Tapoohi v Shiff & Company (a firm)
[2005] VSC 178
•25 May 2005
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION
No. 2052 of 2002
| REGINA TAPOOHI | Plaintiff |
| v | |
| SHIFF & COMPANY (A FIRM) | Defendant |
| and | |
| DAVID DENTON | First Third Party |
| and | |
| GEORGE GOLVAN | Second Third Party |
| and | |
| MORANDING PTY LTD (trading as | Third Third Party |
| and | |
| ANTHONY SOUTHALL | First Fourth Party |
| and | |
| JULIA ADAMS | Second Fourth Party |
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JUDGE: | HABERSBERGER J | |
WHERE HELD: | MELBOURNE | |
DATE OF HEARING: | 13 MAY 2005 | |
DATE OF JUDGMENT: | 25 MAY 2005 | |
CASE MAY BE CITED AS: | TAPOOHI v SHIFF & COMPANY | |
MEDIUM NEUTRAL CITATION: | [2005] VSC 178 | |
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Practice and Procedure – Application to set aside authenticated order dismissing plaintiff's claim against some defendants pursuant to a settlement without a hearing on the merits – Dismissal of plaintiff's claim pleaded as defence to the sole remaining defendant's third party claim against former defendants – Order made without consideration being given to the potential consequences of the wording of the order – Order set aside and replaced with order discontinuing the plaintiff's claim.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Dr C.L. Pannam QC with Mr S.J. Maiden | Gadens Lawyers |
| For the Defendant | Mr J.D. Elliott SC | Lander & Rogers |
| For the First Third Party | Mr J.R. Dixon | Moray & Agnew |
| For the Second Third Party | Mr A. McClelland | Herbert Geer & Rundle |
| For the Third third Party | Ms A. Grice | Monahan + Rowell |
| For the First Fourth Party | Mr D.I. Thomas | Ligeti Partners |
| For the Second Fourth Party | Mr M.G.R. Gronow | Middletons Lawyers |
HIS HONOUR:
The Application
By a summons dated 5 May 2005 the sole remaining defendant, Shiff & Company, sought an order that paragraph 1 of my order made on 3 December 2004 ("the earlier order") be vacated. The earlier order was that:
"The Plaintiff's claim against the second Defendant and the Plaintiff's claim against the third Defendant be dismissed with no order as to costs, and that the Writ be amended accordingly."
In lieu of the earlier order, the defendant sought in its summons an order that:
"The Plaintiff's claim against the second and third Defendants be discontinued with no order as to costs, and the Writ be amended accordingly."
After hearing argument on 13 May 2005, in order not to delay the taking of further interlocutory steps, I indicated that I had decided that the application should be granted, but would publish my reasons at a later date. I now publish my reasons for that decision.
Background
In this proceeding, which was commenced on 26 June 2002, Mrs Regina Tapoohi, who lives in Israel, originally sued her sister, Mrs Halina Lewenberg, and nine other Lewenberg individuals and companies ("the Lewenberg defendants") seeking to set aside or avoid a settlement of a dispute between the sisters about their entitlements to the estate of their late mother and about the affairs of a family company of which the sisters were directors and shareholders. The parties to an earlier proceeding in this Court commenced by Mrs Tapoohi (No. 6895 of 2001) arranged a mediation on 20 September 2001 with a view to resolving those disputes. At the conclusion of the mediation, Terms of Settlement were executed by or on behalf of the plaintiff and the 10 Lewenberg defendants. The plaintiff's main contention in her original statement of claim in this proceeding was that the settlement was subject to an express oral term that the parties would seek taxation advice concerning the settlement and that following receipt of such taxation advice the parties would negotiate in good faith the form of any settlement reached. The alleged conditional nature of the settlement was denied by the Lewenberg defendants.
In September 2002 the plaintiff amended the writ and her statement of claim by adding a claim against an eleventh defendant, her former solicitors, Shiff & Company. Mr Geoffrey Shiff, a principal of Shiff & Company, and an associate partner of the firm, Ms Julia Adams, had represented Mrs Tapoohi at the mediation. In October 2002 the eleventh defendant joined Mr David Denton, who had been counsel for Mrs Tapoohi at the mediation, and Mr George Golvan QC, the mediator, as first and second third parties respectively seeking contribution from them pursuant to s.23B of the Wrongs Act 1958..
After further interlocutory skirmishes, by a summons dated 26 August 2003 the plaintiff sought an order dismissing her claim against the Lewenberg defendants, a declaration that the Terms of Settlement were legally enforceable and binding upon the parties in accordance with their terms, an order for specific performance by the parties of their obligations under the Terms of Settlement and an order that the plaintiff pay the costs of the Lewenberg defendants. When the application came on for hearing on 29 August 2003 counsel for the plaintiff stated that the plaintiff was no longer seeking a declaration about the Terms of Settlement. There was also no agreement between counsel for the plaintiff and counsel for the Lewenberg defendants about the form of order then sought. Further, Mr Elliott of counsel, who appeared for the eleventh defendant, and Ms Buckley, the solicitor for the second third party, raised concerns about the making of the orders sought by both the plaintiff and the Lewenberg defendants because of the possible consequences such orders might have on the position of their clients. They sought and were granted an adjournment of the application in order for them to properly consider their position.
