Melhem v Katter

[2021] NSWCA 273

Court of Appeal

Supreme Court

New South Wales

Medium Neutral Citation:

Melhem v Katter [2021] NSWCA 273

Hearing dates:

5 October 2021

Date of orders:

5 October 2021

Decision date:

05 October 2021

Before:

Brereton JA at [1], [23];
McCallum JA at [21];
Garling J at [22]

Decision:

(1) Grant leave to the applicant to file an Amended Summons Seeking Leave to Appeal in the form initialled, dated this day and placed with the papers.

(2) Extend time to apply for leave to appeal to the date on which the Summons Seeking Leave to Appeal was filed.

(3) Grant leave to the applicant, insofar as leave be required, pursuant to s 4 of the Felons (Civil Proceedings) Act 1981 (NSW), to commence the proceedings for leave to appeal and the consequent appeal.

(4) Grant leave to appeal.

(5) Allow the appeal.

(6) Set aside the orders made by the District Court on 5 November 2020.

(7) Remit the proceedings to the District Court to be dealt with according to law.

(8) Order that the respondents pay the applicant’s costs of the appeal.

Catchwords:

JUDGMENTS AND ORDERS – Enforcement – Appeal from setting aside of examination orders – Where District Court had given two inconsistent judgments – Where Court of Appeal previously prohibited District Court from taking any further steps in proceedings on basis that second judgment was valid – Where District Court on remittal considered itself to be functus officio – Whether District Court entirely prohibited from taking any further steps in the proceedings – Court of Appeal only quashed second judgment – Court of Appeal only prohibited steps on basis of validity of second judgment – Distinction between adjudication and enforcement – Appeal allowed

APPEALS – Right of appeal – Who may exercise – Felons – Application of Felons (Civil Proceedings) Act 1981 (NSW), s 4, in Court of Appeal

APPEALS – Leave to appeal – Whether leave required – Interlocutory decisions – Setting aside of examination orders – Decision had effect of finally disposing of proceedings – Evident merit to appeal – Leave granted

APPEALS – Procedure – Time limits – Extension of time – Where respondents on notice of intention to appeal prior to time elapsing – No prejudice identified – Extension granted

Legislation Cited:

Crimes Act 1900 (NSW), s 4

District Court Act 1973 (NSW), ss 44, 51

Felons (Civil Proceedings) Act 1981 (NSW), ss 4, 5

Supreme Court Act 1970 (NSW), s 101(2)(e)

Uniform Civil Procedure Rules 2005 (NSW), r 38.2(3)

Cases Cited:

Chen v Zhang [2009] NSWCA 202

Clark v Robards [2016] NSWCA 187

Clark v State of New South Wales [2018] NSWCA 13

Clarke v Herrick [2020] NSWCA 71

Ford v Simes [2009] NSWCA 351

Katter v Melhem (2015) 90 NSWLR 164; [2015] NSWCA 213

Melham v Katter [2013] NSWDC 203

Mr D v Ms P [2020] NSWCA 174

Patsalis v State of New South Wales (2012) 81 NSWLR 742; [2012] NSWCA 307

Potier v Attorney General in and for the State of New South Wales (2015) 89 NSWLR 284; [2015] NSWCA 129

Potier v Director-General, Department of Justice & Attorney General [2011] NSWCA 105

Category:

Principal judgment

Parties:

Robert George Melhem (Applicant)
Joseph Katter (First Respondent)
Susan Vera Katter (Second Respondent)

Representation:

Counsel:
A Moutasallem (Applicant)
P E King (Respondents)

Solicitors:
Avondale Lawyers (Applicant)
Sydney Commercial Lawyers Pty Ltd (Respondents)

File Number(s):

2020/340576
2021/97126

 Decision under appeal 

Court or tribunal:

District Court of New South Wales

Jurisdiction:

Civil

Date of Decision:

5 November 2020

Before:

Gibb DCJ

File Number(s):

2011/144484

Decisions under appeal

HEADNOTE

[This headnote is not to be read as part of the judgment]

In 2011, the applicant commenced proceedings against the respondents in the District Court. Partway through the first day of the hearing on 7 August 2012, the proceedings were settled on terms providing, inter alia, that the applicant was to have judgment in the sum of $400,000 inclusive of interest and costs, but that the applicant would also have leave to enter judgment in the sum of $1,000,000 if certain conditions were not satisfied by 1 April 2013. Judgment was entered on 7 August 2012 for the sum of $400,000, and the remainder of the settlement terms were ‘noted’.

