Professional Services of Australia Pty Ltd v Computer Accounting and Tax Pty Ltd [No 4] - [2015] WASCA 253

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

TITLE OF COURT : THE COURT OF APPEAL (WA)

CITATION: PROFESSIONAL SERVICES OF AUSTRALIA PTY LTD -v- COMPUTER ACCOUNTING AND TAX PTY LTD [No 4] [2015] WASCA 253

CORAM: MARTIN CJ
BUSS JA
NEWNES JA

HEARD: 2 OCTOBER 2015

DELIVERED : 10 DECEMBER 2015

FILE NO/S: CACV 76 of 2008

BETWEEN: PROFESSIONAL SERVICES OF AUSTRALIA PTY LTD
First Appellant
DONALD CAMPBELL-SMITH as Executor of the Estate of MARTIN PAUL BANNING
Second Appellant
AND
COMPUTER ACCOUNTING AND TAX PTY LTD
Respondent

ON APPEAL FROM:
Jurisdiction              :  SUPREME COURT OF WESTERN AUSTRALIA
Coram  :SIMMONDS J
Citation  :COMPUTER ACCOUNTING AND TAX PTY LTD -v- PROFESSIONAL SERVICES OF AUSTRALIA PTY LTD [2008] WASC 133
File No  :CIV 2265 of 2006

Catchwords:

Practice and procedure - Application by non-party for leave to be heard in an appeal - No direct interest in orders sought to be set aside

Practice and procedure - Application to vary extracted order - Slip rule - Omission not inadvertent or accidental

Legislation:

Rules of the Supreme Court 1971 (WA), O 21 r 10, O 26 r 16
Supreme Court (Corporations) (WA) Rules 2004, r 1.3, r 2.13

Result:

Application dismissed

Category: B

Representation:

Counsel:

First Appellant               :     Mr T Stephenson
Second Appellant          :     Mr T Stephenson
Respondent:     No appearance
Intervening Applicants    :     In person

Solicitors:

First Appellant               :     Eastwood Sweeney Law
Second Appellant          :     Eastwood Sweeney Law
Respondent:     No appearance
Intervening Applicants    :     In person

Case(s) referred to in judgment(s):

Computer Accounting and Tax Pty Ltd v Professional Services of Australia Pty Ltd [2008] WASC 133
Esther Investments Pty Ltd v Markalinga Pty Ltd (1992) 8 WAR 400
Frigger v Professional Services of Australia Pty Ltd [2015] WASCA 167
Gould v Vaggelas (1985) 157 CLR 215
Kokos International Pty Ltd v Libra Motors Pty Ltd [No 3] [2007] WASC 301
Krishell Pty Ltd v Nilant [2006] WASCA 223
L Shaddock & Associates Pty Ltd v Council of the City of Parramatta [No 2] (1982) 151 CLR 590
Mandurah Enterprises Pty Ltd v Western Australian Planning Commission [2008] WASCA 211 (S)
Orchard Holdings Pty Ltd v Paxhill Pty Ltd as trustee for Paxhill Trust trading as Property People [2012] WASC 271
Professional Services of Australia Pty Ltd v Computer Accounting and Tax Pty Ltd [No 2] [2009] WASCA 183
Professional Services of Australia Pty Ltd v Computer Accounting and Tax Pty Ltd [No 2] [2009] WASCA 183 (S)
Smith v Commissioners of the Rural and Industries Bank of Western Australia [2009] WASC 100
Stambulich v Ekamper [No 4] [2008] WASCA 189
Streeter v Western Areas Exploration Pty Ltd [No 2] [2011] WASCA 17 (S)
MARTIN CJ:

Summary

Angela and Hartmut Frigger (the Friggers) apply for leave to be heard in an appeal to which they are not parties, and to set aside orders of the court announced in reasons delivered on 7 December 2009. Those orders were perfected and extracted on 16 December 2009. The application is brought under the slip rule. It must be dismissed because:
(a)the Friggers should not be given leave to be heard;
(b)the slip rule has no application to the circumstances of this case; and
(c)even if the slip rule did apply, the application would be dismissed in the exercise of the court's discretion.

