Deputy Commissioner of Taxation v Healy
[2003] WASC 38
DEPUTY COMMISSIONER OF TAXATION FOR THE COMMONWEALTH OF AUSTRALIA -v- HEALY & ANOR [2003] WASC 38
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2003] WASC 38 | |
| Case No: | CIV:1031/2002 | 4 MARCH 2003 | |
| Coram: | HASLUCK J | 20/03/03 | |
| 10 | Judgment Part: | 1 of 1 | |
| Result: | Application allowed | ||
| B | |||
| PDF Version |
| Parties: | DEPUTY COMMISSIONER OF TAXATION FOR THE COMMONWEALTH OF AUSTRALIA ALWYN ROBERT HEALY RICHARD DOUGLAS WHEELER |
Catchwords: | Practice and procedure Slip rule Application to correct a judgment entered by consent Application for relief in respect of an error made by party entering judgment Scope of slip rule Application to amend judgment allowed |
Legislation: | Bankruptcy Act 1966 (Cth), Pt X Income Tax Assessment Act 1936 (Cth), Div 9, s 222ALA Rules of the Supreme Court 1971, O 21 r 10, O 43 r 16 |
Case References: | Bailey v Marinoff (1971) 125 CLR 529 Biala Pty Ltd v Mallina Holdings Ltd (1989) 2 WAR 381 L Shaddock & Associates Pty Ltd v Parramatta City Council (No 2) (1982) 151 CLR 590 Monaco v Arnedo Pty Ltd (1994) 13 WAR 522 Permanent Trustee Co (Canberra) Ltd v Stocks and Holdings (Canberra) Pty Ltd (1976) 28 FLR 195 Storey and Keers Pty Ltd v Johnstone (1987) 9 NSWLR 446 Commonwealth v Hospital Contribution Fund of Australia (1982) 150 CLR 49 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CHAMBERS
- Plaintiff
AND
ALWYN ROBERT HEALY
First Defendant
RICHARD DOUGLAS WHEELER
Second Defendant
Catchwords:
Practice and procedure - Slip rule - Application to correct a judgment entered by consent - Application for relief in respect of an error made by party entering judgment - Scope of slip rule - Application to amend judgment allowed
Legislation:
Bankruptcy Act 1966 (Cth), Pt X
Income Tax Assessment Act 1936 (Cth), Div 9, s 222ALA
Rules of the Supreme Court1971, O 21 r 10, O 43 r 16
(Page 2)
Result:
Application allowed
Category: B
Representation:
Counsel:
Plaintiff : Mr A A Jenshel
First Defendant : No appearance
Second Defendant : No appearance
Solicitors:
Plaintiff : Australian Government Solicitor
First Defendant : Gordons
Second Defendant : Gordons
Case(s) referred to in judgment(s):
Bailey v Marinoff (1971) 125 CLR 529
Biala Pty Ltd v Mallina Holdings Ltd (1989) 2 WAR 381
L Shaddock & Associates Pty Ltd v Parramatta City Council (No 2) (1982) 151 CLR 590
Monaco v Arnedo Pty Ltd (1994) 13 WAR 522
Permanent Trustee Co (Canberra) Ltd v Stocks and Holdings (Canberra) Pty Ltd (1976) 28 FLR 195
Storey and Keers Pty Ltd v Johnstone (1987) 9 NSWLR 446
Case(s) also cited:
Commonwealth v Hospital Contribution Fund of Australia (1982) 150 CLR 49
(Page 3)
1 HASLUCK J: The plaintiff, The Deputy Commissioner of Taxation for the Commonwealth of Australia, has applied to set aside a judgment entered by consent in this matter on 15 July 2002. The plaintiff seeks relief pursuant to O 21 r 10 of the Rules of the Supreme Court, known as the slip rule, which provides that clerical mistakes in judgments or orders, or errors arising therein from any accidental slip or omission, may at any time be corrected by the Court on motion or summons without an appeal.
2 The plaintiff relied upon the affidavits of Tracey Maree Kelly sworn 16 October 2002 and 7 January 2003, the affidavit of Michelle Elaine Lindley sworn 17 October 2002 and the affidavit of Philip Harley Pope sworn 7 January 2003. The defendants did not file and serve any opposing affidavits.
Background
3 On 15 January 2002 the plaintiff commenced legal proceedings against the defendants for liabilities owed under Div 9 of the Income Tax Assessment Act 1936 as directors of the company known as Healy Air Conditioning Pty Ltd. It is apparent from pars 3 to 9 inclusive of the statement of claim that the plaintiff sought to recover director penalties imposed in respect of actual liabilities amounting to $151,113 payable by each of the defendants. I will call this part of the statement of claim "the DPN claim" being a reference to a liability arising under a director penalty notice.
