Stambulich v Ekamper - [2002] WASCA 212

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

TITLE OF COURT : THE FULL COURT (WA)

CITATION: STAMBULICH & ORS -v- EKAMPER [2002] WASCA 212

CORAM: MALCOLM CJ
TEMPLEMAN J

HEARD: 25 JUNE 2002

DELIVERED : 8 AUGUST 2002

FILE NO/S: FUL 111 of 1999

BETWEEN: CHARLES BRANKO STAMBULICH
First Appellant (First Plaintiff)
RHONDA MAY STAMBULICH
Second Appellant (Second Plaintiff)
LYNDOCH HOLDINGS PTY LTD
Third Appellant (Third Plaintiff)
AND
HENDRIK FREDERIKUS EKAMPER
Respondent (Defendant)

Catchwords:

Practice and procedure - Appeal - Application to recall orders made by the Full Court which are as yet unperfected

Legislation:

Rules of the Supreme Court 1971 (WA), O 21 r 10, O 24A

Result:

Application dismissed

Category: B

Representation:

Counsel:

First Appellant (First Plaintiff)                :Mr R I Viner QC & Mr N R Cogin
Second Appellant (Second Plaintiff)        :Mr R I Viner QC & Mr N R Cogin
Third Appellant (Third Plaintiff)             :Mr R I Viner QC & Mr N R Cogin
Respondent (Defendant)  :Mr G A Rabe

Solicitors:

First Appellant (First Plaintiff)                :Corsers
Second Appellant (Second Plaintiff)        :Corsers
Third Appellant (Third Plaintiff)             :Corsers
Respondent (Defendant)  :Stables Scott

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

De L v Director General, New South Wales Department of Community Services [No 2] (1997) 190 CLR 207
Stambulich & Ors v Ekamper [2001] WASCA 283

Case(s) also cited:

Autodesk Inc v Dyason [No 2] (1993) 176 CLR 300
Biala Pty Ltd and T S Holdings Pty Ltd v Mallina Holdings Ltd (1990) 2 WAR 381
Cigna Insurance Asia Pacific Ltd v Packer [2000] WASCA 415
Hoad v Nationwide News Pty Ltd (1997) 37 IPR 407
McAdam v Robertson (1999) 73 SASR 360
Norman v Norman (1992) 6 WAR 372
Roache v News Group Newspapers Ltd [1992] TLR 551
Smith v NSW Bar Association (1992) 176 CLR 256
Timms v Clift [1988] 2 Qd R 100
Whitehouse Properties Pty Ltd v Bond Brewing (NSW) Ltd (1992) 28 NSWLR 17

MALCOLM CJ: I have had the advantage of reading in draft the reasons to be published by Templeman J with which I am in entire agreement. I agree that the application made by the respondent under O 24A of the Rules of the Supreme Court 1971 should be dismissed.
TEMPLEMAN J: This is an application to recall orders made by the Court which are as yet unperfected. The application is made on the ground that the reasons for judgment disclose errors which should be corrected in the interests of justice.
As the High Court said in De L v Director General, New South Wales Department of Community Services [No 2] (1997) 190 CLR 207 at 215, the power of the Court to reopen its judgments or orders is not in doubt:
"The Court may do so if it is convinced that, in its earlier consideration of the point, it has proceeded 'on a misapprehension as to the facts or the law', where 'there is some matter calling for review' or where 'the interests of justice so require'. It has been said repeatedly that a heavy burden is cast upon the applicant for reopening to show that such an exceptional course is required 'without fault on his part', ie without the attribution of neglect or default to the party seeking reopening. By such expressions of the power to reopen final orders, courts seek to recognise competing objectives of the law. On the one hand, there is the principle of finality of litigation which reinforces the respect that should be shown to orders, final on their face, addressed to the world at large and upon which conduct may be ordered reliant upon their binding authority. On the other hand, courts recognise that accidents and oversights can sometimes occur which, unrepaired, will occasion an injustice. In the case of a final court of appeal, such as this Court, that injustice may be irremediable, unless the Court itself, acting promptly, is persuaded to reopen its orders so as to afford relief in the exceptional circumstances of the case."
I would apply the same principles in this Court, which is likely to be a final court of appeal in very many cases.
In the present case, the respondent asserts that the reasons for judgment of this Court delivered on 11 September 2001 in Stambulich & Ors v Ekamper [2001] WASCA 283, contain two errors.

