Michael Wilson & Partners Ltd v Nicholls & Ors
[2021] ACTSC 128
•30 June 2021
SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY
Case Title: | Michael Wilson & Partners Ltd v Nicholls & Ors |
Citation: | [2021] ACTSC 128 |
Hearing Dates: | 8 December 2020, 25 February 2021 |
| Submissions last received: Decision Date: | 4 March 2021 30 June 2021 |
Before: | McWilliam AsJ |
Decision: | See [85] |
Catchwords: | PRACTICE AND PROCEDURE – Court Procedures Rules 2006 (ACT) rr 75 and 76 – whether proceedings taken to be dismissed – where judgment on interlocutory issue was not delivered because subject matter of application was overtaken by bankruptcy of judgment debtor – where last step in proceeding was the making of an order and more than two years had passed from that date – where proceeding deemed dismissed – where the only outstanding issue in the dismissed proceeding was a question of costs – where substantial delay – whether in the interests of justice to reinstate |
Legislation Cited: | Bankruptcy Act 1966 (Cth) s 58 Court Procedures Act 2004 (ACT) s 5A Limitation Act 1985 (ACT) s 14 |
Cases Cited: | Ainslie v Ainslie [1927] HCA 23; (1927) 39 CLR 381 Barry Thomas Blunden v Commonwealth of Australia [2014] ACTSC 123 Tenth Vandy Pty Ltd v Natwest Markets Australia Pty Ltd [2007] VSCA 75 |
Parties: | Michael Wilson & Partners Limited (Judgment Creditor) Robert Colin Nicholls (First Judgment Debtor) David Ross Slater (Second Judgment Debtor) Temujin Services Limited (in liquidation) (Third Judgment Debtor) Temujin International Limited (Fourth Judgment Debtor) Temujin International FZE (Fifth Judgment Debtor) John Forster Emmott (First Joined Party) Effective Funds Management Pty Limited (Second Joined Party) |
Representation: | Counsel D Bennett QC with R Thomas (Plaintiff) J Baird (First Joined Party) B Glare (Second Joined Party) |
| Solicitors Michael Wilson & Partners (Plaintiff) Duggan Legal (First Joined Party) Rothwell Lawyers (Second Joined Party) | |
File Number: | SC 82 of 2015 |
McWilliam AsJ:
The Court has before it a dispute as to whether a proceeding that was commenced in this Court by Michael Wilson & Partners Limited (Judgment Creditor) in May 2015 is taken to have been dismissed by operation of a procedural rule, because of a lack of action taken by any of the parties for more than a year.
If the Court finds that the proceeding has been deemed to be dismissed, then the Judgment Creditor applies to the Court to reinstate the proceeding.
Issues
The issues for determination are as follows:
(a)Whether the proceeding is taken to be dismissed pursuant to r 75 of the Court Procedures Rules 2006 (ACT) (Rules); and
(b)If so, whether the proceeding should be reinstated pursuant to r 76 of the Rules.
The Judgment Creditor contended that the proceeding has been awaiting a judgment on an interlocutory application heard in 2015 before further steps could be taken. As the judgment has not been delivered, the Judgment Creditor submitted this is not a case where r 75 applies.
For reasons explained below, the only active parties to the present dispute are the Judgment Creditor and the First and Second Joined Parties. The position of the joined parties was that the proceeding is deemed the subject of a dismissal and that there is no basis for reinstating it now.
The nature of the dispute means that the procedural history of the matter is critical. It has been set out in detail first as it is relevant to both issues for determination.
History of the matter
The precursor to the litigation in the Territory was a judgment entered in New South Wales on 14 December 2012 (NSW Judgment) following a judgment of the Court of Appeal in the Supreme Court of New South Wales: see Nicholls & Ors v Michael Wilson & Partners Ltd [2012] NSWCA 383 (on remittal following Michael Wilson & Partners Limited v Nicholls [2011] HCA 48; 244 CLR 305).
The judgment was obtained against the following people and entities:
(a) Mr Robert Nicholls (First Judgment Debtor),
(b) Mr David Slater (Second Judgment Debtor),
(c) Temujin Service Limited (Third Judgment Debtor),
(d) Temujin International Limited (Fourth Judgment Debtor), and
(e) Temujin International FZE (Fifth Judgment Debtor).
The Third, Fourth and Fifth Judgment Debtors will collectively be referred to as the ‘Temujin Entities’. All five judgment debtors were ordered to pay to the Judgment Creditor what equated in Australian dollars to more than $1.3 million and more than $700,000 in interest (Judgment Debt).