The proceedings at first instance

The Friggers are shareholders in and directors of Computer Accounting and Tax Pty Ltd (CAT). CAT commenced proceedings in the Supreme Court of Western Australia against Professional Services of Australia Pty Ltd and Mr Martin Banning claiming damages for negligent misstatement, deceit and misleading or deceptive conduct. After trial, judgment was entered in favour of CAT in the amount of $675,078 plus interest.[1]
[1] Computer Accounting and Tax Pty Ltd v Professional Services of Australia Pty Ltd [2008] WASC 133.

The appeal

Mr Banning died after judgment was delivered. His estate and Professional Services of Australia Pty Ltd appealed against the judgment at first instance. That appeal was successful. The judgment in favour of CAT was set aside and instead judgment was entered in favour of CAT for a significantly reduced amount.[2]
[2] Professional Services of Australia Pty Ltd v Computer Accounting and Tax Pty Ltd [No 2] [2009] WASCA 183.
At the time the reasons of the court were published, orders were made by consent setting aside the judgment at first instance and instead entering judgment in favour of CAT in the reduced amount. Directions were made for the exchange of written submissions in relation to outstanding matters that remained in contention, with a further direction that those matters would be resolved on the papers.
As the amount for which judgment had been entered at first instance had been paid, one of the issues addressed in the written submissions served by the parties concerned the orders that should be made by the court with respect to repayment of the amount by which the judgment entered at first instance exceeded the amount for which judgment was entered on appeal. Other issues concerned the correction of an apparent error in the calculation of interest due on the amounts for which judgment was entered on appeal, an attempt by CAT to revoke an order made with the consent of its legal representative to the effect that amounts which the appellants had paid into court as security for the costs of the appeal should be paid out to them, the costs of the appeal, the costs of the proceedings at first instance, and the question of whether there should be a stay on the orders of the court and/or a stay upon execution pending an application by CAT for special leave to appeal to the High Court.
In written submissions served on behalf of CAT, it was asserted that:
The Deed of Company Arrangement stipulates that any reduction in the judgment sum on Appeal is to be paid to Banning Holdings Pty Ltd and is to be offset against the respondent's costs.
In the supplementary reasons published by the court,[3] the court dealt with that assertion in these terms:
… [N]either the Deed of Company Arrangement, nor the assertions in respect of outstanding costs orders have been put in evidence before this court.[4]
[3] Professional Services of Australia Pty Ltd v Computer Accounting and Tax Pty Ltd [No 2] [2009] WASCA 183 (S).
[4] [11].
In relation to the issue of repayment of that part of the judgment sum which had been overpaid, the court rejected CAT's submission that orders should not be made in those terms for the reason that the submissions in opposition to those orders failed to appreciate the distinction between the making of orders and the grant of a stay pending an application for special leave, and for the further reason that the assertions made with respect to the financial position of the appellants had not been sustained by any evidence.[5]
[5] [14].
The court made orders requiring CAT to repay to Professional Services of Australia Pty Ltd and the estate of Mr Banning the amount by which the sum it had received exceeded the sum for which judgment was entered on appeal, together with interest on that amount as and from the dates upon which the sums which comprised the judgment sum were paid by the appellants. Those are the orders which the Friggers now move to set aside.
The Friggers were responsible for the conduct of the proceedings at first instance and on appeal on behalf of CAT and gave all relevant instructions to the lawyers acting on behalf of CAT both at trial and on appeal.

The application

The application for orders setting aside the orders for repayment of the amount which CAT had received in excess of the amount for which judgment was ultimately entered relies entirely upon the terms of the deed of company arrangement to which reference was made in the written submissions to which I have referred. For reasons which will appear, it is unnecessary to identify the process of reasoning by which the deed of company arrangement is said to justify that course.
CAT is now in liquidation. The Friggers did not request the liquidator of CAT to apply for the orders which they now seek on behalf of the company in liquidation, nor did they seek his consent to the application which they have made on behalf of the company, nor did they offer to place him in funds which might cover his costs of bringing such an application on behalf of the company in liquidation.