The relevant conditions were not satisfied, and on 23 July 2013, judgment was entered in the District Court in the sum of $1,000,000. An application in the District Court to set aside that judgment was dismissed on 18 October 2013, but the respondents subsequently made a successful application for judicial review to this Court. On 28 July 2015, on the basis that the two judgments entered were inconsistent, this Court quashed the orders of 23 July 2013 giving judgment for $1,000,000, and made an order: “3. Prohibit the District Court of New South Wales from taking any further steps in proceedings 2011/144484 on the basis that the orders given on 22 July 2013 in those proceedings are valid.”

The applicant then proceeded to seek to enforce the judgment for $400,000, by filing a motion for examination orders in July 2020. In turn, the respondents filed a motion seeking to stay the proceedings and set aside the examination orders. On 5 November 2020, the District Court delivered reasons that noted this Court’s 2015 decision and expressed the District Court to be ‘functus officio’ in respect of the proceedings. Orders were made dismissing all motions, setting aside all examination orders, and ‘closing the file’, on the basis that ‘the Court’s jurisdiction has long been exhausted and these proceedings are at an end.’

Held (per Brereton JA; McCallum JA and Garling J agreeing), extending time to apply for leave to appeal, granting leave to proceed under s 4 of the Felons (Civil Proceedings) Act 1981 (NSW) insofar as leave be required, granting leave to appeal, allowing the appeal, setting aside the orders of the District Court of 5 November 2020, and remitting the proceedings to the District Court: [20], [23] (Brereton JA), [21] (McCallum JA), [22] (Garling J).

1. Whether s 4 of the Felons (Civil Proceedings) Act 1981 (NSW) applies to an appeal in this Court is not a concluded question. However, if the appeal is meritorious, there is no reason for refusing leave under that Act, insofar as leave be required: [10]-[11].

Mr D v Ms P [2020] NSWCA 174, considered.

2. Leave to appeal is required because the decision appealed from, although having a final effect on the applicant’s ability to enforce a judgment, is interlocutory. However, that finality is highly relevant to the question of leave, as is, again, the merit of the appeal: [12]-[13].

3. While an extension of time to seek leave to appeal is required, a Notice of Appeal was filed, albeit without leave, within time. The respondents have therefore been on notice since a date within the period for seeking leave to appeal, and no prejudice from the delay has been identified: [14].

4.  The District Court orders of 5 November 2020 overlook the fundamental distinction between adjudication and enforcement. A court continues to have jurisdiction to enforce a judgment after adjudication. Moreover, order (3) of this Court’s 2015 decision only prohibits further proceedings “on the basis” of the validity of the 22 July 2013 judgment for $1,000,000, and not on the basis of the 7 August 2012 judgment for $400,000. The phrase “on the basis” is part of the order, not a reason for it; it describes and qualifies what the District Court is prohibited from doing. The District Court therefore erred by holding that the proceedings were totally at an end, as the judgment for $400,000 remains amenable to enforcement: [15]-[17].

Katter v Melhem (2015) 90 NSWLR 164; [2015] NSWCA 213, applied.

5. There was no denial of procedural fairness in the lack of notice to the respondents of the examination orders application, as Uniform Civil Procedure Rules 2005 (NSW), r 38.2(3), provides that notice is not required: [18].

6. There is no evidence to support the contention that the second respondent was not a party to the terms of settlement. The judgment was entered against both respondents “jointly and severally”: [19].

Judgment (EX TEMPORE)

1. BRERETON JA: In 2011, the applicant Robert George Melhem commenced proceedings in the District Court of New South Wales against the respondents Joseph Katter and Susan Vera Katter, to recover a loan and interest which together were said to amount to in excess of $1 million by the time that the proceedings came on for hearing before Gibson DCJ on 7 August 2012.

2. Partway through the first day of the hearing, the proceedings were settled and the parties, by their respective solicitors, executed handwritten terms of settlement in the following terms:^[1]

   1. See Katter v Melhem (2015) 90 NSWLR 164 at 168-169 [13] (JC Campbell AJA; McColl JA and Leeming JA agreeing); [2015] NSWCA 213 (“2015 CA Judgment”).