The substantive litigation in the Territory was commenced in May 2015 by an application filed by the Judgment Creditor to register the NSW Judgment. That occurred on 22 May 2015 in accordance with r 2010A of the Rules.
The reason for registering the judgment in the Territory was because Mr Slater owned a house in the suburb of Ainslie in the Territory (the Ainslie Property). Once the NSW Judgment was registered, the Judgment Creditor filed, on 13 August 2015, an application in proceeding (August 2015 Application).
The orders sought in the August 2015 Application included an order pursuant to r 2201 of the Rules for possession of the Ainslie property. Other orders sought affected the interests of a company that had lodged a caveat in respect of the Ainslie Property, namely Effective Funds Management Pty Ltd (EFM), and Westpac Banking Corporation (Westpac), who at that time held a registered mortgage over the Ainslie Property.
The August 2015 Application was opposed by Mr Slater on the basis that there had been satisfaction of the Judgment Debt by a joint and several tortfeasor, namely Mr John Forster Emmott, through arbitration proceedings in the United Kingdom (UK Arbitration proceedings). Mr Emmott was formerly either employed by, or in partnership with, the Judgment Creditor. The argument by Mr Slater involved whether the enforcement of the Judgment Debt, obtained by the Judgment Creditor against him in the Territory, should be prevented because of the application of an equitable principle which prevents double satisfaction.
In addition, Mr Emmott sought to intervene, arguing that the Judgment Creditor was in turn the subject of a judgment debt (including indemnity costs) obtained through the UK Arbitration proceedings in favour of Mr Emmott: see Michael Wilson & Partners Limited v John Forster Emmott [2011] EWHC 1441 (Comm). A subsequent decision in relation to quantum was handed down by the UK Arbitration Tribunal in September 2014. The arbitral award was registered as a judgment in the High Court in the UK on 26 June 2015. Mr Emmott’s evidence in these proceedings, through his legal representative, asserted that in 2015, Mr Emmott was seeking to register in the Territory the judgment that he had registered in the UK against the Judgment Creditor. Mr Emmott asserted that any monies obtained pursuant to enforcement of the NSW Judgment in the Territory by the Judgment Creditor against Mr Slater should in fact be paid to him.
On 21 August 2015, three further parties were joined to the proceedings:
(a) Mr John Forster Emmott, as the First Joined Party;
(b) EFM, as the Second Joined Party; and
(c) Westpac, as the Third Joined Party.
Subsequently, Mr Nicholls and Mr Slater both entered into bankruptcy, and Mr Nicholls later died. The three Temujin Entities went into liquidation. The Ainslie Property was also sold (in 2019) and Westpac’s interest was fully discharged at that time. On 5 June 2020, Westpac was removed as a party in the proceeding. That is how it comes to be that Mr Emmott and EFM are now the only respondents in the present dispute.
The genesis of the present dispute
On 16 December 2015, Mossop AsJ (as his Honour then was) heard the August 2015 Application made by the Judgment Creditor. His Honour reserved judgment on that day.
On 23 December 2015, Mr Slater was made bankrupt in the UK (following a successful application made by the Judgment Creditor). The trustee then took steps in the Federal Court of Australia to be recognised as the trustee in bankruptcy in Australia. Under s 58 of the Bankruptcy Act 1966 (Cth), upon Mr Slater becoming bankrupt, the Ainslie Property vested in his trustee in bankruptcy.
On 7 June 2016, the parties came before Mossop AsJ for directions. Mr Vivekananda, counsel then representing the Judgment Creditor, had the following relevant exchange with Mossop AsJ (emphasis added):
[Counsel]:…The principal proceedings – if I call those the execution proceedings in effect of the house but, as you know, the property will [have been] vested already in the trustee as a result of the bankruptcy so we [expect] that will formally dispose of that and there will be an issue about costs and the trustee may well decide that she will consent to that being a debt in the estate and that will resolve that issue.
The other issue that will have to be resolved will be the status of Effective Funds Management’s mortgage over the property. I say mortgage but was it a caveat? There’s a caveat on title, you might recall. The trustee may seek to lapse that caveat on the basis that there was no proper caveatable interest…If that’s the case and the application is made to lapse that and EFM resists that, that will be a matter that will come back to this Court at a later point.
His Honour: As a separate proceeding though.
[Counsel]:As a separate proceedings but it may well be that the fate of that application will determine our – obviously we’ll be seeking the costs of EFM’s intervention in these proceedings and the costs that we’ve had to incur extra as a result of EFM’s intervention.
