Laing and Simmons Corporation Pty Ltd ACN 002 715 764 v SJB 5 Pty Ltd ACN 604 846 639

[2020] NSWDC 42

District Court

New South Wales

• Amendment notes

Medium Neutral Citation:	Laing & Simmons Corporation Pty Ltd ACN 002 715 764 v SJB 5 Pty Ltd ACN 604 846 639 & Anor [2020] NSWDC 42
Hearing dates:	6 March 2020
Date of orders:	13 March 2020
Decision date:	13 March 2020
Jurisdiction:	Civil
Before:	Russell SC DCJ
Decision:	(1)   Dismiss the plaintiff’s Notice of Motion filed on 10 October 2019. (2)   Order each party to pay its or his own costs of the Motion.
Catchwords:	PROCEDURE – slip rule – orders drafted by parties and made by consent – whether there had been an error from an accidental slip or omission – necessary to ascertain the intention of the court when making the orders – Rule 36.17 Uniform Civil Procedure Rules 2005 (NSW)
Legislation Cited:	Uniform Civil Procedure Rules 2005 (NSW), r 36.17
Cases Cited:	Newmont Yandal Operations Pty Limited v The J Aron Corporation and the Goldman Sachs Group Inc [2007] NSWCA 195; (2007) 70 NSWLR 411
Category:	Procedural and other rulings
Parties:	Laing & Simmons Corporation Pty Ltd ACN 002 715 764 (Plaintiff) SJB 5 Pty Ltd ACN 604 846 639 (First Defendant) Koroush Changizi (Second Defendant)
Representation:	Counsel: D Parish (Plaintiff) K Changizi (Self-represented) (Defendants)   Solicitors: Baybridge Lawyers (Plaintiff)
File Number(s):	2017/221253

Judgment

Introduction

1. By a Statement of Claim filed on 20 July 2017 the plaintiff Laing & Simmons Corporation Pty Ltd (Laing & Simmons) sued the first defendant SJB 5 Pty Ltd (SJB) and the second defendant Mr Changizi in relation to alleged breaches of a Franchise Agreement. The defendants filed Defences and a Cross Claim against the plaintiff.

2. The proceedings were listed for hearing before me on 24 July 2018. On that date counsel announced that the proceedings had been settled. A document entitled “Terms of Settlement” was handed up. As requested by the parties, who were represented by counsel and solicitors, I made the following orders:

“(1)   Orders in accordance with paragraphs 1, 3 and 4 of the Terms of Settlement filed in court.

(2)   Note paragraphs 2 and 5-13 inclusive of the Terms of Settlement.”

3. By a Notice of Motion filed on 10 October 2019 Laing & Simmons seeks the following orders:

“1 Pursuant to rule 36.17 of the Uniform Civil Procedure Rules 2005, in respect of the order made by Russell DCJ on 24 July 2018 in accordance with paragraph 3 of the Terms of Settlement, the Court:

a)   notes that the ‘costs of the Statement of Claim as agreed or assessed’ include all costs of the proceedings relating or referring to the matters alleged in the Statement of Claim; or in the alternative,

b)   order that after the words ‘Plaintiff’s costs of the’, the words ‘proceedings in respect of’ be inserted in the Terms of Settlement.

2   Any further or other order that this Honourable Court deems fit.

3   Costs.”

4. Rule 36.17 of the Uniform Civil Procedure Rules 2005 (NSW) is known as the “slip rule”. It provides:

“If there is a clerical mistake, or an error arising from an accident or slip or omission, in a judgment or order, or in a certificate, the court, on the application of any party or of its own motion, may, at any time, correct the mistake or error.”

The Issues

5. The issues on this Motion are:

1. Was there a clerical mistake, or an error arising from an accidental slip or omission in the orders made by consent on 24 July 2018?

2. If so, should the court exercise its discretion to correct the mistake or error?

Background Facts

6. In support of the Motion Mr Palmer, solicitor, swore an affidavit on 10 October 2019. Mr Palmer was present at court when the matter was called on for hearing on 24 July 2018. He signed the Terms of Settlement on behalf of the plaintiff and counsel signed them on behalf of the defendants.

