Clone Pty Ltd v Players Pty Ltd (in liq)

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.