…
[Counsel]:And at that point in time of course then we have to turn to Mr Emmott as well because you’ll recall that he intervened initially and was joined and now he wants to, I suppose, swallow – once the money has got into [the Judgment Creditor’s] hands, he wants to swallow the money from [the Judgment Creditor]. But of course that’s now gone. That opportunity - - -
… - has disappeared. So there’s some costs there again.
His Honour: Anyway, is the position that we just have to wait and see what happens with the trustee, then the majority of this case will go away, leaving possibly some skirmishes in relation to costs?
[Counsel]:Yes. …
There was then an exchange between counsel for the Judgment Creditor and Mossop AsJ as to the time required for an adjournment, before the transcript continues:
His Honour: …it seems to me that … the bit of this saga with which I am involved has rather had the impetus taken out of it and the substance of the matter will be decided elsewhere. So I don’t want to keep people running up costs by coming back to me if it’s not necessary.
[Counsel]:Yes. I should foreshadow that if we do have to apply for costs, your Honour, we have filed - indeed, my instructors have filed yesterday an affidavit where there’s a notice to produce…
His Honour then later confirmed:
His Honour: So if there’s a contested costs application, that may involve some preliminary steps ---
After hearing from counsel for the Judgment Creditor, Mossop AsJ then proceeded to hear from Ms Bristol, the legal representative for Westpac and from Ms Mense, the legal representative for EFM (emphasis added):
His Honour: Does anybody want to say anything else? …
Ms Bristol: Your Honour, perhaps if I could just briefly say that we consent with the proposition of a lengthy adjournment. …
His Honour: …Ms Mense?
Ms Mense: …My client will be seeking a hearing date and that the matter be brought on for hearing and that we’ll be seeking an indemnity costs order against the plaintiff personally.
His Honour: I don’t understand that. A hearing of what?
Ms Mense: The substantive hearing.
His Honour: I think we’ve had the substantive hearing in this matter, not the hearing that involved your client, unless I misunderstood something. The hearing involving your client was deferred until after I have made a ruling on the issue which I am now not required to as a result of the appointment of the trustee in bankruptcy in the UK. So when you say you want a hearing, I don’t understand what you’re saying.
Ms Mense:To my understanding, if the hearing is being postponed until the appointment the trustee then wouldn’t it now be the right time to commence the hearing then?
His Honour: Your client’s interest in the present case depends upon Mr Vivekananda’s client getting hold of the proceeds of the sale of the house.
Ms Mense: Yes.
His Honour: The house is now vested in the trustee in bankruptcy. Mr Vivekananda’s application has effectively been overtaken by events, namely his client’s successful appointment of a trustee in bankruptcy in the UK. So that will mean that your client’s interest in intercepting the funds that would be held by Mr Vivekananda’s client has disappeared. I may have misunderstood what’s gone on or more likely forgotten [what’s] gone on but that’s my understanding of the situation. So it doesn’t seem to me that there’s any need at this stage for a hearing because Mr Vivekananda’s client is not going to get the proceeds of the sale of the house.
Ms Mense: Your Honour, my client would be pushing for a judicial sale of the property…
…
His Honour: But that’s something you are then obliged to agitate with the trustee in bankruptcy. - - -
Ms Mense: Yes.
His Honour: - - - who’s not represented here, who’s seeking to have her appointment recognised, as I understand it, in June and presumably you would then prove your debt in the bankruptcy.
Ms Mense: In Australia?
His Honour: Assuming that the trustee is successful in her application in the Federal Court in June. That’s my understanding of the situation and it’s for that reason that I don’t propose to, at this stage, decide the application which I heard or, subsequent to that decision, move on to consider your client’s application to intercept the proceeds of sale.
Counsel for the Judgment Creditor then confirmed the position on behalf of the Judgment Creditor as follows:
…we certainly can’t proceed any further with the execution proceeding which started the saga, as your Honour has described.
…
Our right has gone as it is now committed to the Bankruptcy Act, section 59, as vested in the property.
The matter was adjourned to 7 October 2016 for further directions. Following the directions hearing on 7 June, a dispute then arose over the title to the Ainslie Property and whether it should have been put into the name of the trustee in bankruptcy located in the UK, or the trustee’s delegated agents in Australia. As a result, the trustee in the UK commenced separate proceedings seeking to rectify the title.
Ultimately the matter came before Mossop AsJ on 27 October 2017. At that time his Honour made orders by consent as follows:
1.This claim should be and hereby stands adjourned unto the final outcome is known of the Application by Ms J.A. Palmer, as to Trustee of the Bankrupt Estate of the Second Judgment Debtor, to rectify the Title in Volume 207, Folio 15, Block 13, Section 97 of Deposited Plan 900, in the Division of Ainslie in the Australian Capital Territory with an address at 41 Officer Crescent, Ainslie, pursuant to section 125 of the Land Titles Act 1925 (ACT) in claim number: SC 402 of 2017, that is currently before this Court in other such proceedings;
2.Liberty to apply.