7. So far as is relevant, the Terms of Settlement provided as follows:

“TERMS OF SETTLEMENT

The Parties have agreed to settle the proceedings on the following terms:

1.   The Defendants to pay the Plaintiff the sum of $25,766.03 inclusive of interest in full and final settlement of the Plaintiff’s claim on or before 4.00pm 22 August 2018.

2.   …

3.   The Defendants to pay the Plaintiff’s costs of the Statement of Claim as agreed or assessed.

4.   The Cross Claim is to be dismissed with the intention that each party bear their own costs.”

8. The defendants paid the principal settlement amount of $25,766.03. In May 2019 the plaintiff applied to have its costs assessed by a Costs Assessor. The plaintiff sought costs in the amount of $56,352.15. The Assessor assessed the plaintiff’s costs at $3,488.89 plus interest and costs of the assessment, bringing the total amount payable by the defendants to $4,702.59. A copy of the Assessment Report was annexed to the affidavit of Mr Palmer.

9. Under the heading “Construction of the Costs Order”, the Assessor noted that the costs order in par 2 of the Terms of Settlement was “limited to a narrower scope by the additional words ‘costs of the Statement of Claim’”. He said:

“17.   What does this mean? In my opinion, the Costs Order limits the costs which the Costs Applicant can recover, to the costs of the Statement of Claim. However, this is an [sic] unusual for a costs order, and I have no way of knowing whether or not it is a drafting error, or was a freely negotiated outcome agreed by the parties as part of their compromise of the proceedings. The Costs Order appears in Terms of Settlement consisting of a pro forma or pre-prepared typed document into which some particulars have been hand written. The pro forma parts of the document includes Order 3 which suggests that this was either poorly drafted by the author, the wrong precedent was used, or Order 3 had already been negotiated between the parties and typed up prior to agreement of the settlement sum in Order 1. This seems less probable than the alternatives, as it is apparent from the supporting papers in the Application that the Costs Applicant’s solicitors believe that they are applying for an assessment of the costs of the proceedings.

18.   Nevertheless, I have to apply the principles of construction, and I find that the costs to be assessed are limited to the costs of the statement of claim.

19.   However, if I am wrong about that, or the parties return to the Court to correct the costs order, I will provide an alternative determination for the ‘costs of the proceedings’.”

10. In his affidavit Mr Palmer set out the settlement negotiations which took place on the night before the hearing date. He also gave evidence about the conversations he had with the officer of the plaintiff who gave him instructions regarding settlement. Mr Palmer did not give evidence concerning how the Terms of Settlement were created, nor did he give any evidence of conversations before or at court which led to the execution of the Terms. Mr Palmer said that when he signed the Terms of Settlement, he understood the words in par 3 to mean that the defendants would pay the costs of the whole claim brought by the plaintiff, not simply the costs of drafting and filing the Statement of Claim document.

11. There has been no application for review of the determination of the Costs Assessor, and no appeal from that decision.

The Law

12. The leading authority in relation to the meaning of the slip rule is Newmont Yandal Operations Pty Limited v The J Aron Corporation and the Goldman Sachs Group Inc [2007] NSWCA 195; (2007) 70 NSWLR 411.

13. The case concerned an order made by Justice Austin in the Supreme Court of NSW in 2004 proceedings. The purpose of those proceedings, as understood by all parties and by the trial judge, was to create a mechanism by which particular questions could be raised and answered. Justice Austin determined the separate questions in the 2004 proceedings and made orders.

14. Later proceedings before Justice White of the Supreme Court sought an order under the slip rule varying the orders made by Justice Austin. It was said that the trial judge’s orders had unintended consequences for other matters in dispute between the parties.

15. The Court of Appeal held that under the slip rule, a court has power to set aside or recall its regularly entered judgment resulting in an order the trial judge intended to make, where that judgment has unforseen or unintended legal consequences, specifically consequences for other proceedings – at [41], [58], [60], ]66], [185] and [194].

16. Paragraphs (5), (6) and (7) of the headnote in the NSW Law Reports are as follows (omitting references to paragraphs in the judgment):

“(5)   A court’s order which has consequences which were not intended by the judge making that order, as objectively determined, can constitute an ‘error’ within the meaning of the slip rule.