“1. Verdict and judgment for the plaintiff in the sum of $400,000 inclusive of interest and costs.

2. Judgment against the defendants jointly and severally.

3. No interest to run on judgment if paid within 90 days of 7 August 2012. If not paid within such time, interest shall be payable from 7 August 2012 at the rate prescribed for post-judgment interest.

4. Leave to the plaintiff to enter judgment in the sum of $1 million if payment under 1 (and/or 2 if applicable) has not been paid by 1 April 2013, or unless paragraph 5 herein applies.

5. Each defendant (either jointly or separately) shall execute a put and call option in favour of the plaintiff for the sale of a unit on reasonable terms at 136-138 New Canterbury Rd Petersham.

6. The unit referred to in Order 5 above must be the first available to be sold. On settlement, clear title must be provided.

7. The defendants shall do all things necessary to facilitate the giving effect of Orders 5 and 6 herein.

8. The provision of a unit to the plaintiff under these Orders shall release the Defendants from the liability that they would otherwise have under these Orders provided that:

(a) The sale value of the unit is at least $400,000 (plus the amount of any applicable interest under Order 3) at the time of settlement of the unit; and

(b) The relevant contract in respect of the sale of the unit is entered into not later than 31 March 2013.”

3. The primary judge observed that there was an inconsistency between paragraph [1], which provided for an immediate judgment for the plaintiff for $400,000, and paragraph [4], which reserved leave to the plaintiff to enter judgment for $1 million if the first judgment was not satisfied by 1 April 2013 or certain other conditions were not satisfied. As a result, the document was amended so that orders were ultimately entered on 7 August 2012 as follows: ^[2]

   2. 2015 CA Judgment at 169 [16] (JC Campbell AJA; McColl JA and Leeming JA agreeing).

“(1) Orders in accordance with paragraphs 1 and 2 of the Terms of Settlement as follows (noting that judgment will not be entered until 1 April 2013):

1. Verdict and judgment for the plaintiff in the sum of $400,000 inclusive of interest and costs.

2. Judgment against the defendants jointly and severally.

(2) Liberty to apply in relation to order (1) above.

(3) Note the contents of paragraphs 3, 4, 5, 6, 7 and 8 as follows:

3. No interest to run on judgment if paid within 90 days of 7 August 2012. If not paid within such time, interest shall be payable from 7 August 2012 at the rate prescribed for post-judgment interest.

4. Leave to the plaintiff to enter judgment in the sum of $1 million if payment under 1 (and/or 2 if applicable) has not been paid by 1 April 2013, or unless paragraph 5 herein applies.

5. Each defendant (either jointly or separately) shall execute a put and call option in favour of the plaintiff for the sale of a unit on reasonable terms at 136-138 New Canterbury Road, Petersham.

6. The united [sic] referred to in order 5 above must be the first available to be sold. On settlement, clear title must be provided.

7. The defendants shall do all things necessary to facilitate the giving effect to orders 5 and 6.

8. The provision of a unit to the plaintiff under the order shall release the defendants from the liability that they would otherwise have under these orders provided that:

(a) The sale value of the unit is at least $400,000 (plus the amount of any applicable interest under order 3) at the time of settlement of the unit; and

(b) The relevant contract in respect of the sale of the unit is entered into not later than 31 March 2013.

(4) Note the agreement of the parties not to disclose the contents of this settlement other than by operation of law.

(5) Note the undertaking to the court given by the solicitor for the plaintiff still stand.

(6) Exhibits returned.”

4. The sum of $400,000 was not paid and the condition concerning a put and call option was not, as ultimately determined, satisfied, with the result being that on 23 July 2013, pursuant to an application made on behalf of the present applicant, judgment was entered in the District Court, purportedly pursuant to paragraph [4] of the earlier orders, for $1 million.