3.Costs in the cause.
The issue as to the title to the Ainslie Property was resolved on 22 December 2017: see Palmer v Registrar-General of Land Titles of the Australian Capital Territory [2017] ACTSC 407 (Palmer).
No further communication with the Court in relation to these proceedings occurred from any party until 10 January 2020, when the Deputy Registrar sent the parties a notice of listing, informing them that the matter had been listed for directions on 17 February 2020. Although the reason for the listing is not apparent from the contents of the notice, it may be inferred that the Court intended to formally finalise what it considered to be an inactive matter.
On 21 February 2020, the Judgment Creditor issued notices to produce to Mr Emmott and EFM.
On 14 April 2020, the Judgment Creditor filed an application in proceeding (April 2020 Application) seeking the following orders:
1. That the Estates of Mr Nicholls and Mr Slater and Mr Emmott shall be liable for and shall pay the Judgment Creditor’s costs of the proceedings to date.
2. That Mr Emmott “is jointly and severally liable and in contribution for all of the US$14m judgment debts owed to the Judgment Creditor, as a Temujin Partner since early September 2005 to date, as found by the judgments and as admitted”.
3. That Mr Emmott and EFM shall forthwith comply with the two Notices to Produce, as filed and served on them by the Judgment Creditor on 24 November 2015 and also on 17 February 2020.
4. That pursuant to r 6(1) of the Rules, the requirements of rr 2201(3) and 2300(3), for supporting affidavits being made within two days of any application under those rules, be waived.
That application led Mr Emmott and EFM to raise the preliminary question of whether the proceeding has been dismissed. On 24 September 2020, the Judgment Creditor filed an application in proceeding, primarily seeking an order for reinstatement, pursuant to r 76(2) of the Rules. The application was filed purely to address the consequences if the contentions of Mr Emmott and EFM as to dismissal of the proceeding were accepted.
Has the proceeding been dismissed by the operation of r 75?
A proceeding is taken to be dismissed in relation to a defendant if (relevant to the present circumstances) a party does not take a step in the proceeding before the end of one year after the day the last step was taken in the proceeding: r 75(2) of the Rules.
What constitutes a ‘step’
I have previously set out what constitutes a ‘step in the proceedings’ in Butler v Daood [2017] ACTSC 253 (Butler) at [33]-[37]. Without repeating the authorities there-cited, it equates to something in the nature of a formal step in the prosecution of an action, being conduct the party is required or permitted to take, pursuant to either rules or orders of the court, for the purpose of advancing the case towards final judgment.
When was the ‘last step’ taken in the proceeding?
In the present case, the orders of Mossop AsJ meant that the parties had agreed no step would be taken from 27 October 2017 until a particular event had occurred, being the handing down of a decision in a different proceeding in this Court.
As set out above in the procedural history, that occurred on 22 December 2017 with the delivery of the Palmer judgment. For the purposes of considering the operation of r 75, I consider that was the ‘last step’ taken in the proceeding.
Mr Emmott (supported by EFM) submitted that handing down a judgment in a different proceeding does not constitute any ‘step’ in the present proceeding. While I accept that submission, the effect of Palmer being handed down was to fix the time to which the present proceedings stood adjourned by the operation of the consent orders of 27 October 2017. The consequence of Palmer being delivered was that 22 December 2017 also became the date to which the present proceeding was adjourned. The result was to lift what was tantamount to a temporary stay in the present proceeding.
From 22 December 2017, the first order made by Mossop AsJ on 27 October 2017 had been implemented and spent. The procedural status of the matter changed from one that was the subject of an adjournment to one that was able to be progressed, if any party chose to do so. As that change was brought about by the operation of an order, it has a sufficient degree of formality about it, and may also be viewed as having the purpose of advancing the case towards final judgment.
The Judgment Creditor submitted (subject to submissions about judgment being reserved below) that if r 75 applied, then the relevant date for the ‘last step’ taken was the expiry of an appeal period following the decision of Palmer. No authority was cited for why an appeal period would be considered a ‘step’ in a proceeding. I am not persuaded on the authorities referred to in Butler at [33]-[37] that the existence or conclusion of an appeal period in relation to a judgment in a different proceeding has any bearing on whether a step was taken in these proceedings. As explained above, it was the fulfilment of a time period that was fixed by reference to the happening of an event in an order operating in these proceedings that gave rise to a step in the proceedings, not the handing down of the Palmer judgment itself.
