute no offer is to be put to the plaintiff without our agreement as to the figure. Nor does acceptance of the offer in any way alter the costs order made yesterday against your client in favour of ours.
The defendant did not accept the third party’s 13 February 2019 offer.
On 15 February 2019 Mr Smith SC, senior counsel for the defendant, telephoned Mr Myers and informed him that the defendant would accept a contribution of 25 per cent from the third party. That offer was rejected. Mr Myers’s made a counteroffer that the third party would contribute 21 per cent to any settlement, verdict or judgment and forego the costs order made in its favour on 12 February 2019. Subsequently, Mr Smith telephoned Mr Myers to convey a further offer, that the third party contribute 23 per cent and agree to forego the 12 February 2019 costs order.
Mr Hand’s affidavit deposes that Mr Myers was instructed to reject that offer and make a further counteroffer as follows:
(a) contribute 21 per cent to any settlement, verdict or judgment of the plaintiff’s action;
(b) forego the 12 February 2019 costs order;
(c)present the director of the third party to Mr Smith’s chambers at 9am on the day fixed for trial for a conference, together with a set of enlarged photographs and video obtained by the third party;
(d) on the basis that the third party retained input into quantum.
…
An automatic consequence of the offer … was that, if the defendant accepted it, the third party’s application to adjourn the trial would fall away.[4]
[4]Affidavit of James Hand sworn 17 June 2019 [19]–[21].
On 16 February 2019, which was a Saturday, the Court received an email from Mr Myers stating as follows:
I am writing to inform you that the Third Party proceeding resolved late Friday afternoon. I will appear, of course, before her Honour to seek the appropriate orders on Monday morning.
Warm regards,
Dave Myers, counsel for the Third Party
On the morning of 18 February 2019, counsel for the plaintiff provided a document to Mr Myers by which the plaintiff expressed his willingness to settle the proceeding by accepting an all-in offer of $550,000, with a waiver of any costs ordered against the plaintiff. That offer was open until 2pm on 18 February 2019. In response to the plaintiff’s offer, Mr Myers provided a document to Mr Smith by which the third party expressed that it was ‘willing to pay 21% (the agreed percentage of contribution as between the Third Party and the Defendant) of $550,000 inclusive of costs (including reserve costs) and disbursements in this action’. The defendant did not accept this offer and nor did it make any counteroffer.
On 18 February 2019, having been informed by Mr Myers that the defendant and the third party had reached a negotiated settlement, I pronounced the following orders:
THE COURT ORDERS BY CONSENT THAT:
1. The Third Party proceeding be dismissed.
2. No order as to costs.
After the Court adjourned on 18 February 2019, Mr Hand and the solicitor for the plaintiff agreed to reopen the plaintiff’s offer, which would now close at 10am on 19 February 2019. That night Mr Hand sent a letter to the defendant’s solicitor which reads relevantly as follows:
We confirm that your client’s third party proceeding against our client has resolved …
The plaintiff has offered to accept $550,000 “all inclusive”. The plaintiff’s solicitor has confirmed to us that the offer will now be open for acceptance until 10am Tuesday 19 February 2019.
We consider the plaintiff’s offer to be a reasonable offer and that it should be accepted. Pursuant to the Contribution Agreement our client will contribute 21% towards acceptance of the plaintiff’s offer. …
If the plaintiff’s offer is not accepted and the matter proceeds to verdict or judgment and your client obtains a result that is less favourable than or substantially the same as the plaintiff’s offer outlined above, this letter will be produced in support of an application for your client to pay all of the damages and costs awarded to the plaintiff above $550,000.
The defendant did not respond to Mr Hand’s letter.
As I have said, on 20 May 2019, I delivered my principal reasons for judgment in this proceeding and pronounced the following orders:
THE COURT ORDERS THAT:
1. Judgment be entered in favour of the plaintiff.
2. Costs are to be determined.
Those orders were authenticated on 30 May 2019.