5. An application to set aside that judgment in the District Court was dismissed by Gibson DCJ on 18 October 2013. ^[3] However, the respondents then brought judicial review proceedings in this Court, in which they sought a writ of prohibition prohibiting the taking of any step to enforce or otherwise give effect to the judgment made on 23 July 2013, and a declaration that the judgment was entered into without power, without notice and therefore in breach of the rules of natural justice, and beyond the scope of ss 44 and 51 of the District Court Act1973 (NSW). ^[4] In those proceedings, this Court held that because the $1 million judgment of 23 July 2013 was inconsistent with the final judgment entered on 7 August 2012, it was void and liable to be quashed, and made the following orders: ^[5]

“1. Extend the time for bringing the summons filed in proceedings 2014/364845 to and including 11 December 2014, on terms that clause 4 of that summons not be relied on.

2. Quash the orders given on 22 July 2013 in proceedings 2011/144484 in the District Court of New South Wales.

3. Prohibit the District Court of New South Wales from taking any further steps in proceedings 2011/144484 on the basis that the orders given on 22 July 2013 in those proceedings are valid.

4. Dismiss the summons seeking leave to appeal filed in this court in proceedings 2015/89863.

5. Dismiss the appeal filed in this court in proceedings 2015/89841.

6. Order Robert George Melham to pay 90 per cent of the costs of Joseph Katter and Susan Vera Katter in proceedings 2014/364845, 2015/89863 and 2015/89841 in this Court.”

3. Melham v Katter [2013] NSWDC 203.

4. 2015 CA Judgment at 174-175 [41] (JC Campbell AJA; McColl JA and Leeming JA agreeing).

5. 2015 CA Judgment at 198 [147] (JC Campbell AJA; McColl JA and Leeming JA agreeing).

6. Thus it will be seen that those orders quashed the orders given on 22 July 2013 in the District Court, being the $1 million judgment, and prohibited that Court from taking any further steps “on the basis that the orders given on 22 July 2013 in those proceedings are valid.”

7. On 21 July 2020, the applicant filed motions in the District Court for examination orders against each of the respondents. Conformably with Uniform Civil Procedure Rules 2005 (NSW) (“UCPR”), r 38.2(3), which provides that unless the Court otherwise orders, an application for an order for examination may be dealt with in the absence of the parties and need not be served on the person bound by the judgment or order, those motions were not served and examination orders were subsequently made.

8. On 29 September 2020, the respondents filed a motion in the District Court seeking a stay of the proceedings and an order restraining the registrar from conducting examinations as provided for in the examination orders of 22 July 2020. The proceedings came before Gibb DCJ on 5 November 2020. In a document which appears to be the only record of her Honour’s reasons for judgment of that day, her Honour noted the orders of this Court in the 2015 CA Judgment and observed that the jurisdiction of the District Court was exhausted in 2012, 2013, or at the latest 2015 (referring to the 2015 CA Judgment), that various orders for examination had been filed in the years since “the court was functus officio”, and that “[t]he plaintiff [was] informed that should he wish to pursue this matter he must take appropriate steps and file [a] fresh summons or fresh proceedings invigorating appropriate jurisdiction.” Her Honour made orders dismissing all motions and examination orders made in the proceedings in 2020, including those to which I have referred, setting aside the examination orders of 22 July 2020, and ordering “that this file be closed as the Court’s jurisdiction has long been exhausted and these proceedings are at an end.”

9. The applicant filed a Notice of Intention to Appeal on 1 December 2020 and a Notice of Appeal within time on 3 February 2021. It having become apparent that it was at least arguable that leave to appeal might be required, the applicant filed a Summons Seeking Leave to Appeal on 8 April 2021, which, if leave be required, would be out of time. By an amendment, leave for which was sought at the hearing, the applicant seeks to add a claim for such an extension of time.

10. It has also emerged that the applicant is serving a sentence for what is not disputed to be a “serious indictable offence” within the meaning applicable to Felons (Civil Proceedings) Act 1981 (NSW) (“Felons Act”), s 4,^[6] such that the applicant may require leave under that Act to commence an appeal. Whether s 4 of the Felons Act applies to an appeal in this Court is, however, not a concluded question. In Mr D v Ms P,^[7] Bell P observed that a number of decisions have proceeded on the basis that the bringing of an appeal amounts to the “institution” of “civil proceedings”, referring to Chen v Zhang,^[8] Ford v Simes,^[9] and Clark v State of New South Wales,^[10] but his Honour left the question open as it did not require resolution. ^[11] Perhaps more relevantly, his Honour observed that the requirement of s 5 of that Act that the Court not grant leave unless satisfied that the proceedings are not an abuse of process and that there is a prima facie ground for the proceedings, set a low hurdle for an application for leave. As his Honour said, “[i]t follows that the ‘prima facie’ requirement in s 5 of the Felons Act represents a relatively low threshold to be satisfied on an application for leave pursuant to s 4 of that Act.” ^[12]

    6. That meaning being the one prescribed by Crimes Act 1900 (NSW), s 4.

    7. [2020] NSWCA 174 at [17]-[18] (Bell P) (“Mr D”).