Was any ‘step’ taken in the proceeding in the year following 22 December 2017?
Thereafter, no further step was taken until the notices to produce issued by the Judgment Creditor on 21 February 2020, by which stage more than two years had passed from the date the ‘last step’ was taken in the proceedings.
The Judgment Creditor submitted that although the parties agreed that a determination of the substantive issue was no longer required, it was made clear that the issue of costs was required to be determined, and that issue further required the determination of, among other things, the validity of the mortgage asserted by EFM.
The Judgment Creditor further argued that before the issue of costs can be determined, a determination of the substantive matter about which judgment had been reserved was, in fact, required. It was submitted that until judgment is delivered on the substantive matter, costs cannot be determined and the court record remains unperfected.
That submission is rejected. Not once during the period between 22 December 2017 and when the Deputy Registrar contacted the parties in January 2020 did anyone enquire as to whether a judgment was to be handed down. As the emphasised passages of the transcript of the hearing before Mossop AsJ on 7 June 2016 above make clear, the August 2015 Application by the Judgment Creditor was rendered futile by the Judgment Creditor’s own actions in having Mr Slater made bankrupt in the UK. Once the Ainslie Property vested in the trustee in bankruptcy by operation of law, the Judgment Creditor lost the right to pursue possession of the Ainslie Property against Mr Slater (because he no longer had the legal title to it).
The submission that a judgment on the reserved issue was required before an argument about costs was able to occur is equally without substance for two reasons: first, the submission is flawed as a matter of legal principle, and second, the argument is not made out on the facts of this case.
In terms of legal principle, cases such as Re Minister for Immigration & Ethnic Affairs (Cth); Ex Parte Lai Qin [1997] HCA 6; (1997) 186 CLR 622 (Lai Qin) have referred to the following position (at 624, citations omitted):
In an appropriate case, a court will make an order for costs even when there has been no hearing on the merits and the moving party no longer wishes to proceed with the action. The court cannot try a hypothetical action between the parties.
Rule 1706 of the Rules is consistent with such statements of principle. It expressly provides:
(1)If, for any reason, it becomes unnecessary to continue a proceeding other than for deciding who is to pay the costs of the proceeding, any party to the proceeding may apply to the court for an order for the costs.
(2)The court may make the order it considers just.
There can be no doubt that in the present proceeding, although there had been a hearing on the merits, the proceeding had been overtaken by an external state of affairs, being the bankruptcy of Mr Slater. The moving party had subsequently lost any right to proceed with the action for possession because Mr Slater was no longer in possession of the Ainslie Property.
To determine the interesting legal issues raised by the application brought by the Judgment Creditor would have been to impermissibly determine a hypothetical action, that being whether possession of the Ainslie Property would have amounted to double satisfaction if the bankruptcy had not occurred and Mr Slater had continued to own such an asset.
The fact that the proceeding had become futile meant that no judgment on the application was either required or appropriate. That was a position plainly accepted by the Judgment Creditor before Mossop AsJ on 7 June 2016 and counsel for the Judgment Creditor, quite properly, did not seek judgment on that date. Instead, the application was effectively withdrawn or discontinued, meaning there was no need for Mossop AsJ to formally dismiss the application.
However, as confirmed by r 1706, that did not prevent any questions about costs being agitated upon application.
The second reason why the Judgment Creditor’s submission must be rejected is because of what occurred in this particular proceeding. As the hearing before Mossop AsJ on 7 June 2016 again makes clear, the Court was not requested to determine any costs issues until the recent April 2020 Application. The fact that the substance of the application in proceeding had not been determined did not mean that the Judgment Creditor was prevented from applying for costs in relation to the proceedings. On the contrary, it was clear that following the bankruptcy of Mr Slater, there was a possibility of future skirmishes about costs, but no application for costs against Mr Slater’s trustee in bankruptcy, EFM or Mr Emmott had yet been made by the Judgment Creditor.
Once the Palmer judgment was delivered, it was a matter for the parties how they wished to proceed and in particular, whether they resolved questions of costs between themselves (including by the means foreshadowed by Mr Vivekananda, namely seeking to prove the debt in the bankrupt estate of Mr Slater) or whether they wished to make an application in relation to the costs of the proceedings. No application was made by any party. There was no dispute on the question of costs brought before Mossop AsJ for resolution. Contrary to the submissions of the Judgment Creditor, there was no justiciable issue awaiting determination.
Accordingly, r 75(2) of the Rules applies. As more than a year had passed from the last step taken in the proceedings, the proceedings are taken to have been dismissed.