At hand down, Mr Myers appeared on behalf of the third party, indicating that the third party had an interest in the issue of costs. A date for arguments as to costs was fixed for 22 May 2019. On 22 May 2019, at the costs mention, Mr Myers submitted that the third party’s liability should be limited to 21 per cent of $550,000, pursuant to chapters 2, 6, 7, 8 and 9 of the Civil Procedure Act 2010. He submitted that the defendant had gone off ‘on a jaunt of its own’ and should suffer the consequence of that action.[5] I adjourned the third party’s application until such time as I had ruled on costs as between the plaintiff and the defendant.
[5]T20.10–12.
On 17 June 2019 I delivered my ruling as to costs, allowing damages in the nature of interest, and ordering that the defendant pay the plaintiff’s costs, including any reserved costs, on an indemnity basis to be taxed in default of agreement.[6] On 19 June 2019 I delivered a brief ruling as to certification of counsels’ fees. I referred the determination of counsels’ fees to the Costs Court to be taxed in default of agreement.[7]
[6]Bucic v Arnej Pty Ltd (No 2) [2019] VSC 394.
[7]Bucic v Arnej Pty Ltd (No 3) [2019] VSC 410.
On 21 June 2019 I pronounced final orders as follows:
THE COURT ORDERS BY CONSENT THAT:
1. The defendant pay the plaintiff damages in the amount of $1,043,000.00.
2. The defendant pay the plaintiff interest in the sum of $186,747.16.
3.The defendant pay the plaintiff’s costs, including any reserve costs, on an indemnity basis to be taxed in default of agreement.
4.Counsel’s fees be determined by the Costs Court and taxed in default of agreement.
5.The parties have liberty to apply in respect of any matter arising out of these orders.
6.The proceeding is otherwise dismissed.
I then received written submissions from the third party and the defendant and, on 5 August 2019, heard oral submissions as to whether this Court has jurisdiction to reopen the proceeding.
Relief sought
The third party seeks orders that:
(a) it pay the defendant the sum of $115,500 in full and final settlement of its contribution to the damages, interest and costs payable by the defendant to the plaintiff, representing 21 per cent of the total amount that the plaintiff was willing to settle the proceeding for as at 18 February 2019; and
(b) the defendant pay the third party’s costs of this application, such costs to be offset against the amount to be paid by the third party in accordance with the above order.
Legal Principles
The principles governing an application such as the present are well-settled and may be succinctly stated.
Once the Court has made an order disposing of proceedings, which has been perfected by being drawn up as a record of the Court, then that proceeding is at an end and the Court does not have any inherent or statutory jurisdiction to make further orders in respect of such proceedings save for in exceptional circumstances. While a court may be persuaded to stay its own order, it is extremely rare for a court to vary or set aside its own order, save for where there has been fraud, a breach of natural justice, a mistaken apprehension of law or fact or material error in the approach of the judge. The overriding reason for the rule is the importance of the principle of the finality of litigation for the parties and, indeed, all society.
The chief authority for the above proposition is Bailey v Marinoff.[8] The case concerned a self-executing order of the Court of Appeal of the Supreme Court of New South Wales. The order required the appellant to file and serve appeal books by a certain date—if the appeal books were not filed and served the appeal would be dismissed with costs. The appellant filed the appeal books by the required date but did not serve them until a week later. The order therefore self-executed and the appeal was dismissed. The Court of Appeal then ordered, upon application of the appellant, that the service effected be sufficient for the purposes of the order. The respondent appealed to the High Court on the ground that the Court of Appeal lacked the jurisdiction to vary or set aside its own perfected order.
[8](1971) 125 CLR 529 (‘Bailey’).
The majority of the High Court (Barwick CJ, Menzies, Owen and Walsh JJ) held that there is no inherent power in a court to deal further with an appeal which has already been dismissed by formal order, in conformity with an order pronounced, where the order was entered before an application to vary it was made. The ratio of the majority is expressed in the reasons of Barwick CJ:
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. In my opinion, none of the decided cases lend support to the view that the Supreme Court in this case had any inherent power or jurisdiction to make the order it did make, its earlier order dismissing the appeal having been perfected by the processes of the Court.[9]
[9]Ibid 530–1. See also Gamser v Nominal Defendant (1977) 136 CLR 145.
