Clone Pty Ltd v Players Pty Ltd (In Liquidation) (Receivers & Managers Appointed)
[2018] HCA 12
21 March 2018
A22/2017 & A23/2017
ORDER
Matter No A22/2017
1.Appeal allowed.
2.Set aside orders 3, 4 and 5 of the Full Court of the Supreme Court of South Australia dated 8 December 2016 and, in their place, order that:
(a)the appeal to the Full Court of the Supreme Court of South Australia be allowed;
(b)the orders of the Supreme Court of South Australia (Hargrave AJ) dated 9 November 2015 in proceeding SCCIV‑04-319 be set aside and, in their place, order that:
(i)the application be refused; and
(ii)the first, seventh, eighth and tenth defendants pay the plaintiff's costs; and
(c)the first to fourth respondents pay the appellant's costs.
3.The first to fourth respondents pay the appellant's costs of the appeal to this Court.
Matter No A23/2017
1.Appeal allowed.
2. Set aside orders 3, 4 and 5 of the Full Court of the Supreme Court of South Australia dated 8 December 2016 and, in their place, order that:
(a) the appeal to the Full Court of the Supreme Court of South Australia be allowed;
(b) the orders of the Supreme Court of South Australia (Hargrave AJ) dated 9 November 2015 in proceeding SCCIV‑10-819 be set aside and, in their place, order that:
(i) the action be dismissed; and
(ii) the plaintiffs pay the defendant's costs; and
(c) the first to fourth respondents pay the appellant's costs.
3. The first to fourth respondents pay the appellant's costs of the appeal to this Court.
On appeal from the Supreme Court of South Australia
Representation
B C Roberts SC with R Bonig for the appellant (instructed by Finlaysons Lawyers)
A S Bell SC with P Zappia QC for the first to fourth respondents (instructed by Griffins Lawyers)
Submitting appearance for the fifth respondent
C D Bleby SC, Solicitor-General for the State of South Australia with B L Garnaut for the sixth respondent (instructed by the Crown Solicitor (SA))
Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports.
CATCHWORDS
Clone Pty Ltd v Players Pty Ltd (In Liquidation) (Receivers & Managers Appointed)
Equity – Where judgment given by Supreme Court of South Australia, as varied by Full Court of Supreme Court of South Australia – Where successful party engaged in malpractice – Where malpractice later discovered – Where perfected judgment set aside – Where no pleading or proof of fraud – Nature of court's equitable power to set aside perfected judgment – Whether equitable power extends to malpractice not amounting to fraud – Whether power to set aside perfected judgment conditional upon unsuccessful party having exercised reasonable diligence to discover fraud or malpractice.
Procedure – Perfected judgment –…
Grounds of appeal
[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.
[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.
[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.
Consideration
[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.
[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.
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Details
AGLC
Clone Pty Ltd v Players Pty Ltd [2018] HCA 12
Case
[2018] HCA 12
Decision Date
CaseChat Overview and Summary
Clone Pty Ltd and Players Pty Ltd (in liquidation) were parties to litigation concerning legal costs. Players sought to set aside a perfected judgment against it, alleging malpractice by Clone. The Supreme Court of South Australia, as varied by its Full Court, had set aside the judgment. Clone appealed this decision to the High Court of Australia.
The High Court was required to determine whether the equitable power of a court to set aside a perfected judgment extended to instances of malpractice by a party, where such malpractice did not amount to actual fraud. A further issue was whether the exercise of this equitable power was conditional upon the unsuccessful party demonstrating they had exercised reasonable diligence to discover the fraud or malpractice. The Court also considered the proper procedural course for bringing such an application, specifically whether it should be made within the original proceeding or by way of a fresh action.
The High Court allowed the appeal, setting aside the orders of the Full Court of South Australia. The Court reasoned that the equitable jurisdiction to set aside a perfected judgment was primarily concerned with preventing injustice arising from fraud or fundamental procedural unfairness. While acknowledging that the conduct of lawyers could, in some circumstances, amount to fraud, the Court held that malpractice, as alleged by Players, which did not reach the threshold of fraud, was not a sufficient basis to set aside a perfected judgment. The Court emphasised the importance of the finality of judgments and that the equitable power to interfere with such finality was to be exercised with caution. The Court also indicated that a fresh action, rather than an application within the original proceeding, was generally the appropriate procedural avenue for seeking to set aside a perfected judgment on grounds of fraud or misconduct.
The High Court ordered that the applications to set aside the judgment be refused, and that the original proceedings be dismissed, with costs awarded to Clone Pty Ltd.