Should the Court’s reinstate the proceedings?
If proceedings are taken to be dismissed, the Court has the power to reinstate the proceedings if it is in the interests of justice to do so, pursuant to sub-r 76(2) of the Rules.
The Rules do not prescribe any mandatory factors which the Court is obliged to consider when determining where the interests of justice lie. Each case must be considered independently on its own facts.
The question of whether proceedings should be reinstated has similarities to the category of cases seeking a dismissal of proceedings or want of prosecution: see Barry Thomas Blunden v Commonwealth of Australia [2014] ACTSC 123 (Blunden) per Refshauge J at [37]. However, the question of reinstatement does not stand or fall on whether an application to dismiss a proceeding for want of prosecution would be successful: see Caruso v Jafer & Anor (Unreported, Supreme Court of Victoria, Mandie J, 18 June 1998), with that principle approved in Tenth Vandy Pty Ltd v Natwest Markets Australia Pty Ltd [2007] VSCA 75 at [31] and referred to in both Blunden at [42] and EquuscorpPty Ltd v Lah [2009] ACTSC 113 at [33]-[34].
Considerations that are material here include the nature of the proceedings, the length of delay, the explanation for the delay (including whether the delay was the result of deliberate conduct on the part of the plaintiffs or otherwise) and what prejudice arises from the delay. The applicant bears the legal onus to satisfy the Court that the interests of justice lie in favour of reinstatement, although in the event that actual or specific prejudice is alleged, the evidential onus is on the defendant: Mander Forklift Pty Ltd v Singles [2014] ACTCA 44 at [12].
The prospects of success of the action have some bearing on the Court’s discretion. The Court would obviously not reinstate proceedings that either did not disclose a reasonable cause of action, or that were plainly doomed to fail. However, on an application for reinstatement, a plaintiff generally does not bear any onus to satisfy the Court that a claim has good (as opposed to reasonable) prospects of success: see Rumble v GPT Re Ltd [2012] ACTSC 39; 6 ACTLR 257 at [30]-[31].
The nature of the proceedings
In the present case, it is important to appreciate that the present proceedings were enforcement proceedings. The Judgment Creditor seeks to reinstate the proceedings to agitate a question about costs of an application in proceedings that became futile. The production of documents under notices to produce issued to Mr Emmott and EFM are in aid of the order sought.
The Judgment Creditor submitted that because the limitation period regarding enforcement of the NSW Judgment had not yet expired, the Judgment Creditor was able to commence fresh enforcement proceedings again now. As a result, the Court would not refuse to reinstate proceedings that could simply be commenced afresh again.
That circumstance alone would not be decisive in the exercise of the Court’s discretion: Muirhead v Uniting Church in Australia Property Trust [1999] QCA 513 at [12]-[13]. More importantly though, the argument conflates the broad right of enforcement with the specific enforcement proceeding that had been commenced by the August 2015 Application.
As at December 2017, the NSW Judgment had been registered in the Territory. The 12-year limitation period prescribed by s 14(2) of the Limitation Act 1985 (ACT) means that the Judgment Creditor has until 13 December 2024 to enforce the NSW Judgment in this jurisdiction. The argument that the Judgment Creditor maintains the right to an enforceable judgment in the Territory, even if the proceeding is not reinstated, is correct.
However, it is important to distinguish between a judgment registered in the Territory continuing to have force and continuing to be the source of a right of enforcement, and the proceeding sought to be reinstated. The fact that the August 2020 Application has been dismissed has no legal effect on the ability to enforce the NSW Judgment that has been registered. The Judgment Creditor is not required to register the judgment in the Territory again in order to seek a further remedy in this jurisdiction. It is simply that the application in proceedings for the enforcement order against Mr Slater was futile and the only remnant of the existing proceeding was a potential costs issue. That is what is taken to have been dismissed.
The nature of the proceeding that has been deemed dismissed is important, because the Judgment Creditor also seeks to reinstate the proceedings in order to seek additional orders. The order sought is that Mr Emmott:
is jointly and severally liable and in contribution for all of the US$14m judgment debts owed to the Judgment Creditor, as a Temujin Partner since early September 2005 to date, as found by the judgments and as admitted.
There are two parts to the above order sought. The first is that Mr Emmott be made liable for the Judgment Debt, and the second is that Mr Emmott be made liable for all debts owed to the Judgment Creditor in the capacity of what is described as a ‘Temujin Partner’.
As to the first, that is plainly a matter entirely separate to the enforcement of a judgment that has been registered in the Territory for the purpose of recovering a property asset within the jurisdiction.