4 The statement of claim goes on to refer to a further head of liability arising under an agreement dated 3 July 2001 made pursuant to s 222ALA of the Income Tax Assessment Act whereby the company agreed to pay the plaintiff certain amounts in accordance with a prescribed timetable. It is apparent from pars 10 to 18 inclusive of the statement of claim that, as a discrete cause of action, the plaintiff sought to recover from each of the defendants the sum of $454,791.71 being director penalties imposed in respect of an alleged breach of the agreement. I will call this "the agreement claim".
5 A statement of defence dated 14 February 2002 was filed on behalf of the defendants whereby the defendants denied liability with respect to both claims and sought an order that the plaintiff's claim be dismissed with costs.
6 It emerges from the Kelly affidavit of 16 October 2002 that the plaintiff and the defendants then reached an agreement to settle part of the
(Page 4)
- action in a manner evidenced by correspondence between the parties. The principal letter in that regard is a letter dated 6 May 2002 from a solicitor for the plaintiff to the defendants' solicitors in which it was proposed that the matter be settled upon the basis set out in the letter.
7 The 6 May letter is lengthy and contains a number of detailed paragraphs directed to a timetable for paying off the DPN debt of $151,113. Importantly, for present purposes, the defendants were invited to sign a minute of consent in the terms of the attached proposed minute. Clause 2(h) of the subject letter provides that "the balance of the action relating to the s 222ALA agreement will be briefed to the Australian Government Solicitor to proceed to trial on that issue."
8 The proposal contained in the 6 May letter was accepted by a responsive letter from the defendants' solicitors dated 7 May 2002. The letter in question was accompanied by the proposed memorandum of consent to be filed pursuant to O 43 r 16 of the Rules of the Supreme Court signed by the solicitors for the defendants.
9 It clearly emerges from this exchange between the parties that an agreement had been reached whereby the first part of the plaintiff's claim, namely, the DPN claim was to be disposed of by the entry of a consent judgment in favour of the plaintiff in the sum of $151,113 plus interest. The defendants would remain at liberty to contest the balance of the claim being advanced by the plaintiff, namely, the agreement claim in the sum of $454,791.71.
10 With the benefit of hindsight, it can be seen that the memorandum of consent submitted to the defendants for their signature, which purported to give effect to the May 2002 compromise agreement, was not sufficiently precise. It allowed for orders to be made that "judgment be entered against the defendants in the sum of $151,113" with the defendants to pay interest on the said amount plus costs. It should have provided for judgment to be entered against the defendants in the sum of $151,113 in respect of pars 1 to 9 only of the statement of claim, that is to say, in respect of the DPN claim.
11 In the event, judgment was entered by consent against the defendants on 15 July 2002 in the form corresponding to the memorandum signed by the parties with the result that the plaintiff obtained judgment in this form:
"The Plaintiff having become entitled to judgment pursuant to O 43 r 16 of the Supreme Court Rules and by consent of the parties it is this day adjudged that the Defendants pay to the
(Page 5)
- Plaintiff $151,113.00 together with interest thereon in the sum of $4,496.12 and $500.20 costs."
Application to set aside
12 It was against this background that the plaintiff applied to set aside the judgment. The plaintiff seeks an order that "Judgment be entered against the Defendants in the sum of $151,113 in respect of paragraphs 1 to 9 only of the Statement of claim dated 15 January 2002." The plaintiff also seeks an order that the defendants pay the plaintiff's costs fixed in the sum of $500.20 and the costs of the application to set aside including reserved costs.
13 The affidavits relied upon by the plaintiff establish that the plaintiff sought to convince the defendants and their solicitors that the matter in issue could be disposed of by an order made by a Judge in Chambers pursuant to the slip rule and that such an order was likely to be made. However, it is apparent from the affidavits before me, that the plaintiff was unable to secure the co-operation of the defendants in correcting what was said to be an error falling within the scope of the slip rule. It has therefore become necessary for a ruling to be made in respect of what is in effect a contested issue. It was for this reason that the plaintiff seeks the costs of the application.
14 In order to complete the narrative, I note that subsequent to the plaintiff applying to the Court for relief pursuant to the slip rule the defendants have changed their solicitors and have also appointed a controlling trustee pursuant to Pt X of the Bankruptcy Act 1966. This led to a situation at the hearing before me in which the solicitor on the record for the defendants sought leave to withdraw upon the basis that he did not have appropriate instructions to oppose or take any other step in relation to the plaintiff's application for relief. The solicitor for the defendants acknowledged, prior to leave being granted to him to withdraw, that the defendants and the controlling trustee had advance notice of the hearing. In effect, it seemed that the defendants were prepared to abide the ruling of the Court. It was not put to me by counsel on either side that the effect of any provision of the Bankruptcy Act was to preclude relief of the kind applied for.