The Friggers should not be given leave to be heard in an appeal to which they are not parties

The application filed by the Friggers sought an order that:
The applicants, as members, directors and secured creditors of the Respondent (CAT) have leave to be heard in these proceedings pursuant to Supreme Court (Corporations) (WA)Rules 2004 r.2.13.
The application for that order is misconceived. The rule to which reference is made relevantly provides:
2.13Leave to creditor, contributory or officer to be heard
(1)The Court may grant leave to any person who is, or who claims to be -
(a)a creditor, contributory or officer of a corporation;
(b)an officer of a creditor, or contributory, of a corporation; or
(c)any other interested person,
to be heard in a proceeding without becoming a party to the proceeding.
Rule 1.3 of the Supreme Court (Corporations) (WA) Rules relevantly provides:
1.3Application of these rules and the Supreme Court Rules
(1)Unless the court otherwise orders:
(a)these rules apply to a proceeding in the Court under the Corporations Act, or the ASIC Act, that is commenced on or after the commencement of these rules …
The proceedings at first instance and on appeal were not proceedings in the court under the Corporations Act 2001 (Cth) or the Australian Securities and Investments Commission Act 2001 (Cth). They were proceedings in which damages were claimed for negligent misrepresentation, deceit and misleading or deceptive conduct. It follows that r 2.13 has no application to these proceedings and it is not possible for the Friggers to be heard pursuant to its provisions.
The Friggers also placed reliance upon O 26 r 16 of the Rules of the Supreme Court 1971 (WA). That rule provides:
16.Revocation and variation of orders
Any order which has been made under this Order, including an order made on appeal, may, on sufficient cause being shown, be revoked or varied by a subsequent order or direction of the Court made or given at or before trial of the cause or matter in relation to which the original order was made.
However, that rule only applies to orders of the court made pursuant to O 26, which is concerned with discovery of documents. It has no application to these proceedings.
When these misconceptions were pointed out to the Friggers during the hearing of their application, they sought a short adjournment. Following that adjournment, they moved to amend their application to seek leave to be heard:
[P]ursuant to the jurisdiction of the court to allow a non-party to intervene where the party's interests are directly affected.[6]
[6] Appeal ts 22.
That amendment was allowed.
The Friggers assert that they have a direct interest in the orders made by this court requiring CAT to repay the amount which had been paid in excess of the amount for which judgment was ultimately entered in two respects. First, they assert that they received the amount paid in respect of the judgment entered at first instance in their capacity as creditors of CAT. Second, it is asserted that they have a direct interest because the liquidator of CAT has claimed that CAT's liability to repay the amount by which the judgment at first instance exceeded the amount of the judgment entered on appeal is a liability which the company incurred in its capacity as trustee of a superannuation fund in which the Friggers have an interest, and the liquidator, on behalf of the company in liquidation, is claiming indemnity from the superannuation fund in respect of that liability.
Neither of these assertions is established by any evidence adduced in support of the application. However, assuming, for the sake of argument, that those assertions were established by evidence in support of the application, neither would establish that the Friggers had a direct interest in the orders which they now seek to set aside. Those orders were made against CAT and only directly affect its rights and obligations. The creditors of the company do not have a direct interest in its assets, nor in its rights or obligations. Nor would an interest which the Friggers may have in a superannuation fund which is said to be liable to indemnify the company in liquidation in respect of liabilities incurred while acting as trustee of the fund confer upon them a direct interest in the orders made by the court in the disposition of the appeal. It will commonly be the case that orders made by the court will have commercial ramifications and repercussions for the debtors and creditors of those against whom orders are made. However, those consequences do not give such debtors and creditors a direct interest in the subject matter of the proceedings, or in the orders of the court.
It may, nevertheless, also be assumed, for the sake of argument, that in some circumstances which need not be defined for the purposes of these proceedings, the court may have a discretion to allow persons whose interests are indirectly affected by proceedings before the court to be heard in relation to those proceedings,[7] or on an appeal from those proceedings.[8]
[7] Smith v Commissioners of the Rural and Industries Bank of Western Australia [2009] WASC 100.
[8] Krishell Pty Ltd v Nilant [2006] WASCA 223; Frigger v Professional Services of Australia Pty Ltd [2015] WASCA 167 [24] ‑ [25].
However, assuming without being taken to decide that the court has such a discretion, there is no reason why any such discretion should be exercised in favour of the Friggers in the circumstances of this case. CAT commenced the proceedings claiming damages, and was successful in those proceedings. It received the benefit of an excessive award of damages at first instance, and was ordered to repay the excess over the amount to which it was entitled by this court. Any rights or obligations arising from the proceedings commenced by CAT, or the appeal from those proceedings, are rights and obligations of CAT, a company now in liquidation. The control and direction of all the assets of the company in liquidation is vested in the liquidator. The Friggers have not requested the liquidator to take the action which they purport to take on behalf of the company and are, in effect, attempting to usurp the liquidator's control over the company and its affairs. I can see no reason why the court should exercise any discretion which it might have for the purpose of enabling them to achieve that improper objective. Accordingly, even if the court has a discretion to allow the Friggers to be heard in relation to the revocation of orders made in an appeal to which they were not a party, I would not exercise that discretion in their favour.
This conclusion is sufficient, in itself, to dispose of the Friggers' application. However, for the sake of completeness, I will address the other reasons why the application must be refused.