The NSW Judgment was obtained against five separate entities, in circumstances where Mr Emmott was expressly not a party to, and not bound by, the NSW Judgment. Upon registration, the judgment has the same effect (no more) as if it had been given by the court of registration: Bell v Bell (1954) 73 WN (NSW) 7 (Bell v Bell). The court of registration has no jurisdiction to vary the order in any way to affect the substantive rights and obligations of the parties thereunder.
I accept that there are circumstances where a judgment that is registered in the Territory so as to enforce a judgment from a court in a different jurisdiction may be varied or set aside. These include where the judgment of the other jurisdiction is itself varied (Remilton v CML Assurance (1907) 24 WN (NSW) 177; Bell v Bell; Doyle v Hall Chadwick[2007] NSWCA 159 at [51]) or where the original judgment is the product of fraud (Ainslie v Ainslie [1927] HCA 23; (1927) 39 CLR 381 at 402).
However, registering a judgment in a different jurisdiction does not of itself create any rights independent from the judgment obtained in the original jurisdiction. With regard to the present issue, there is no right for a party to effectively seek a variation of the judgment to extend liability to someone else in the course of enforcement. This is not a case where the order seeking to extend liability to ensure consistency with any variation in the NSW Judgment to extend joint and several liability to Mr Emmott. On the contrary, on its face, the order appears inconsistent with the result of the NSW proceeding.
The same issue arises in respect of the remainder of the order sought, which seeks to extend Mr Emmott’s liability even further, to ‘all of the US$14m judgment debts owed to the Judgment Creditor’. Further, the fact that the order sought goes outside the effect of the judgment that has been registered is one of a number of problems arising in relation to that part of the order. The fact that the judgment debts totalling US$14m referred to have themselves not first been registered in the Territory is, to my mind, a fairly critical hurdle.
As Mr Emmott submitted, the order sought is clearly not relief that is part of the existing proceeding. Rather, it is substantive final relief that should be properly pleaded in an originating claim (r 33(2)). The order sought refers to Mr Emmott ‘as a Temujin Partner’. Insofar as those words are an attempt by the Judgment Creditor to invoke a right pursuant to r 2006 (order in partnership name) of the Rules, on the evidence before the Court the underlying basis for such an extension (being the entitlement of the Judgment Creditor to enforce a judgment debt in the name of the Temujin Entities) is at best an assertion. If there is such a right, and it has not yet been extinguished, then the Judgment Creditor is still able to commence a fresh proceeding that sets out the legal basis in a pleading to which Mr Emmott may properly respond.
The question before the Court is whether it is in the interests of justice that the proceeding that was on foot but were deemed dismissed should be reinstated. It is not whether the Court should reinstate an old proceeding between parties in order that the proceeding provide a shell for what is in substance an entirely different cause of action.
Delay
There was an overall delay between the last step in the proceedings being made and the April 2020 Application of more than two years, and a year from the time that the proceeding was deemed dismissed. On any view, the delay is substantial.
Explanation for delay
An explanation for the delay has been given. The Judgment Creditor submitted that during the period of delay, the NSW Judgment was pursued in other courts spanning across a number of jurisdictions, including NSW and the UK. The Judgment Creditor submitted that the delay was caused by the judgment debtors, as they had taken a number of steps to avoid, or simply frustrate, enforcement of the judgment in proceedings across the different jurisdictions.
I do not accept the explanation as satisfactorily explaining a delay in pursuing the costs of an application that had become futile in this Court. The fact that the Judgment Creditor was pursuing enforcement of the Judgment Debt in other jurisdictions is irrelevant, because any dispute about the costs of the August 2015 Application could only be resolved by applying for those costs in these proceedings.
Prejudice
When assessing the prejudicial effects of delay it is relevant to consider the whole of the delay between the cause of action arising and a hearing of the proceedings if leave is granted, rather than the marginal delay between the end of the limitation period (or in this case the dismissal) and such a hearing: Stefek v Garnama Pty Ltd [2014] ACTSC 140 at [28], citing Brisbane South Regional Health Authority v Taylor (1996) 186 CLR 541 (Brisbane South) at 548-9, 554-5, 556; see also Sophron v Nominal Defendant (1957) 96 CLR 469 at 475.
The only feature of the proceeding that was outstanding between the parties was costs. Questions of costs are likely to be able to be dealt with on the papers, through exhibiting correspondence between the lawyers leading up to the proceeding and transcripts of what occurred during the arguments. As such, although the delay in this case is substantial, it is probably not a matter that weighs heavily in the Court’s consideration in relation to questions of prejudice.
