Flowers v Finlayson (No 2)

Case [2023] SASCA 12

Supreme Court of South Australia

(Court of Appeal: Civil)

FLOWERS v FINLAYSON (No 2)

[2023] SASCA 12

Judgment of the Court of Appeal  (ex tempore)

(The Honourable President Livesey, the Honourable Justice Doyle and the Honourable Justice Nicholson)

10 February 2023

APPEAL AND NEW TRIAL - PROCEDURE - SOUTH AUSTRALIA - POWERS OF COURT - REOPENING APPEAL

The applicant filed an originating application seeking, among others, orders that the Supreme Court reopen and set aside the judgment of the Full Court in Flowers v Finlayson [2021] SASCFC 3.

The application was predicated on the proposition that the decision of the Full Court was procured by fraud.  The applicant relied on a decision of the Full Court, as well as the subsequent decision of the High Court, in Clone v Players (2018) 264 CLR 165.

The Court held (dismissing the originating application):

1.The applicant has not demonstrated that the decision of the Full Court was procured by fraud and it does not appear that the applicant can ever demonstrate that the Full Court’s decision was procured by fraud.

2.      The application is properly to be regarded as an abuse of process.

Uniform Civil Rules 2020 (SA) rr 85.1, 143.2, 186.1; Supreme Court Act 1935 (SA) s 50, referred to.
Autodesk Inc v Dyason (No 2) (1993) 176 CLR 300; Clone Pty Ltd v Players Pty Ltd (In Liquidation) (Receivers Appointed) [2012] SASC 12; Clone Pty Ltd v Players Pty Ltd (In liquidation) (Receivers Appointed) (2016) 127 SASR 1; Clone Pty Ltd v Players Pty Ltd (In Liquidation) (Receivers & Managers Appointed) (2018) 264 CLR 165; Commonwealth Bank of Australia v Forshaw (1990) 55 SASR 247 (FC) (1990) 55 SASR 247 (FC); Commonwealth Bank of Australia v Quade (1991) 178 CLR 134; Flowers v Finlayson [2021] SASCFC 3; Forrest v ASIC (2012) 247 CLR 486; McAdam v Robertson (1999) 73 SASR 360; Mohtar v Mohtar (1988) 146 LSJS 377; Players Pty Ltd (In Liquidation) (Receivers Appointed) v Clone Pty Ltd (2013) 115 SASR 547; Players Pty Ltd (In Liquidation) (Receivers Appointed) v Clone Pty Ltd [2015] SASC 133, considered.

FLOWERS v FINLAYSON (No 2)
[2023] SASCA 12

Court of Appeal – Civil:  Livesey P, Doyle JA and Nicholson AJA

THE COURT (ex tempore):

Introduction

  1. Some time ago the respondent represented the applicant in the Family Court.  The applicant has since been seriously critical of the respondent’s conduct of his retainer.  He prosecuted him before the Legal Practitioner’s Disciplinary Tribunal. The Tribunal’s dismissal of the applicant’s charges against the respondent was appealed to the Full Court, whose decision dismissing that appeal was delivered over two years ago on 3 February 2021.[1]

    [1]     Flowers v Finlayson [2021] SASCFC 3 (Lovell J, with whom Peek and Stanley JJ agreed).

  2. By an originating application filed on 15 December 2022, supported by an affidavit sworn on 10 November 2022, the applicant now seeks orders that the Supreme Court reopen and set aside the…

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Flowers v Finlayson (No 2) [2023] SASCA 12
Case
[2023] SASCA 12
Decision Date

CaseChat Overview and Summary

This matter concerned an application to set aside a perfected judgment. The applicant sought to rely on the High Court's decision in *Clone Pty Ltd v Players Pty Ltd (In Liquidation) (Receivers & Managers Appointed)*, which dealt with the equitable jurisdiction to set aside a perfected judgment on the ground of fraud. The court noted that the applicant had not addressed the Uniform Civil Rules 2020 (SA) r 186.1, which provides a rules-based power to set aside or vary a judgment, and that the application was based squarely on fraud.

The central legal issue was the scope of the equitable jurisdiction to set aside a perfected judgment for fraud, particularly whether it extended to professional misconduct by lawyers representing the successful party. The court considered the historical development of this jurisdiction, tracing its roots to the equitable bill of review and distinguishing it from the appellate court's power to set aside a lower court judgment. The court also examined the High Court's reasoning in *Clone v Players*, which clarified that the equitable power to set aside a judgment for fraud required actual fraud, not merely misconduct, accident, surprise, or mistake.

The court explained that while the equitable bill of review did not survive the development of the right of appeal, the equitable power to set aside a judgment on the ground of fraud persisted. However, this power is narrowly defined and requires actual fraud, meaning the party seeking to set aside the judgment must demonstrate that the judgment was obtained by a person acting with the intention of knowingly defrauding another. The court referenced *Patch v Ward* to illustrate that the essence of such an action is actual fraud, and this ground is not diluted to encompass other forms of misconduct.