    8. [2009] NSWCA 202, see at [8] (Sackville AJA; Campbell JA and Handley AJA agreeing).

    9. [2009] NSWCA 351, see at [30] (Bergin CJ in Eq; Tobias JA and Handley AJA agreeing).

    10. [2018] NSWCA 13, see at [2]-[5] (Basten JA).

    11. See also Potier v Attorney General in and for the State of New South Wales (2015) 89 NSWLR 284 at 290 [16] (Basten JA), 296-297 [48] (Leeming JA; Basten JA and Meagher JA agreeing); [2015] NSWCA 129; Patsalis v State of New South Wales (2012) 81 NSWLR 742 at 745 [5]-[6] (Allsop P), 752-755 [43]-[57] (Basten JA; Allsop P agreeing), 768-770 [112]-[117] (Sackville AJA; Allsop P agreeing); [2012] NSWCA 307. Cf Clark v Robards [2016] NSWCA 187 at [97] (Emmett AJA; Simpson JA agreeing); Potier v Director-General, Department of Justice & Attorney General [2011] NSWCA 105 at [9]-[12] (Handley AJA).

    12. Mr D at [26], and see also [24]-[25] (Bell P).

11. The proceedings before us are set down for a concurrent hearing of the application for leave and any appeal, if leave be granted or if leave not be required. In those circumstances, the Court will form a view of the merits of the grounds of appeal, and if the appeal is meritorious then there is no reason for refusing leave under the Felons Act.

12. The decision of Gibb DCJ is undeniably an interlocutory one, although it has a final effect on the applicant’s ability to enforce the judgment of 2012. Notwithstanding that final effect, a motion in connection with enforcement of a judgment and, in this case, the dismissal of that motion is plainly interlocutory in nature, just as the dismissal of proceedings on an application for summary dismissal has been held to be interlocutory. ^[13] Leave to appeal is therefore required. ^[14]

    13. See most recently Clarke v Herrick [2020] NSWCA 71 at [1] (Meagher and Leeming JJA).

    14. Supreme Court Act 1970 (NSW), s 101(2)(e).

6. Nonetheless, on the question of leave to appeal it is highly relevant that the that the judgment, if it stands, would finally dispose of the applicant’s substantive rights and ability to enforce those rights. Again, as the Court will in any event consider the merits of the appeal on a concurrent hearing, the requirement for leave provides no reason for refusing leave if, in those circumstances, the appeal has merit.

7. Because leave is required, an extension of time to seek leave to appeal is required. In that respect, however, it is highly relevant that a Notice of Appeal was filed, albeit without leave, within time. One consequence of that is that the respondents have been on notice of the intention to appeal since 1 December 2020, when the Notice of Intention to Appeal was filed, no prejudice from the delay in seeking leave to appeal could arise, and none has been identified in the course of argument. . An extension of time for the Summons Seeking Leave to Appeal to the date on which it was filed should be granted.

8. That brings me to the substantive issues raised. The primary judge’s observation that the District Court was functus officio in 2012, 2013, or at the latest 2015 overlooks the fundamental distinction between adjudication and enforcement. An examination order is an aspect of enforcement, not of adjudication. This distinction was plainly recognised in the 2015 CA Judgment in these proceedings, where JC Campbell AJA said: ^[15]

“Entry of a final judgment does not completely remove a court’s jurisdiction concerning a proceeding. The court continues to have jurisdiction concerning the enforcement of the judgment. If the court that had pronounced a final, entered judgement had jurisdiction to grant a freezing order, it would have jurisdiction to make a freezing order in aid of enforcement. However except where there is a specific statutory power, or there is fraud, what it does not have jurisdiction to do is to enter a final order on the same cause of action that is inconsistent with the final order already entered.”

15. 2015 CA Judgment at 182 [80] (JC Campbell AJA; McColl JA and Leeming JA agreeing).