Legal Principles
15 The general rule is that once an order has been sealed or a judgment entered it may only be varied by an appeal to the Full Court. The rule was
(Page 6)
- expressed in this way by Barwick CJ in Bailey v Marinoff (1971) 125 CLR 529 at 530:
"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."
17 In L Shaddock & Associates Pty Ltd v Parramatta City Council (No 2) (1982) 151 CLR 590 Mason ACJ, Wilson and Deane JJ observed at 594 that the slip rule reflects the inherent jurisdiction of a court at any time to correct an error in a decree or order arising from a slip or accidental omission. The rule extends to authorise an omission resulting from the inadvertence of a party's legal representative. This is so, regardless of whether the order has been drawn up, passed and entered.
18 In that case, pursuant to the slip rule, the High Court was prepared to amend the Court's previous order to make provision for interest upon damages in circumstances where, by inadvertence of counsel, the matter of interest was not specifically raised by the relevant notice of appeal, was not alluded to in argument before the High Court, and was not mentioned in the reasons for judgment subsequently published.
19 In Storey and Keers Pty Ltd v Johnstone (1987) 9 NSWLR 446 the Court of Appeal in New South Wales held that the Court has power to amend its judgment or order if the judgment or order, as drawn up, fails to express correctly the intention of the Court at the time the judgment or order was pronounced.
20 McHugh JA observed at 452 that if the proposed variation of an order relates to a matter which was an issue in the proceedings or to something which was incidental to such a matter, the Court had power to
(Page 7)
- amend its order if the need for the variation is the result of an accidental omission or mistake. Matters such as costs or interest on a judgment, for example, are almost always incidentally involved in proceedings, and the Court has power to deal with them even though they are not specifically raised at the hearing provided, of course, the omission was accidental.
21 His Honour went on to say that it would be contrary to the rationale of the slip rule to allow judgments and orders to be amended to deal with matters which were not in issue in the proceedings. Such matters must be dealt with by way of appeal and in accordance with the principles which govern the raising of new matters on appeal. The rationale of the slip rule also requires that an omission or mistake should not be treated as accidental if the proposed amendment requires the exercise of an independent discretion or is a matter upon which a real difference of opinion might exist. In general, a test of whether a mistake or omission is accidental is whether the correction would have been made at once if the matter had been drawn to the Court's attention.
22 These two cases establish also that the Court always has a discretion to refuse to make an order under the slip rule if something has intervened which would render it inexpedient or inequitable that it be made: Shaddock (supra) at 597; Storey and Keers Pty Ltd v Johnstone (supra) at 453.
23 In Monaco v Arnedo Pty Ltd (1994) 13 WAR 522 it was held that if an order of the Court is made or not made which turns out to be incorrect as a result of the inadvertence of counsel or due to a mistake being made by a Judge which is not corrected by counsel, there is an inherent jurisdiction, quite apart from the slip rule, to rectify the orders to avoid injustice. Counsel for the plaintiff cited a number of other authorities to this effect, namely, Permanent Trustee Co (Canberra) Ltd v Stocks and Holdings (Canberra) Pty Ltd (1976) 28 FLR 195 at 198; Biala Pty Ltd v Mallina Holdings Ltd (1989) 2 WAR 381 at 390.
24 I pause to observe that in Biala (supra) the Chief Justice noted at 388 that in Bailey v Marinoff (supra) Barwick CJ was careful to say that it was the "substance" of the order which was beyond recall. Further, the order must be of a kind which has "finally disposed" of the relevant proceeding. Malcolm CJ cited with approval a passage from the dissenting judgment of Gibbs J in Bailey v Marinoff (supra) in which his Honour observed that the rule concerning finality of judgments rests on the obvious principle that it is desirable that there be an end to litigation and on the view that it would be mischievous if there were
(Page 8)
- jurisdiction to rehear a matter decided after a full hearing. 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. 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. That power does not depend on rules of court but is inherent in the Court.
Conclusion
25 The memorandum of consent signed on behalf of the respective parties in the present case, as appears from the terms of the judgment itself, came to be entered as a judgment pursuant to O 43 r 16 of the Rules of the Supreme Court. The rule in question was introduced in 1996 and provides that the parties to proceedings or their solicitors may file a written consent to the making of an order subject to certain specified exceptions. Upon the written consent being filed, the Registrar may settle, sign and seal the order without any other application being made in any case in which in his opinion the Court would make such an order upon consent of the parties. The order shall state that it is made by consent and shall be of the same force and validity as if it had been made after a hearing by the Court.