Menzies J added the following:
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.[10]
[10]Bailey (1971) 125 CLR 529, 531–2.
Gibbs J, in dissent, arrived at a slightly wider formulation of the rule. His Honour restated the rule as follows:
It is a well-settled rule that once an order of a court has been passed and entered or otherwise perfected in a form which correctly expresses the intention with which it was made the court has no jurisdiction to alter it. The rule rests on the obvious principle that it is desirable that there be an end to litigation … However, the rule is not inflexible and there are a number of exceptions to it in addition to those that depend on statutory provisions such as the slip rule found in most rules of court. Indeed, as the way in which I have already stated the rule implies, the court has the power to vary an order so as to carry out its own meaning or to make plain language which is doubtful, and that power does not depend on rules of court, but is inherent in the court. Further, it has been held that a court may amend a part of a judgment or an order which is ‘not the operative and substantial part’; such an amendment, which may be far from being merely formal in its effect, could … only be made under the inherent jurisdiction … Moreover, it has been held that in certain cases circumstances occurring since the judgment may warrant the making of a supplemental order … and this seems to be another example of the inherent power.[11]
[11]Ibid 539–40 (citations omitted).
His Honour concluded that:
If, to adopt the metaphor not infrequently used in these cases, the action becomes dead when the order dismissing it takes effect, it is not beyond revival. Indeed, to say that the appeal is dead, or at an end, seems to me, with all respect, to be beside the point, which is whether the inherent jurisdiction of the court permits it to vary the condition of an order dismissing an appeal after the condition has taken effect, and to say without more that because an appeal is at an end therefore no further order can be made is to beg the question. Clearly such an order might have been varied on the day before the condition took effect and it would seem strange if the power of the court were so limited as to make the order incapable of variation even one day after the condition had taken effect, no matter what unexpected misfortune might have prevented the party affected from complying with the condition. However I can see no reason in principle, and certainly none in justice or convenience, why an appellate court cannot vary the condition of an order dismissing an appeal, notwithstanding that the appeal has been dismissed before the variation is effected; the appeal may be at an end, but the power of the court remains, and an exercise of the power can reinstate the appeal.[12]
[12]Ibid 544–5.
Thus, even in the dissenting view of Gibbs J, a court has no power to vary or set aside its own order, once perfected, save for where the recorded judgment requires clarification, is to be altered in a minor and non-substantive way, or where there has been fraud, a breach of natural justice, or other circumstances which impeach the obtaining of the order or judgment.
The ratio in Bailey was revisited by the High Court in Autodesk Inc v Dyason (No 2).[13] That case too concerned an application to the High Court for the purposes of vacating an earlier order of that Court dismissing an appeal. The High Court refused the application. Dawson J, expressing the view of the majority, stated:
Whilst the Court has jurisdiction to entertain an application to vacate orders which it has made, at all events before those orders have been perfected by the entry of judgment … it is a jurisdiction to be exercised cautiously, bearing in mind the public interest in the finality of litigation. In Wentworth v Woollahra Municipal Council, the Court said:
‘[T]he circumstances in which this Court will reopen a judgment which has been pronounced are extremely rare. The public interest in maintaining the finality of litigation necessarily means that the power to reopen to enable a rehearing must be exercised with great caution. Generally speaking, it will not be exercised unless the applicant can show that by accident without fault on his part he has not been heard’.[14]
[13](1993) 176 CLR 300 (‘Autodesk (No 2)’).
[14]Ibid 317 (citations omitted).
Chief Justice Mason, who was in dissent, said:
The exercise of the jurisdiction to reopen a judgment and grant a rehearing is not confined to circumstances in which the applicant can show that, by accident and without fault on the applicant’s part, he or she has not been heard. It is true that the jurisdiction is to be exercised with great caution, having regard to the importance of the public interests and the finality of litigation.
…
[T]he public interest in the finality of litigation will not preclude the exceptional step of reviewing or rehearing an issue when a court has good reason to consider that, in its earlier judgment, it has proceeded on a misapprehension as to the facts or the law.[15]
[15]Ibid 301–2 (citations omitted).
