Euromark Limited v Smash Enterprises Pty Ltd (in liq) [No 2]

SUPREME COURT OF VICTORIA

COURT OF APPEAL

S EAPCI 2021 0096

EUROMARK LIMITED	Cross-Appellant
v
SMASH ENTERPRISES PTY LTD (IN LIQ) (ACN 091 134 708) [NO 2]	Cross-Respondent

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JUDGES:	NIALL and MACAULAY JJA
WHERE HELD:	Melbourne
DATE OF HEARING:	Determined on the papers
DATE OF JUDGMENT:	27 June 2024
MEDIUM NEUTRAL CITATION:	[2024] VSCA 152
JUDGMENT APPEALED FROM:	[2021] VSC 97 (Lyons J)

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PRACTICE AND PROCEDURE – Where cross-respondent entered liquidation following order by Court of Appeal setting aside costs order of trial judge – Application by cross-appellant to reopen case to enable setting aside of Court of Appeal order with the effect of restoring trial judge’s original costs order – Whether Court has power to reopen case or set aside orders in ‘exceptional circumstances’ – No power to set aside perfected orders otherwise than on recognised grounds – Application refused.

Corporations Act 2001 (Cth) s 553.

Bailey v Marinoff (1971) 125 CLR 529, applied; Clone Pty Ltd v Players Pty Ltd (in liq) (2018) 264 CLR 165, considered. De L v Director-General (1997) 190 CLR 207, distinguished.

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Counsel for written submissions
Cross-Appellant:		Mr O Bigos KC and Mr M Garrett
Cross-Respondent:		--
Solicitors
Cross-Appellant:	Tisher Liner FC Law
Cross-Respondent:	--

NIALL JA
MACAULAY JA:

The cross-appellant (‘Euromark’) sued the cross-respondent (‘Smash’) and its director, Jason Harbinson, and executive, David Malone. At first instance, Euromark succeeded in its unconscionable conduct claims against Mr Harbinson and Mr Malone, and on an aspect of its contractual claims against Smash, but the claim for damages for loss of bargain against Smash was dismissed by Lyons J (as his Honour then was).[1] Costs orders were made, reflecting the mixed result.[2] Order 4 of the orders of Lyons J dated 30 June 2021 provided:
4. The first, second and fourth defendant [Smash, Mr Harbinson and Mr Malone] pay 60% of the plaintiff’s [Euromark] costs on a standard basis of this proceeding from 18 May 2019 onwards (this proceeding having been consolidated with the 2018 Proceeding on 17 May 2019), including all reserved costs but excluding costs already ordered, to be taxed in default of agreement.
[1]Euromark Limited v Smash Enterprises Pty Ltd [2021] VSC 97.
[2]Euromark Limited v Smash Enterprises Pty Ltd(No 2) [2021] VSC 393.
An appeal to this Court was brought by Smash, Mr Harbinson and Mr Malone. Euromark cross-appealed, seeking damages for loss of bargain against Smash, and also fresh costs orders. Euromark succeeded. The appeal was dismissed and the cross-appeal was allowed. The background to that proceeding is set out in the Court’s reasons for judgment.[3]
[3]Smash Enterprises Pty Ltd v Euromark Limited [2022] VSCA 267.
As to costs, on 14 December 2022, this Court relevantly made the following order:
9.Paragraphs 3–6 of the orders made by the Honourable Justice Lyons on 30 June 2021 in proceeding SECI 2015 00478 (costs) be set aside and the issue of the costs of the proceeding be reserved to the trial judge.
Pursuant to the order for remittal touching the damages for loss of bargain, Lyons J conducted a further hearing and assessed damages.[4] No orders have yet been made on the remitter.
[4]Euromark Limited v Smash Enterprises Pty Ltd (No 3) [2023] VSC 490.
Smash went into liquidation on 27 July 2023.
As things presently stand, there is no extant order, either from Lyons J or this Court, that deals with the costs of the trial. Euromark now apprehends that if, as may be expected, a costs order for trial costs (including the remittal hearing) is now made, the order would not be a provable debt in the liquidation. On Euromark’s submission, this is because a future costs order would create a fresh liability, not a debt or claim ‘the circumstances giving rise to which occurred before the relevant date’ for the purposes of s 553 of the Corporations Act2001 (Cth).[5] For present purposes, that proposition may be accepted.
[5]Citing Foots v Southern Cross Mine Management Pty Ltd (2007) 234 CLR 52; [2007] HCA 56.
Against that undesirable outcome, Euromark has proposed a novel solution. More than 18 months after this Court made its orders disposing of the proceeding, Euromark now applies to this Court for the following orders:
1. Leave to proceed against the Cross-Respondent under s 500(2) of the Corporations Act 2001 (Cth) in respect of these orders, on condition that no step shall be taken in execution of these orders without leave of the Court on notice to the Cross-Respondent’s liquidator.
2. The Cross-[Appellant] have leave to reopen the proceedings, and to withdraw the cross-application for leave to appeal (and appeal) insofar as it concerned paragraph 4 of the orders made by the Honourable Justice Lyons on 30 June 2021 in proceeding S ECI 2015 000478.
3. Paragraph 9 of the orders of the Court of Appeal made on 14 December 2022 be revoked, but only insofar as that paragraph had set aside paragraph 4 of the orders made by the Honourable Justice Lyons on 30 June 2021 in proceeding S ECI 2015 000478.
4. Such further or other orders as the Court considers appropriate.
In substance, Euromark seeks for this Court to reopen the proceeding so as to enable Euromark to withdraw its cross-application and cross-appeal in so far as it sought costs and for the Court to set aside its order as to costs (in part), with the effect that order 4 of the orders made by Lyons J on 30 June 2021 would apply. Euromark submits that it would be ‘most unfair’ not to do so in circumstances where it has undertaken a ‘lengthy and difficult proceeding … at great expense’.
The liquidator for Smash advised that she does not intend to respond to or contest Euromark’s application. Mr Harbinson and Mr Malone were provided the opportunity to file submissions in response to Euromark’s application but did not do so. After the time for filing submissions had expired, Mr Harbinson sought an opportunity to file submissions, which was refused.
Euromark’s application should be rejected for the following reasons.
First, this Court has no power to make the orders sought.
The orders of this Court finally disposed of the applications for leave to appeal and cross-appeal. Despite this, Euromark submits that the orders sought are justified in the ‘exceptional circumstances’ of Smash’s liquidation, relying on the High Court’s decision in De L v Director-General.[6] In that case, the plurality referred to the High Court’s power to reopen its judgments and orders if it ‘has proceeded “on a misapprehension as to the facts or the law”, where “there is some matter calling for review” or where “the interests of justice so require”’.[7]
[6](1997) 190 CLR 207, 215–21 (Toohey, Gaudron, McHugh, Gummow and Kirby JJ); [1997] HCA 14 (‘De L’).
[7]Ibid 215 (Toohey, Gaudron, McHugh, Gummow and Kirby JJ), citing Autodesk Inc v Dyason [No 2] (1993) 176 CLR 300, 302 (Mason CJ), 322 (Gaudron J); [1993] HCA 6 and Smith v NSW Bar Association (1992) 176 CLR 256, 265 (Brennan, Dawson, Toohey and Gaudron JJ); [1992] HCA 36.
However, De L may be distinguished from this case on two grounds. First, the High Court with its ‘entrenched jurisdiction as a court of final appeal under s 73 of the Constitution’ is in a different position to this Court, whose jurisdiction is determined by its own governing statutes.[8] The powers of this Court to reopen an appeal and reconsider the orders it made must be identified by reference to the legislation which establishes it and confers its express or implied powers.[9] Second, the High Court’s statement about its power to reopen final orders was made in the context where the relevant orders had not been formally entered into the Court’s records, although they had been publicly announced.[10] In the present case, Euromark seeks for the Court to vary its orders after they have been perfected.