That is on the assumption that the relief sought in Order 2 of the April 2020 Application is excluded from consideration. If, contrary to what I have found above, the proceeding that is sought to be reinstated is taken to include an action against Mr Emmott for joint liability in respect of judgment debts amounting to more than US$14m, then the factual complexities underlying the alleged debts may require more expansive evidence.
A material, and often the most important, question is whether, by reason of the time which has elapsed, a fair trial is possible: Brisbane South at 547-8, 550, 555; Laws v Web Scaffolding [2010] ACTCA 3 at [37]. In answering that question, significant weight may be given to the presumptive prejudice that arises, identified by McHugh J in Brisbane South in particular at 551 where his Honour states:
Sometimes the deterioration in quality is palpable, as in the case where a crucial witness is dead or an important document has been destroyed. But sometimes, perhaps more often than we realise, the deterioration in quality is not recognisable even by the parties. Prejudice may exist without the parties or anybody else realising that it exists. ... it must often happen that time will diminish the significance of a known act or circumstance because its relationship to the cause of action is no longer as apparent as it was when the cause of action arose. ... The longer the delay in commencing proceedings, the more likely it is that the case will be decided on less evidence than was available to the parties at the time that the cause of action arose.
It need hardly be said that delay renders more difficult the determination of factual issues. Dim memories and unavailable witnesses render the elucidation of the truth more difficult, to the prejudice of the parties and to the quality of justice provided by the courts: Stollznow v Calvert [1980] 2 NSWLR 749 at 754. Consequently, the greater the delay, the closer the Court will likely scrutinise whether the explanation justifies the indulgence of the Court.
Mr Emmott’s submissions as to matters affecting prejudice and the interests of justice more generally included the following:
(a) Mr Emmott has not taken any active part in the proceeding since 2015.
(b) The order sought by the Judgment Creditor is seeking to relitigate the same claims for contribution that were dealt with in NSW, such that a res judicata or issue estoppel arises in seeking to bring the same claims via an enforcement proceeding in a different forum.
(c) Any claim for contribution is statute barred, as the limitation period for such a claim would be six years after the dates of the judgments obtained against the primary tortfeasor (as opposed to 12 years for enforcement).
(d) The contribution claim has no connection with the Territory, and no leave has been sought for service outside the jurisdiction.
Weighing the considerations
While a costs application may be made at any stage of a proceeding, including after its conclusion, there are times where it will simply not be in the interests of justice or consistent with the principle of a finality in litigation for the court to permit a belated application for costs to be made. Here, reinstatement would be for the sole purpose of hearing a costs application seeking orders against the estates of parties who have entered into bankruptcy and one of whom is now deceased. In addition, the costs application extends to those (Mr Emmott and EFM) who were seeking to intervene in enforcement proceedings but whose interests were never determined.
While the Court does not assess the ultimate merit of the proceeding sought to be reinstated, it is relevant to the Court’s discretion that upon reinstatement, there is a real possibility that the Court will apply the principle articulated in Lai Qin at 625:
If it appears that both parties have acted reasonably in commencing and defending the proceedings and the conduct of the parties continued to be reasonable until the litigation was settled or its further prosecution became futile, the proper exercise of the costs discretion will usually mean that the court will make no order as to the cost of the proceedings.
Section 5A of the Court Procedures Act 2004 (ACT) requires that the civil procedure provisions must be applied, and any power or duty must be exercised, in a way that promotes, among other things, the resolution of disputes at a cost that is proportionate to the importance and complexity of the matters in dispute. I am not persuaded that reinstating a proceeding to deal with a late application for costs, in a proceeding that was never determined, is consistent with that purpose.
I am further not persuaded that it would be in the interests of justice to reinstate a proceeding to enable a Judgment Creditor to seek to enforce a judgment against a person who is not presently a judgment debtor.
Costs
As the Judgment Creditor has not succeeded, it is appropriate to order that costs follow the event. However, the order will be stayed for 7 days to enable any party seeking a different order to make such an application.
Conclusion
The orders of the Court are as follows:
(1) The application filed 14 April 2020 and the application for reinstatement filed 24 September 2020 are each dismissed.
(2) The Judgment Creditor is to pay the costs of the applications filed 14 April 2020 and 24 September 2020.
(3) Order 2 is stayed for 7 days, and in the event that any party notifies the Court in writing that a different costs order is sought within that time, is stayed until further order.
| I certify that the preceding eighty-five [85] numbered paragraphs are a true copy of the Reasons for Judgment of her Honour Associate Justice McWilliam. Associate: Zoe Saunders Date: |
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