Orders
Orders of the court
Matter No A22/2017
1. Appeal allowed.
2. Set aside orders 3, 4 and 5 of the Full Court of the Supreme Court of South Australia dated 8 December 2016 and, in their place, order that:
(a) the appeal to the Full Court of the Supreme Court of South Australia be allowed;
(b) the orders of the Supreme Court of South Australia (Hargrave AJ) dated 9 November 2015 in proceeding SCCIV‑04-319 be set aside and, in their place, order that:
(i) the application be refused; and
(ii) the first, seventh, eighth and tenth defendants pay the plaintiff's costs; and
(c) the first to fourth respondents pay the appellant's costs.
3. The first to fourth respondents pay the appellant's costs of the appeal to this Court.
Matter No A23/2017
1. Appeal allowed.
2. Set aside orders 3, 4 and 5 of the Full Court of the Supreme Court of South Australia dated 8 December 2016 and, in their place, order that:
(a) the appeal to the Full Court of the Supreme Court of South Australia be allowed;
(b) the orders of the Supreme Court of South Australia (Hargrave AJ) dated 9 November 2015 in proceeding SCCIV‑10-819 be set aside and, in their place, order that:
(i) the action be dismissed; and
(ii) the plaintiffs pay the defendant's costs; and
(c) the first to fourth respondents pay the appellant's costs.
3. The first to fourth respondents pay the appellant's costs of the appeal to this Court.
Background
Background to the litigation
Full text does not contain this section.
Evidence
Evidence Before The Court
Full text does not contain this section.
Decision
Reasons for decision
KIEFEL CJ, GAGELER, KEANE, GORDON AND EDELMAN JJ
At the time when Mr Griffin was informed of the existence of these copies, Players and Clone were involved in a dispute about legal costs. Mr Griffin inspected documents on a file listed on Clone's bill of costs. His purpose was to determine whether Clone's solicitors had been aware of the existence of the third and fourth copies of the agreement to lease during the trial. Mr Griffin found documents that revealed that Clone knew about the third copy of the agreement, and that the fourth copy of the agreement was contained in the file produced to the Court, but not called upon by Clone.The proceedings to set aside the judgment from the first trial Players' applications In June 2010, Players brought two applications to set aside the judgment against it and to obtain an order for a new trial. The first application was brought in the same proceedings that had been the subject of the trial judge's perfected judgment, as amended by the Full Court. The second application was a new proceeding before a single judge of the Supreme Court to set aside the judgment. The second application was the appropriate way to proceed. Even where the separate procedure of a motion for a new trial might be concurrently available[7], if fraud is alleged then a fresh action will generally be the appropriate application relying upon the power to set aside a perfected judgment of any court for fraud[8]. Independent proceedings, even where the application is to set aside an appellate court's decision[9], can permit "the whole issue [to] be properly defined, fought out, and determined"[10]. [7]McCann v Parsons (1954) 93 CLR 418 at 426; [1954] HCA 70.[8]Flower v Lloyd (1877) 6 Ch D 297 at 302; Jonesco v Beard [1930] AC 298 at 300-301; McDonald v McDonald (1965) 113 CLR 529 at 533, 535; [1965] HCA 45; Wentworth v Rogers (No 5) (1986) 6 NSWLR 534 at 538; Spies v Commonwealth Bank of Australia (1991) 24 NSWLR 691 at 699-700. See also Sheridan, "Fraud and Surprise in Legal Proceedings", (1955) 18 Modern Law Review 441 at 444.[9]Seton, Forms of Judgments and Orders in the High Court of Justice and Court of Appeal, 6th ed (1901), vol 1 at 859.[10]Hip Foong Hong v H Neotia and Co [1918] AC 888 at 894. See also Daniell, The Practice of the High Court of Chancery, 5th ed (1871), vol 2 at 1428. In its applications to set aside the orders of the trial judge and Full Court, Players alleged that the judgment could be set aside on the basis of malpractice by Clone, relying upon the decision of this Court in Commonwealth Bank of Australia v Quade[11]. As Blue J observed in the Full Court, the misconduct which was attributed to Clone was based upon the conduct of its lawyers[12]. Players' case of malpractice was threefold. First, Players alleged that Clone had breached an obligation to discover the third copy of the agreement to lease. Secondly, Players alleged that Clone had misled the Court and had misled Players by failing to inform them of the existence of the third copy of the agreement to lease and by prosecuting a case on the false premise that the provenance of copies of the agreement to lease was unknown. Thirdly, Players alleged that Clone had breached an obligation to disclose to Players the Commissioner's production of the files to the Court under the April 2005 notice to produce. [11](1991) 178 CLR 134; [1991] HCA 61. [12]Clone Pty Ltd v Players Pty Ltd (In liquidation) (Receivers Appointed) (2016) 127 SASR 1 at 12 [15].The decisions at first instance and on appeal
Ratio Decidendi
Legal Principle Established
Established by:
KIEFEL CJ, GAGELER, KEANE, GORDON AND EDELMAN JJ