It is obvious from a comparison of par [63], par [12] and par [6] that there is an error in the latter, which resulted in an order requiring the respondent to repay $10,400 more than he should have done. That error could have been corrected under the slip rule: O 21 r 10 of the Rules of the Supreme Court 1971 (WA). It is regrettable that the error was made by the Court. It was corrected at the hearing of this application. That aspect of the matter is therefore closed.
The second error asserted by the respondent falls within the principles set out in De L's case (supra). It arises from the Court's decision concerning the costs of the trial. That was one of the issues arising on the appeal and upon which the Court heard argument. However, the respondent did not then take the point which he now wishes to raise. Given that the appeal raised a number of complex issues and that it would not have been reasonable to expect the respondent to anticipate all the orders made ultimately by the Court, I think the respondent should be given the opportunity to address the matter now. I therefore turn to the background which gives this application its context.
It was the appellants' case at trial that a fiduciary relationship existed between them and the respondent. He was the appellants' accountant and tax agent. From time to time, the appellants had entrusted money to the respondent for the payment of income tax. The appellants claimed that the respondent had not dealt properly with their money: and that the respondent had used some of their money for his own purposes. The appellants therefore sought to have the respondent account to them as a fiduciary. However, the respondent denied that he was a fiduciary. He said he was liable to account only as a debtor, and that he had done so.
The learned trial Judge accepted that the respondent was a fiduciary. However, the Judge declined to order the respondent to account as such. Instead, he ordered the respondent to pay damages to the appellants. The damages were to be calculated by an award of interest, compounded at commercial rates and at six monthly rests, on the moneys which, but for the respondent's breaches of fiduciary duty, would have been available to the appellants for their use.
The Judge left the detailed calculation of damages to counsel. They agreed that the appropriate amount was $16,843.40.
On 23 April 1999, the Judge made orders in relation to the costs of the proceedings. In so doing, he took into account an offer which the respondent had made to "settle the (appellants') claim by payment of the sum of $60,000". That offer had been made on 19 December 1997 under O 24A of the Rules of the Supreme Court.
As the amount of the offer was greater than the amount of damages awarded to the appellants, the Judge ordered the respondent to pay the appellants' costs down to the date of the offer: and he ordered the appellants to pay the respondent's costs from the date of the offer down to 23 April 1999.
On appeal, the appellants contended (inter alia) that the respondent should have been ordered to account to them as a fiduciary; and that, accordingly, he should have been ordered to pay their costs of the action.
That part of the appeal was successful. In relation to costs I said in my reasons (par [97]) (with which Malcolm CJ and Kennedy J agreed):
"Although the relief sought by the appellants included several money claims, one of the principal issues in the action was, of course, whether the respondent was a fiduciary: hence the claim for an account of profits. The risk to a plaintiff of rejecting an O 24A offer, is that costs will be awarded against him from the date of that offer, if the judgment which he obtains at trial is 'not more favourable to him than the terms of the offer': O 24A r 10(5). But in determining whether that criterion has been satisfied, the court may have regard to relief which the plaintiff has obtained which does not involve the payment of money: Timms v Clift [1998] 2 Qd R 100. The Court of Appeal there referred to a decision of the English Court of Appeal in Roache v News Group Newspapers Ltd [1992] TLR 551, where the plaintiff in a defamation action was awarded the very sum which had been paid into court. However, the plaintiff also obtained an injunction to restrain the publication. That being so, it was the plaintiff who emerged as "the substantial winner". The defendant had 'denied the plaintiff the prize which the plaintiff fought the action to win'.
In my view, that is the position here. The appellants were entitled to prosecute the action in order to obtain a finding that the respondent was a fiduciary and to be able to investigate whether he had profited from the unauthorised use of their money. In those circumstances, I consider that the appellants were justified in rejecting the O 24A offer. I consider also that the discretion exercised by the learned trial judge miscarried, because he did not take this factor into account. The appellants contend that in these circumstances, the respondent should pay their costs of the action. I agree. I would therefore allow this part of the appeal and make an order in those terms."
The respondent now submits that those reasons disclose an error of law. Put shortly, the submission is that the bare finding that the respondent was a fiduciary is of no significance. It is submitted that, ultimately, the claim is for money: and until the relevant account is taken and the appellants have elected whether to claim damages or profits, it cannot be determined whether they should have accepted the O 24A offer.
Counsel for the respondent, in his outline of submissions, submits that:
"An accounting of profits in this case could be protracted and expensive, and if the respondent's judgment as to the maximum amount the appellants are likely to receive from such an account is correct, his O 24A offer ought to protect him from those costs. The public policy considerations underlying the introduction of O 24A would make it unjust for the respondent to be denied judicial assessment of his offer."
I do not accept those submissions. In my view, they overlook a matter of fundamental importance in this case: namely, that the respondent was a fiduciary who used the appellants' money for his own purposes but denied the existence of the fiduciary relationship.
At all material times, the respondent had an obligation to account to the appellants as a fiduciary. The appellants did not know how the respondent had used their money. That was a matter entirely within the respondent's knowledge. In those circumstances, it was not open to the respondent to protect himself against the costs of the action by making an offer under O 24A. The respondent could have avoided the action by accounting on a proper basis. I repeat that part of my reasons (par [98]), in which I said that while the respondent denied he was a fiduciary:
"the appellants were entitled to prosecute the action in order to obtain a finding that the respondent was a fiduciary and to be able to investigate whether he had profited from the unauthorised use of their money."
I have referred above to the respondent's submission that "an accounting of profits in this case could be protracted and expensive".
If, by that, the respondent intends to refer to the costs which he must incur in order to account on a proper basis, the submission is irrelevant. That is because the respondent was always under an obligation to account in that way.
If the respondent intends to refer to the costs of proceedings, his concern is premature. It may be that the appellants will accept as accurate and truthful the evidence which the respondent has now been ordered to put before them. The respondent is, of course, obliged to make full and frank disclosure on pain of perjury or contempt of court.
If the appellants do not accept the respondent's account, they will be entitled to litigate the matter further. If they do, the respondent could properly protect himself by a payment into court or an offer pursuant to O 24A. But until he has accounted, the respondent cannot reasonably expect the appellants to share his assessment of the likely outcome of an account, when the relevant facts are exclusively within his knowledge; and when at all material times he has had an obligation to disclose those facts to the appellants but has denied the existence of the relationship which gives rise to that obligation.
Those were the considerations which led me to conclude that, as a result of the appeal, the appellants had obtained a judgment which was more favourable than the terms of the offer made by the respondent. I am not persuaded that I was wrong to reach that conclusion and I would therefore dismiss the application.