Bailey and Autodesk (No 2) were in turn considered by this Court in Lollis v Loulatzis (No 3).[16] There, after dismissing the plaintiff’s claim, Kaye J (as he then was) was asked to reopen proceedings because the first defendant had allegedly removed certain improvements from a property. The plaintiff contended this had ‘falsified’ the basis of his Honour’s otherwise regularly perfected orders. The plaintiff sought orders that the Court’s earlier order be vacated or set aside. It was said that the Court had power to make such orders either in its inherent jurisdiction or under r 66.14 of the Supreme Court (General Civil Procedure) Rules 2005 (‘the Rules’).
[16][2008] VSC 231 (‘Lollis’).
After surveying the authorities, and construing the scope and application of r 66.14, his Honour concluded as follows:
In my view, the foregoing review of the authorities makes it plain that, subject to certain well established exceptions, there is no inherent jurisdiction in the Court to set aside or vary orders which have been perfected by authentication by the Prothonotary. That longstanding rule is based on the principle that it is in the public interest that there be an end to litigation. In DJL v The Central Authority, the High Court described how the exceptions to that rule … are substantially a creature of history. In particular, the exception relating to judgments obtained by fraud derives from the equitable jurisdiction of the Court of Chancery. Indeed, where it is sought to impeach a judgment for fraud, the application is usually made in a separate proceeding seeking the equitable remedy.[17]
[17]Ibid [30] (citations omitted).
Lollis has been followed by several more recent decisions of this Court.
In Lawstrane Pty Ltd v Ruttmar[18] the Court of Appeal (Redlich JA and Davies AJA) considered whether the County Court was functus officio after it had entered judgment and accordingly whether it had power to stay its own order. Their Honours held that the Court was functus but that it nevertheless had the power to stay its own order. The power to stay an order under r 66.14 is, however, very different to the power to vary or set aside an order as is sought by the third party in the instant proceeding.
[18](2013) 37 VR 320.
In Giedo van der Garde BV v Sauber Motorsport AG (No 2)[19] Croft J was asked by consent to vary, discharge or permanently stay orders made pursuant to international arbitration. His Honour noted that, although the orders were sought by consent, the relevant award (i.e. under arbitration) was extant and had not been annulled or otherwise the subject of orders by any of the courts of the arbitral seat (i.e. Switzerland). Further, the subject orders had been affirmed by the Court of Appeal, in a subsequent decision. His Honour therefore decided that it would only be appropriate to stay the orders until further order (not permanently) as that was the extent of the Court’s jurisdiction in the circumstances.
[19][2015] VSC 109.
In PCCEF Pty Ltd v Geelong Football Club Ltd[20] Croft J considered the question once again and reached the same conclusion. In that case the plaintiff sought leave to reopen its case. The application was made after final orders were perfected. The plaintiff submitted that new evidence had arisen to advance a new claim of rectification notwithstanding that the Court had delivered judgment and perfected final orders. The plaintiff submitted that s 49 of the Civil Procedure Act 2010 bestowed upon the Court a power to revisit its own orders once perfected. His Honour rejected this submission, holding that such a conclusion would be clearly antithetical to the purpose for which the Act had been promulgated, namely the just, efficient, timely and cost-effective resolution of the real issues in dispute.[21] Justice Croft was firmly of the view that the application must be dismissed for want of jurisdiction because the plaintiff had not established any ‘truly exceptional circumstances’.[22]
[20][2018] VSC 258 (‘PCCEF’).
[21]Ibid [13].
[22]Ibid [69].
In Ugrinovski v Naumovski[23] Almond J had made orders by consent after the parties had resolved the matter pursuant to a binding heads of agreement (‘HOA’). The orders made by the Court gave effect to the terms of the HOA. The parties were required to enter into a settlement deed, which they did, however one of the parties subsequently came back, on summons, seeking to vary the final orders. His Honour considered Bailey and Lollis and concluded that the Court did have the power to determine the issues raised on the summons. The principle question was whether the Independent Counsel had made a manifest error in drawing up the Settlement Implementation Deed. As this was a circumstance that arose after and independently to the Court’s orders, and required determination for the parties to give effect to the terms of the settlement, his Honour held that he did have jurisdiction to hear it. Ultimately, Almond J determined that there was no manifest error, which left the terms of the settlement to stand.