(6)   Carrying into effect the actual intention of the judge making the order, and making sure that the order did not have a consequence which the judge clearly intended to avoid, falls within the natural and ordinary meaning of the word ‘correct’ in the slip rule, particularly as understood in the light of the overriding purpose of the rules of court as set out in s 56 of the Civil Procedure Act 2005, and such rule will apply to correct an order which extends too far by resolving matters that were not in issue.

(7)   It is where the amendment of a court’s order to give effect to a judge’s intention is beyond controversy that the slip rule can be used; whether or not the judge’s order is correct is a different issue which is not to the point.” [Emphasis added.]

17. At par 84 of the judgment, the Court of Appeal dealt with the topic of “the intention of the Court”. At par 89 it was said that the orders made by Justice Austin “had consequences which Austin J had not intended”. This meant that there was an error within the slip rule – at [90].

18. The Court of Appeal, at [153] agreed with par [82] of the decision of Justice White, where his Honour said:

“Moreover, as Mr Walker SC for the plaintiffs pointed out, an ambiguous order can be corrected under the slip rule without the court first construing the order to determine whether, on its proper construction, the order has a different meaning from that which the court intended. An ambiguous order can be corrected to make clear what was the judge’s intention and thereby avoid the necessity for such argument. In such a case, the error is in not making the court’s intention clear.” [Emphasis added.]

Consideration

19. On this Motion it is necessary for me to ascertain the court’s intention (i.e. my intention) in making the orders in accordance with the Terms of Settlement. This was not a case where there had been a hearing on the merits and the court had a particular intention as to the costs order which should follow. Rather, this was a case where there was no hearing on the merits and the parties simply presented an agreed document to the court and asked the court to make the orders written down in the document.

20. In those circumstances, the only intention held by the court was to make orders which accurately reflected the Terms of Settlement handed up by counsel for both parties. There is no suggestion that the orders which I made contain an error, in the sense of failing to reflect the precise words of the Terms of Settlement. Indeed, the orders made by the court simply recited that orders were made in accordance with pars 1, 3 and 4 of the Terms of Settlement, and the balance of the paragraphs were noted. In this case the court had no particular understanding of what the parties intended by the words of the costs order in par 3 of the Terms of Settlement. There was no occasion for the court to seek any explanation or clarification of the document handed up.

21. The affidavit of Mr Palmer discloses that his intention was that the settlement should be that the defendants paid all of the costs of the plaintiff of the proceedings. However, the intention of the plaintiff, or of the plaintiff’s solicitors, is not the relevant intention, according to the decision of the Court of Appeal cited above. Even if the relevant intention were that of the parties to the Terms of Settlement, Mr Palmer’s evidence goes no further than stating his own intention. There is no evidence as to how the various paragraphs in the Terms of Settlement came to be agreed and thus no evidence of the intention of the defendants.

22. The slip rule can be used where a court’s order has consequences which were not intended by the judge. I have already indicated the limited scope of my intention - to accurately make the orders requested by both parties.

23. If the parties have written the orders down in a form which is not agreed between them, and if it can be said that there is a mistake in the form of the Terms of Settlement, then the remedy may well lie in a suit for rectification in the Equity Division of the Supreme Court. No such application was made to this court, and I very much doubt that the District Court would have power to deal with such an application in any event.

24. If the Terms of Settlement failed to reflect the intention of the plaintiff and its advisers, or if the Terms of Settlement had consequences unintended by the plaintiff and its advisers, that error or mistake does not fall within the operation of the slip rule.

Conclusion and Orders

25. For the reasons given above, the plaintiff’s application for relief under the slip rule fails.

26. Mr Changizi, the second defendant, represented himself on the hearing of the Motion. By leave he also appeared for the company. He is not a legal practitioner and thus the defendants have incurred no legal costs in defending the Motion. I will order each party to pay their own costs.

27. My orders are:

1. Dismiss the plaintiff’s Notice of Motion filed on 10 October 2019.

2. Order each party to pay its or his own costs of the Motion.

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Amendments

13 March 2020 - Catchwords added

Decision last updated: 13 March 2020