The slip rule does not apply

In the absence of a statutory provision to the contrary, and subject to certain narrow exceptions, the Court of Appeal has no jurisdiction to reopen or reconsider an extracted order.[9] The slip rule is one of the narrow exceptions to that general principle. It is embodied in O 21 r 10 of the Rules of the Supreme Court, which provides:
Clerical mistakes in judgments or orders, or errors arising therein from any accidental slip or omission, may at any time be corrected by the Court on motion or summons without an appeal.
[9] Mandurah Enterprises Pty Ltd v Western Australian Planning Commission [2008] WASCA 211 (S) [10] (McLure JA, Buss JA & Murray AJA agreeing).
The Friggers do not seek to correct a clerical mistake. Their application is based on the proposition that the orders of the court which they seek revoked were made by error, arising from an accidental slip or omission.
The cases in this and other comparable jurisdictions where similar rules of court exist establish a number of general principles which govern the application of the slip rule. First, the slip or omission which is said to have given rise to the error must be properly characterised as inadvertent or accidental - the product of oversight rather than afterthought.[10] Second, the 'error' said to arise from the accidental slip or omission must be such that its correction does not require the exercise of an independent discretion nor is it a matter upon which a real difference of opinion might exist.[11]
[10] L Shaddock & Associates Pty Ltd v Council of the City of Parramatta [No 2] (1982) 151 CLR 590; Gould v Vaggelas (1985) 157 CLR 215, 275 (Gibbs CJ, Wilson, Brennan & Dawson JJ); Orchard Holdings Pty Ltd v Paxhill Pty Ltd as trustee for Paxhill Trust trading as Property People [2012] WASC 271 (S2) [23] (Allanson J); Kokos International Pty Ltd v Libra Motors Pty Ltd [No 3] [2007] WASC 301 [67] (Johnson J).
[11] Mandurah Enterprises [8].
These principles are conveniently illustrated by some of the cases on the topic. In each of Shaddock, Gould and Orchard Holdings,[12] orders were made under the slip rule allowing interest on the judgment sum in cases in which the legal representatives of the parties inadvertently omitted to ask for interest, and there was no doubt that interest would have been allowed if requested at the time of judgment. On the other hand, in Mandurah Enterprises, an application under the slip rule for an order setting aside the orders for costs made by the primary judge was dismissed because the arguments in favour of such an order were neither obvious nor compelling.
[12] See footnote 10 above.
These principles preclude the application of the slip rule to the circumstances of this case. First, it cannot be said that the failure to draw the attention of the court to the deed of company arrangement (upon which the current application is based) was inadvertent or accidental. As I have noted, the attention of the court was in fact drawn to the deed of company arrangement in the written submissions which preceded the making of the orders which the Friggers now seek revoked. However, no argument of the kind now advanced was brought based upon the terms of the deed of company arrangement, nor was the deed adduced in evidence. The court refused to act upon the assertions made with respect to the deed for those reasons. Omissions of that kind cannot be characterised as accidental or inadvertent, but are more properly characterised as a failure to provide any basis for, or to substantiate by evidence, the proposition advanced. The slip rule does not permit arguments or contentions that have been poorly or inadequately advanced to be bolstered by further argument or evidence after final orders have been made. Further, there is a fair inference that the failure to produce in evidence and advance detailed submissions based upon the deed of company arrangement may have well been a deliberate forensic decision on the part of the Friggers and/or their legal advisers. That is because CAT had commenced proceedings in the Supreme Court of Western Australia seeking orders to the effect that the deed of company arrangement was either void or had been terminated according to its terms. Those proceedings were on foot at the time written submissions were provided to this court on behalf of CAT, and at the time this court made the orders which the Friggers now seek to have revoked.
Second, the consequences which the Friggers assert flow from the terms of the deed of company arrangement are neither obvious nor compelling, and are matters upon which there is great scope for argument and for the formation of differing views. To the contrary, the legal reasoning said to underpin the Friggers' application is convoluted and at points circuitous.