[23][2018] VSC 437.
In Perton v Walters[24] Derham AsJ considered whether the defendant, one Mrs Walters, should be granted a stay of the hearing of the costs of the plaintiff pursuant to r 66.14. His Honour held that a stay was warranted and, in doing so, reiterated the rule in Bailey and Lollis that a stay, in contradistinction to an order to vary or set aside, is the furthest extent of the jurisdiction unless exceptional circumstances exist.
[24](2018) 56 VR 306.
Submissions
For the third party
Senior counsel for the third party submitted that this Court is not functus officio because it has an inherent jurisdiction to vary or set aside its own regularly perfected order where to do otherwise would be to allow an injustice or inequity. Reliance was placed on the dissenting opinion of Gibbs J in Bailey. In particular, senior counsel emphasised the passage in his Honour’s reasons where he described an action as ‘dead when the order dismissing it takes effect,’ yet is capable of being revived:
Indeed, to say that the appeal is dead, or at an end, seems to me, with all respect, to be beside the point, which is whether the inherent jurisdiction of the court permits it to vary the condition of an order dismissing an appeal after the condition has taken effect.[25]
[25]Bailey (1971) 125 CLR 529, 544–5.
Similarly, senior counsel submitted, the question for the Court in the instant proceeding is whether the inherent jurisdiction permits the variation of the subject order. It was submitted that such jurisdiction exists because of the allegedly unconscionable manner in which the defendant, by its silence, induced the third party into the expectation that its liability would be limited to 21 per cent of $550,000, as per the third party’s letter dated 18 February 2019, rather than 21 per cent of any liability that might flow from any judgment for the plaintiff. This was so even though the third party’s letter, and the defendant’s failure to respond, post-dated the making of the consent orders by which the third party was dismissed from the proceeding.
Senior counsel for the third party also placed reliance on the subsequent decision of the High Court in Autodesk (No 2). This was said to be authority for the proposition that the Court has an inherent jurisdiction where there have been exceptional circumstances such as a misapprehension of fact or law, or an error of law in the approach of the judge, which would vitiate the foundation of a regularly perfected order. Senior counsel conceded, with reference to the reasons of Mason CJ in that case, that there is public interest in the principle of the finality of litigation. However, senior counsel drew attention to the reasoning of Brennan J, especially the following paragraph:
This Court has undoubted jurisdiction to recall a judgment which it has pronounced, at least prior to the formal entry of the judgment, if the judgment has been pronounced against a person who, without fault on the part of that person, has not had an opportunity to be heard as to why that judgment should not be pronounced … The jurisdiction is exercised sparingly for it is important to bring litigation to finality in this Court. The approach of Courts from which an appeal lies is not so strict, for it may be preferable to recall an unperfected but erroneous judgment rather than allow it to stand until it is quashed on appeal. Nevertheless, natural justice would be denied if, in a case in which the stated conditions are satisfied, the judgment were not vacated.[26]
[26]Autodesk No (2) (1993) 176 CLR 300, 308.
It was submitted that this Court has dismissed the third party proceeding without any substantive hearing in relation to that matter and that, as a result, an error or misapprehension has formed the basis of the order such that an inequity or injustice has been perpetuated.
Finally, counsel for the third party relied on Kabat Investments Pty Ltd v Compleat Imports Pty Ltd[27] as authority for the proposition that, if there is a power to vacate perfected orders, it ought to be exercised by the court or judge who made the original order.[28] It was submitted that, as I had made the original order, it would be in the interests of justice for me to rehear the matter and, if necessary, vary or set aside the orders I pronounced and perfected on 18 February 2019. Senior counsel submitted that it was reasonable of the third party to seek to limit its liability at an early stage of the trial and unconscionable of the defendant not to respond to its letter of variation to the terms of the contract.