Orders

Orders of the court

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Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

The present version of the rule which was considered in that case is r 186.1 of the Uniform Civil Rules 2020 (SA): [13][13] Mohtar v Mohtar (1988) 146 LSJS 377 (von Doussa J); Commonwealth Bank of Australia v Forshaw (1990) 55 SASR 247 (FC); Clone Pty Ltd v Players Pty Ltd (In Liquidation) (Receivers & Managers Appointed) (2018) 264 CLR 165. These were rulings based on rule 84.12 of the Supreme Court Rules 1987 (SA) and rule 242 of the Supreme Court Civil Rules 2006 (SA).186.1—Power to set aside or vary judgment(1)The Court may at any time correct an error in a judgment.(2)The Court may, if satisfied that the interests of justice so require—(a) vary a judgment;(b) set aside a judgment and reopen a proceeding; or(c) set aside a default judgment by consent. Whilst the applicant referred to r 186.1 he has not addressed it in any way. Indeed, whether the rules-based power can be relied on to set aside a perfected judgment does not arise for decision in this case because the applicant has based his application squarely on fraud and, by his application, he relies on the decision of the High Court in Clone v Players.[14] [14] Clone Pty Ltd v Players Pty Ltd (In Liquidation) (Receivers & Managers Appointed) (2018) 264 CLR 165. By the time Clone v Players reached the High Court, the case was only concerned with the equitable jurisdiction to set aside a perfected judgment on the ground of fraud. As in this case, the rules-based jurisdiction was not pressed. As for the jurisdiction in equity, and the breadth of the concept of fraud recognised by it, the question for the High Court in Clone v Players was whether fraud extended to professional misconduct by the lawyers representing the successful party at the initial trial. That wide view of fraud was said to have been supported by an earlier decision of the High Court, Commonwealth Bank of Australia v Quade.[15] As the High Court explained, however, Commonwealth Bank of Australia v Quade was only concerned with the circumstances in which “an appellate court is justified in setting aside a verdict merely on the grounds of fresh evidence”,[16] relying on a statutory power to receive further evidence.[17] Drawing on the historical antecedents of the bill of review and the original bill in equity, the High Court explained:[18]The distinction between each of the equitable bills is today broadly reflected in the distinction between (i) the power of an appellate court to set aside a lower court judgment and order a new trial, and (ii) the power of a court, by an original action, to set aside a judgment (often its own) based upon fraud.[15] Commonwealth Bank of Australia v Quade (1991) 178 CLR 134, 141.[16] Commonwealth Bank of Australia v Quade (1991) 178 CLR 134, 139.[17] Clone Pty Ltd v Players Pty Ltd (In Liquidation) (Receivers & Managers Appointed) (2018) 264 CLR 165, [50]-[51].[18] Clone Pty Ltd v Players Pty Ltd (In Liquidation) (Receivers & Managers Appointed) (2018) 264 CLR 165, [44]. Whilst the bill of review in equity did not survive the development of the right of appeal,[19] the equitable power to set aside a judgment on the ground of fraud did survive.[20] In the exercise of this “narrowly defined”[21] exception, what was regarded as “fraud” did not encompass misconduct (and a number of the other grounds which had been relevant to the bill of review procedure):[22]The general power to set aside a judgment on the ground of fraud required actual fraud. The “essence of the action [was] fraud”.[23] The general ground of fraud was not diluted to allow, for instance, the judgment to be set aside for misconduct, accident, surprise, or mistake. This point was made pellucidly in 1867 in Patch v Ward.[24] In that case, as Lord Cairns LJ observed,[25] the application was not brought on the basis of either category of the bill of review – either error of law or fresh evidence discovered since the decree. Rather, it was brought upon the basis that the decree was obtained by fraud. His Lordship explained that it was necessary that the fraud be "actual fraud ... the person chargeable with it ... acting in order to take an undue advantage of some other person for the purpose of actually and knowingly defrauding him".[26][19] Clone Pty Ltd v Players Pty Ltd (In Liquidation) (Receivers & Managers Appointed) (2018) 264 CLR 165, [48], [56], which was “completed” by the Supreme Court of Judicature Act 1873 (36 & 37 Vict c 66) and, in South Australia, by the Supreme Court Act 1935 (SA), s 50.[20] Clone Pty Ltd v Players Pty Ltd (In Liquidation) (Receivers & Managers Appointed) (2018) 264 CLR 165, [52]-[53], [56].[21] D'Orta-Ekenaike v Victoria Legal Aid (2005) 223 CLR 1, 17 [34] (Gleeson CJ, Gummow, Hayne and Heydon JJ).[22] Clone Pty Ltd v Players Pty Ltd (In Liquidation) (Receivers & Managers Appointed) (2018) 264 CLR 165, [55].[23] Wentworth v Rogers (No 5) (1986) 6 NSWLR 534, 538. [24] (1867) LR 3 Ch App 203.[25] Patch v Ward (1867) LR 3 Ch App 203, 206.[26] Patch v Ward (1867) LR 3 Ch App 203, 207.

Ratio Decidendi

Legal Principle Established

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