[8]DJL v The Central Authority (2000) 201 CLR 226, 247 [43] (Gleeson CJ, Gaudron, McHugh, Gummow and Hayne JJ); [2000] HCA 17 (‘DJL’); De L (1997) 190 CLR 207, 215 (Toohey, Gaudron, McHugh, Gummow and Kirby JJ); [1997] HCA 14; Burrell v The Queen (2008) 238 CLR 218, 223 [15] (Gummow ACJ, Hayne, Heydon, Crennan and Kiefel JJ); [2008] HCA 34 (‘Burrell’).
[9]Burrell (2008) 238 CLR 218, 225 [22] (Gummow ACJ, Hayne, Heydon, Crennan and Kiefel JJ); [2008] HCA 34.
[10]De L (1997) 190 CLR 207, 216 (Toohey, Gaudron, McHugh, Gummow and Kirby JJ); [1997] HCA 14; see DJL (2000) 201 CLR 226, 247–8 [44] (Gleeson CJ, Gaudron, McHugh, Gummow and Hayne JJ); [2000] HCA 17.
As for the circumstances in which this Court may vary or set aside its own perfected orders, Barwick CJ explained the general position in Bailey v Marinoff (in observations which pertained to the Court of Appeal of New South Wales but which apply equally to this Court):
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.[11]
[11](1971) 125 CLR 529, 530–1; [1971] HCA 49. See similarly Gamser v Nominal Defendant (1977) 136 CLR 145, 153–4 (Aickin J); [1977] HCA 7.
Consistent with that general position, the circumstances in which this Court can set aside its own perfected orders are heavily circumscribed.[12] For example, the Court has an equitable power to do so where the orders have been procured by fraud.[13] It can also do so pursuant to its power to correct an order that is affected by a ‘clerical mistake’ or an ‘error arising … from any accidental slip or omission’.[14] The purpose of this latter power is to ensure that the orders of the Court as made accurately reflect the actual intention of the Court.[15] The Court also has inherent jurisdiction to make a supplemental order in certain circumstances provided that such order does not vary or alter the initial order.[16]
[12]Burrell (2008) 238 CLR 218, 225 [22] (Gummow ACJ, Hayne, Heydon, Crennan and Kiefel JJ); [2008] HCA 34, citing D’Orta-Ekenaike v Victoria Legal Aid (2005) 223 CLR 1, 17 [34] (Gleeson CJ, Gummow, Hayne and Heydon JJ); [2005] HCA 12.
[13]Clone Pty Ltd v Players Pty Ltd (in liq) (2018) 264 CLR 165, 191–5 [52]–[62] (Kiefel CJ, Gageler, Keane, Gordon and Edelman JJ); [2018] HCA 12 (‘Clone’).
[14]Supreme Court (General Civil Procedure) Rules 2015, r 36.07.
[15]Gamboni v Bendigo and Adelaide Bank Ltd [No 2] [2013] VSCA 282, [31]–[32] (Tate JA and Kyrou AJA).
[16]Ibid [62]–[68] (Tate JA and Kyrou AJA), citing various authorities.
None of those circumstances is applicable here. Nor has Euromark identified any statutory power or power in the Rules of Court that would authorise this Court to reopen the appeal, or to set aside its order, in the particular circumstances that have arisen since the Court made its order. Recourse to inherent powers belonging to this Court as a superior court of record cannot avail Euromark. It may be accepted that this Court has a well of powers that are necessary to ensure the proper and effective exercise of its jurisdiction.[17] However, there has been no miscarriage in the exercise of this Court’s powers. The cross-appeal was regularly made and the orders made in consequence, including as to costs, gave effect to the intent of the Court and were entirely apt to that end. The fact that, as events have transpired, Euromark would have been better off had it left the original costs order in place is neither here nor there. Euromark invoked the jurisdiction of the Court, was successful in its claim, obtained favourable orders consistent with those that were sought, and has unsurprisingly not appealed to disturb them.
[17]See, eg, PT Bayan Resources TBK v BCBC Singapore Pty Ltd (2015) 258 CLR 1, 18–19 [38]–[43] (French CJ, Kiefel, Bell, Gageler and Gordon JJ); [2015] HCA 36.
Further, there is no basis to impute to this Court an inherent power to set aside its orders where it is in the interests of justice to do so, or where the orders have an unexpected consequence. Such a broad power finds no basis in authority,[18] and is inconsistent with the decision of the High Court in Clone and other cases which emphasise the finality of litigation and confining the power to set aside orders to cases of fraud and other recognised grounds.[19]
[18]See Harrison v Schipp (2002) 54 NSWLR 612, 636 [170] (Giles JA), 644 [216] (Ipp AJA); [2002] NSWCA 78; Marshall v MacTiernan (2003) 128 LGERA 231, 237 [30] (Parker J, Murray J agreeing at 232 [1], Anderson J agreeing at 233 [3]); [2003] WASCA 67; Foundas v Arambatzis (No 5) (2022) 109 NSWLR 113, 77–9 [20]–[30] (White JA, Bell CJ agreeing at 74 [1] and Basten JA agreeing at 81 [32]); [2022] NSWCA 113; Jafari v 23 Developments Pty Ltd [No 2] [2020] VSCA 187, [13] (Niall JA).
[19]Clone (2018) 264 CLR 165, 175 [2], 189 [48], 193–4 [56], 197–8 [69]–[70] (Kiefel CJ, Gageler, Keane, Gordon and Edelman JJ); [2018] HCA 12. See also Burrell (2008) 238 CLR 218, 223 [15]–[16] (Gummow ACJ, Hayne, Heydon, Crennan and Kiefel JJ); [2008] HCA 34.
Even if we had such a power, we would not exercise it in favour of Euromark. Briefly, that is because, first, the finality of litigation is a critical consideration. Allowing the application would accord a provisional status to orders of this kind. Second, Euromark having elected to pursue one path, it would not be just to allow it to retrace its steps and chart a different course. That is especially so where it has taken advantage of the orders and pursued the assessment of damages claim on remittal. Third, no proper basis has been shown to alter the normal operation of the insolvency rules by, in effect, recreating a liability that was not in place at the time of liquidation. Fourth, the orders sought are entirely artificial. It would bring the law into disrepute to allow a cross-appeal to be withdrawn, even in part, after it has been finally determined.
The application to set aside the costs orders made by this Court on 14 December 2022 will be dismissed. Given that none of Smash, Mr Harbinson or Mr Malone filed any material in answer to the application, apart from some correspondence, and Smash is in liquidation, in all of the circumstances it is appropriate that there be no order as to the costs of the application.

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[2024] VSCA 152

27 June 2024