For the defendant
[27][2002] VSCA 134.
[28]Ibid [10] (Buchanan JA, Batt JA agreeing).
Senior counsel for the defendant submitted that Gibbs J was in the minority in Bailey and that the state of the law is effectively represented by the decision of Kaye J in Lollis. Thus, save for exceptional circumstances or for non-substantive alterations such as those involving the ‘slip rule’, this Court has no power to vary or set aside its own regularly perfected order. Senior counsel pointed out that there is no suggestion that I had made an order contrary to the intentions of the parties. And nor was there any misapprehension of fact or law, which was not a fault of either party, as discussed by the High Court in Autodesk (No 2). As such, it was submitted, the order pronounced and perfected on 18 February 2019 is not tainted by any mistake or inadvertence and so could not be varied or set aside without disturbing the principle of the finality of litigation. Further, whereas the third party submitted that varying the orders would involve no substantive alteration, senior counsel for the defendant submitted that to grant the orders sought would be to radically alter their substance. This is because it would substitute an order dismissing proceedings for one in which the Court nominates the amount of monetary contribution that the third party is to make.
Senior counsel for the defendant submitted that this is precisely the sort of case in which the public has an interest in the finality of litigation. For the Court to set aside regularly entered and perfected orders to conduct an investigation about post-facto developments between the parties would strike at the very heart of that policy consideration. It would invite the making of further orders in circumstances where the parties had consented to orders but then had changed their minds and essentially sought to revisit a forensic decision. Senior counsel relied on the fact that the third party had been represented by counsel, signified their consent to the orders and never came back to the Court to complain of the orders, or agitate some error or misapprehension on the part of the Court, until after the completion of the trial. It was submitted that, even granting that a court can vary or set aside its own regularly perfected orders to prevent an injustice, there is no evidence of any such injustice before the Court. Rather, as senior counsel for the defendant put it, what has occurred is that the third party has sought to unilaterally vary a contract between itself and the defendant, which the defendant has not acquiesced to. How this could give rise to an injustice is hard to see.
Senior counsel for the defendant submitted that the third party’s reliance on Autodesk (No 2) is misconceived. The key point in that case was that a party had not been heard, or alleged that it had not been heard, on a substantive matter. The High Court accepted that in certain circumstances this could justify reopening a proceeding. Further, a proceeding might be reopened if the final orders had not been perfected, or if there was a mistaken apprehension of fact or law or an error in the approach of the judge. But the evidence before the Court does not suggest that anything of the sort has occurred. Further, it is difficult to see how the third party’s claim can be made out either in contract or in equity. In the former, the third party’s letter seeking a unilateral benefit does not constitution a ‘variation’ of a contract, since no valuable offer for consideration was made to the defendant. In the latter, when the defendant’s ‘silence’ in not replying the letter is objectively considered, it is hard to see how it can possibly have induced the third party into reliance in the time-honoured form of an equitable estoppel. These substantive deficiencies, while not directly relevant to the issue of functus officio, go some way to demonstrating that there has been no injustice of the kind that might enliven the inherent jurisdiction of the Court to vary or set aside its own regularly perfected order.
Consideration
Having regard to the foregoing authorities, subject to well-established exceptions, there is no inherent jurisdiction in this Court to set aside or vary the authenticated orders, dated 18 February 2019, dismissing the proceeding as between the defendant and the third party.
At the time the order was made the defendant and the third party were legally represented. There is nothing in the third party’s affidavits or submissions to suggest there has been fraud or a breach of natural justice. There is no evidence that the order was made contrary to the parties’ intentions or that the Court was unaware of a material fact or a material matter of law which was not a fault of either party. The parties agree that that the order was a perfectly regular order apparent on its terms, apparent on its language and made with the consent of the parties.
There is no evidence of mistake by either party, or that the court was in any way mistaken about the basis of the order.