16. As determined in the 2015 CA Judgment, the 7 August 2012 judgment for $400,000 finally determined the rights of the parties on the relevant cause of action. The 22 July 2013 judgment was a nullity and liable to be quashed, because it was inconsistent with that earlier judgment. Thus, this Court quashed the 22 July 2013 judgment and, in order (3), prohibited further proceedings “on the basis” of its validity. The order did not prohibit further proceedings on the basis that the 7 August 2012 judgment was valid.

17. For the respondents, it was argued that the prohibition order should be construed as being a total prohibition on further proceedings, and that the words “on the basis…” were a reason for the order. In my judgment, that construction is untenable. The phrase “on the basis…” is part of the order, not a reason for it, and it forms part of the description of the further proceedings which were prohibited. In other words, the District Court was prohibited from acting on the basis that the 22 July 2013 judgment was valid. It was not prohibited from acting on the basis that the 7 August 2012 judgment was valid, and indeed the entire judgment of the Court of Appeal proceeds on the basis that the 7 August 2012 judgment was indeed valid. ^[16] For those reasons, in my opinion, the judgment of the District Court in holding that it was functus officio and that the proceedings were totally at an end was plainly wrong.

    16. See especially 2015 CA Judgment at 179 [64], [68], 181 [76], 184 [86], 189-190 [107], 194-195 [129] (JC Campbell AJA; McColl JA and Leeming JA agreeing).

18. Two other arguments were raised in written and oral submissions. It was submitted that the examination orders were liable to be set aside on the basis that they were made in denial of procedural fairness, no notice of the application for them having been given. No Notice of Contention sought to raise this as a ground upon which the judgment should be upheld. But in any event there was, as I have indicated, no requirement for any such notice. UCPR, r 38.2(3), explicitly so provides.

19. Secondly, there was a suggestion, at least in the written submissions, that the second respondent was not a party to the terms of settlement and was not bound by them. Again, no Notice of Contention raised this as a ground on which the judgment below should be upheld. There is no evidence, so far as the documents before this Court show, as to exactly how the terms of settlement were signed, but the 2015 CA Judgment records that they were signed by the solicitor for each of the parties and there is no reason to depart from that finding. ^[17] In any event, the judgment was plainly in its terms entered against both respondents “jointly and severally”, and remains on the record against both. In those circumstances, it is enforceable against both and both were liable to be examined on an examination order.

    17. 2015 CA Judgment at 168 [13] (JC Campbell AJA; McColl JA and Leeming JA agreeing).

20. In my opinion, therefore, leave to appeal should be granted, the appeal allowed, the orders of the District Court set aside and the matter remitted to the District Court for further hearing. I propose the following orders:

1. Grant leave to the applicant to file an Amended Summons Seeking Leave to Appeal in the form initialled, dated this day and placed with the papers.

2. Extend time to apply for leave to appeal to the date on which the Summons Seeking Leave to Appeal was filed.

3. Grant leave to the applicant, insofar as leave be required, pursuant to s 4 of the Felons (Civil Proceedings) Act 1981 (NSW), to commence the proceedings for leave to appeal and the consequent appeal.

4. Grant leave to appeal.

5. Allow the appeal.

6. Set aside the orders made by the District Court on 5 November 2020.

7. Remit the proceedings to the District Court to be dealt with according to law.

8. The respondents pay the applicant’s costs of the appeal.

21. McCALLUM JA: I agree with the orders proposed by Brereton JA for the reasons his Honour has given, and would make one short additional observation. The submission that the concluding words of order (3) of the Court of Appeal in Katter v Melhem (2015) 90 NSWLR 164; [2015] NSWCA 213 “on the basis that the orders given on 22 July 2013 in those proceedings are valid” were to be construed as the reason for that order rather than a qualification to the order did not make sense. The validity of the orders given on 22 July 2013 had been impugned by order (2) of the same decision. In my view, there is no way to read order (3) other than on the basis that those words presented a qualification to the prohibition on taking further steps in the proceedings.

22. GARLING J: I agree with the orders proposed by the presiding judge and with his reasons. I also agree with the additional remarks of McCallum JA.

23. BRERETON JA: Accordingly, the orders of the Court will be as I have proposed.

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Endnotes

Decision last updated: 10 November 2021