26 It follows that in the circumstances of the present case judgment was obtained by the plaintiff not as a consequence of a hearing at which an aspect of the claim was overlooked or incorrectly expressed but pursuant to a prescribed procedure which did not require any explicit pronouncement of the Court's judgment. Nonetheless, in my view, I am entitled to draw upon the reasoning reflected in the decided cases mentioned earlier in determining whether the judgment in question can be corrected pursuant to the slip rule. The decided cases suggest that the crucial considerations are whether the matter now sought to be corrected would have been attended to at once if the matter had been raised for consideration before judgment was entered and whether the matter to be resolved would require the exercise of an independent discretion or could be regarded as a matter upon which a real difference of opinion might exist. Further, it seems that the slip rule allows for the correction of any infelicity or ambiguity in the expression of the judgment which would result in the order of the Court having an untoward effect.
27 It is quite clear in the circumstances of the present case that the statement of claim pleaded facts and matters giving rise to two discrete causes of action, namely, the DPN claim and the agreement claim. At a first glance, because the consent judgment dated 15 July 2002 was in
(Page 9)
- respect of the sum of $151,113, being the precise amount of the DPN claim, an independent observer would probably presume, without knowing anything of the underlying compromise between the parties, that the judgment related only to the DPN claim. Thus, on one view of the matter, the correction proposed in the plaintiff's application for relief can be regarded as simply removing a degree of ambiguity and rendering more plain that which is already inherent in the language of the judgment.
28 Certainly, when one has regard to the underlying May 2002 compromise agreement, it becomes apparent that there is no basis for the exercise of an independent discretion as to what was the amount to be allowed to the plaintiff. The documentation makes it quite clear that the plaintiff was to obtain judgment for the DPN debt and that, in the manner allowed for by cl 2(h) of the relevant letter the balance of the action was to proceed to trial. If the matter had been raised by the Registrar or by a Judge in Chambers before judgment was entered there can be little doubt that the proposed form of the judgment would have been corrected at once to make it plain that the judgment related to a part only of the claims reflected in the statement of claim.
29 The decided cases establish that the slip rule is broad enough to embrace errors arising from the inadvertence of a party's legal representative. In the circumstances of the present case I consider that the power allowed to an officer of the Court by the slip rule extends to a correction of the consent judgment dated 15 July 2002 in the manner proposed by the plaintiff in that if the matter had been drawn to the Court's attention the correction in question would have been made in order to give precise expression to the underlying compromise agreement negotiated by the parties.
30 Further, having regard to the residual discretion of the kind mentioned in Shaddock (supra) at 597, I do not consider that there is any reason why it would be inexpedient or inequitable to make the order sought. The plaintiff has brought the application for relief promptly and any delay concerning the same is largely due to a change in the defendants' legal advisers and some consequential difficulty in the obtaining of instructions concerning the present application. As I have noted, it was not put to me that any provisions of the Bankruptcy Act precluded relief of the kind proposed. Further, and in any event, I am conscious that the relief sought is in respect of a judgment that had been obtained prior to any steps being taken by the defendants pursuant to Pt X of the Bankruptcy Act.
(Page 10)
31 Having regard to this conclusion, it is not necessary for me to make any determination as to whether the proposed correction could be made pursuant to the inherent jurisdiction of the Court to rectify the judgment with a view to avoiding injustice and I decline to do so. The boundaries of the power in that regard have not been defined exactly and I am not satisfied that this is an appropriate case to undertake a full examination of the nature of the power and as to whether it can be utilised in the circumstances of the present case.
32 I consider that the plaintiff should obtain the costs of the present application including costs previously reserved. It will be apparent from previous discussion that the plaintiff made a bona fide attempt to dispose of the matter by agreement rather than having the matter resolved by a ruling as to a contested issue. It is true that, on the morning of the hearing, counsel for the defendants sought leave to withdraw upon the basis that instructions had not been obtained to put up a case in opposition to the plaintiff's case. However, until then, the plaintiff's application had been opposed by the defendants and the plaintiff was therefore obliged to proceed at all material times upon the basis that it was a contested issue.
Summary
33 Orders will be made as follows:
1. Judgment entered by consent on 15 July 2002 be set aside and in lieu thereof there be substituted judgment in the following terms:
(a) Judgment be entered against the defendants in the sum of $151,113 in respect to pars 1 to 9 only of the statement of claim dated 15 January 2002.
(b) In respect of the judgment mentioned in par (a) above the defendants pay the plaintiff's costs fixed in the sum of $500.20.
2. The defendants do pay the costs of and incidental to this application including reserved costs such costs to be taxed.
34 I will hear from counsel for the plaintiff as to whether any order is required in respect of interest.
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