As a general rule, there is no inherent power to set aside a judgment regularly made and authenticated by reason of changed circumstances. However, the law is not inflexible and there are a number of exceptions to it, in addition to those that depend on statutory provisions such as the ‘slip rule’. As Derham AsJ noted in Perton v Walters,[29] these exceptions include clarification of the recorded judgment, minor alterations which do not affect the operative and substantive part of the judgment, as well as any fraud or breach of natural justice which impeaches the orders.
[29](2018) 56 VR 306.
In this case, the third party is asking the court to reconsider and alter the substance of the orders that were made, in the absence of any evidence or suggestion of fraud or breach of natural justice. The third party wants the Court to look at the matter afresh. This would involve the Court substituting the order dismissing the proceeding between the third party and the defendant and then determining on the evidence the monetary contribution that the third party is to make. The new order would be entirely different in substance and form.
As noted, when the 18 February 2019 order was made, both parties were legally represented. I am satisfied the third party understood the order and did not seek to be heard. In fact, Mr Hand deposes that he was in court at the time the orders were made and that he remained in court for the afternoon of 18 February 2019, at no stage raising any issue with the orders pronounced.
I cannot see how it could be in the interests of justice to amend the order. At the time the third party consented to the order which is now challenged, it understood exactly what it had agreed to with the defendant. The third party now wants to impose additional terms into that agreement. The third party made an informed decision and consented to the order being made.
The third party is aggrieved that they have agreed to an order, properly made, which now leaves them having to contribute to what it considers unreasonable. Whether there has been a variation to the agreement between the third party and the defendant, as I have said, has no bearing on the orders of 18 February 2019. The third party wants the court to revisit an order based on conduct between it and the defendant after the order was made. The alleged inequity or unconscionable conduct by the defendant relied upon by the third party occurred after the order was made and after the proceeding between the defendant and third party was dismissed.
The evidence is that, at the time the 18 February 2019 order was made, the third party agreed that it would contribute 21 per cent to any judgment or settlement obtained by the plaintiff.[30] Contribution was not limited to a particular amount. The third party received consideration for the making of the offer, in that it avoided the risk that its contribution to any verdict for the plaintiff would exceed 21 per cent and it was not exposed to the costs of conducting its defence in the trial. I repeat that there is no evidence of mistake by the Court, coercion, fraud, breach of natural justice or even misunderstanding or mistake between the parties in relation to the agreement struck and relied upon when the parties sought the consent orders.
[30]Affidavit of James Hand sworn 17 June 2019, Exhibit JH6.
Critically, acceding to the third party’s application to impose a limit upon its contribution would undermine a fundamental principle of our justice system, namely that it is in the public interest that there be an end to litigation. Allowing the third party’s application would create an undesirable precedent which could undermine future attempts by parties to agree to contribution or encourage them to reopen negotiations after a settlement had been reached and regular and perfected orders made. I agree with the defendant that this would create a real disincentive for parties to minimise litigation and shorten trials by way of negotiated settlement. It would, I hasten to add, militate against the overarching purpose of the Civil Procedure Act 2010 and the rules of court in that it would not facilitate the just, efficient, timely and cost-effective resolution of the real issues in dispute. It is precisely this sort of situation that was in the contemplation of the High Court in Bailey and is articulated in the rule that a court has no power, save in exceptional circumstances, to vary or set aside its own regularly perfected orders. Those sorts of circumstances are not made out on the evidence before me.
If the third party has any remedy against the defendant, it cannot seek to advocate those rights in this proceeding.
Conclusion
There is no evidence before the Court to suggest anything in the order of fraud, breach of natural justice, misapprehension of law or fact, or error on the part of the Court. Accordingly, applying Bailey and Lollis, I cannot see how the inherent jurisdiction could be enlivened.
The third party is no longer a party to this proceeding and lacks standing to bring the application. The nature of the agreement between the defendant and the third party as to contribution, and whether that agreement was subsequently varied, are questions which, if at all, should be the subject of a fresh proceeding in contract or equity. This Court does not have the power to hear such matters in circumstances where final orders have been perfected and entered into the records of the Court.
Subject to any submissions, I consider the appropriate order as to costs is that the third party pay the defendant’s costs of the application on a standard basis.
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