For these reasons, even if the Friggers were granted leave to bring their application, the circumstances of this case fall a long way distant from any potential operation of the slip rule.

Relief under the slip rule would be refused in the exercise of discretion in any event

It is well established that the power to amend orders pursuant to the slip rule is discretionary.[13] As the High Court has observed:[14]
The jurisdiction is one to be exercised sparingly, lest it encourage carelessness by a party's legal representatives and expose to risk the public interest in finality of litigation.
[13] See, for example, Kokos [66]; Esther Investments Pty Ltd v Markalinga Pty Ltd (1992) 8 WAR 400, 409 (Malcolm CJ).
[14] Gould v Vaggelas, 275 (per Gibbs CJ, Wilson, Brennan & Dawson JJ).
The public interest in the finality of litigation, and the inevitable consequences of delay in making an application under the slip rule are matters that will be given considerable weight in the exercise of the discretion conferred by the slip rule. In Shaddock, the plurality observed:
[A]n order under the slip rule is not available as a matter of course. There is a discretion in the court to refuse an order if something has intervened which would render it inexpedient or inequitable that it be made (see Tak Ming (35); and the cases there cited). In the present case, there was considerable delay in filing the notice of motion … The general principle in support of finality in litigation together with the fact that a party against whom judgment in a money sum is entered is entitled to regard that judgment as finally determining the extent of his liability combine to stress the importance of prompt action under the slip rule.[15]
[15] Per Mason ACJ, Wilson & Deane JJ at 597.
In Esther Investments, Malcolm CJ observed:[16]
There must come a point where the interests of finality of litigation militate against the exercise of discretion in favour of a party whose solicitors or counsel have failed by inadvertence to make an appropriate application at the appropriate time.
It has been urged upon me by counsel for the defendant that the court should be reluctant to visit upon the litigant the consequences of inadvertence by his solicitors or counsel. So much may be accepted, but there must be in the interests of the administration of justice and finality in litigation some limit to the exercise of that discretion which is by way of an indulgence of the court. If a litigant suffers loss or damage as a result of inadvertence amounting to negligence, he has a remedy.
…
In any event, there is an interest in the finality of litigation, and a party is entitled to order its affairs on the basis of a judgment regularly obtained, entered and perfected in the court.
These observations have been cited with approval in a number of subsequent cases.[17]
[16] Esther Investments at 409.
[17] See Stambulich v Ekamper [No 4] [2008] WASCA 189 [28] ‑ [31] (Pullin JA, Newnes AJA agreeing); Streeter v Western Areas Exploration Pty Ltd [No 2] [2011] WASCA 17 (S).
These principles leave no doubt as to the proper exercise of the discretion in this case. The Friggers were, of course, aware of the deed of company arrangement at the time this court sought submissions with respect to the orders properly made to dispose of the appeal. Although their lawyers referred to the deed in their submissions to the court, it was not adduced in evidence, nor were submissions of the kind now advanced placed before the court. That may well be because the Friggers, through CAT, were then asserting, in proceedings pending before the court, that the deed was either void or had been terminated according to its terms. The legal representatives of CAT were advised of the orders made by the court in the usual way, and there is no reason to believe that the Friggers were not made aware of those orders at or about the time they were made in December 2009. The Friggers do not assert, either in evidence or in

argument, that they were unaware of the orders at the time they were made.

The application to revoke the orders made for repayment of the amount paid in excess of the judgment at first instance was not made until more than five and a half years had elapsed. Professional Services of Australia Pty Ltd and the estate of Mr Banning have had, and continue to have, a very real interest in the benefit of those orders. Although the Friggers have proffered various explanations for the extraordinary delay in bringing this application, none of those explanations is convincing. The simple and undeniable fact is that they were aware of all facts and matters said to give rise to this application, but nevertheless sat on their hands for over five years before taking any step to revoke the orders of which they now complain.
In this case the public interest in the finality of litigation and the extraordinary delay in making the application, for which there is no satisfactory explanation, would necessarily preclude the exercise of the discretionary power conferred upon the court by the slip rule if that rule otherwise applied.

Conclusion

For these various reasons, the application must be dismissed.
BUSS JA: I agree with Martin CJ.
NEWNES JA: I agree with Martin CJ.