At the adjourned hearing on 5 September 2003 the making of the agreed orders now sought by the plaintiff and the Lewenberg defendants was opposed by the eleventh defendant, the first third party and the second third party. Their concern was that the making of the orders sought might preclude them from pursuing contribution proceedings against the Lewenberg defendants. Reference was made to the judgment of Ashley J in Wintle v Stevedoring Industry Finance Committee (No. 3) ("Wintle (No. 3")[1] and to that of the High Court of Australia in James Hardie & Coy Pty Limited v Seltsam Pty Limited[2]. Argument centred around the meaning of s.23B(3) and s.23B(5) of the Wrongs Act. The argument resulted in the plaintiff and the Lewenberg defendants making a further amendment to the orders sought by them. They deleted the reference to an order that the plaintiff's claim against the Lewenberg defendants be dismissed, and replaced it with an order giving the plaintiff leave to discontinue her proceeding against the Lewenberg defendants. Counsel for the Lewenberg defendants also obtained instructions to give an undertaking that they would not rely on the orders made as in any way defeating any subsequent claim by the eleventh defendant, the first third party or the second third party for contribution. It was only on that basis that I decided to make the orders sought.[3]
[1][2002] VSC 369
[2](1998) 196 CLR 53
[3]Tapoohi v Lewenberg [2003] VSC 379 at [30]-[33]
In December 2003, February 2004 and June 2004 three further amended statements of claim were filed by the plaintiff in respect of her claim against the now sole defendant, Shiff & Company. Certain matters pleaded in the last of these statements of claim led to Shiff & Company seeking to file an amended third party notice adding the plaintiff's then solicitors, McNab McNab & Starke, as a third third party. This in turn led to the plaintiff seeking leave to add the first third party, Mr Denton, and the third third party, McNab McNab & Starke, as second and third defendants. Needless to say, this meant new solicitors commenced to act for Mrs Tapoohi. Leave to the defendant to file the amended third party notice and leave to the plaintiff to add the extra defendants was granted on 27 August 2004. On 17 September 2004 the plaintiff filed her fourth amended statement of claim pleading her claims against all three defendants. But then at the next directions hearing on 3 December 2004 the plaintiff, by now represented not only by new solicitors but also by new counsel, sought to change tack yet again.
The Hearing on 3 December 2004
I set out below relevant extracts from the transcript of the directions hearing on 3 December 2004. Relevant appearances were Dr Pannam QC and Mr Maiden of counsel for the plaintiff, Mr Elliott SC and Mr D. Bennett of counsel for the first defendant, Mr Donaldson as the solicitor for the second defendant/first third party and Mr Tesarch as the solicitor for the third defendant/third third party.
After the announcement of appearances, Dr Pannam commenced to address me:
"DR PANNAM: … The matter was last before Your Honour on 27 August and on that occasion I think Mr Nash appeared on behalf of the plaintiff and sought Your Honour's leave to amend the writ and the statement of claim by the addition of Mr Denton and McNab & McNab as defendants. Since that date as Your Honour will have seen from the file, there's been a change of the legal array representing the plaintiff. The matters have been very carefully considered and it's been decided and the disputes – nascent disputes between the plaintiff and the added defendants last time have been resolved and what we seek is leave to deliver a fifth further amended statement of claim which deletes the pleaded claims against Mr Denton and against McNab & McNab. Can I hand Your Honour a copy of that proposed pleading and the consequential amendment to the writ in terms of the parties? …
That's what's happened in the time between 27 August and today Your Honour. Those decisions have been taken and those are amendments sought.
HIS HONOUR: Does the agreement extend to – and perhaps I should be addressing this question to Mr Elliott, but to the what would then become third party claims.
MR ELLIOTT: Your Honour, we're hearing about the agreement for the first time this morning. And I've just been handed this document. …
I can't really assist the court at the moment by how the third party proceedings will progress in the circumstances, we've only just heard about it.
HIS HONOUR: Yes.
DR PANNAM: Your Honour, I can only say that we only got instructions late yesterday afternoon from Israel to take the course that we're taking against the background of some work we've been doing over the last month.
…
HIS HONOUR: Do I need to make an order discontinuing against the defendants, or if the statement of claim is amended, there's no – if you want an order that the writ be amended by deletion of their name, I suppose the claim against them does need to be discontinued.
DR PANNAM: It is, I suppose. So far as discontinuance is concerned in any event, the pleadings wouldn't have been closed. There can be discontinuance without leave. …
HIS HONOUR: They haven't closed, yes.
DR PANNAM: That can be attended to ministerially if that's what the parties want. But certainly so far as the form of the proceeding is concerned, the names would simply be deleted.
HIS HONOUR: Yes.
DR PANNAM: If Your Honour pleases, they're the directions that we seek.
HIS HONOUR: Yes, thank you Dr Pannam. Mr Elliot?
MR ELLIOTT: I'm not sure what to say Your Honour. …
It doesn't appear that we need to file a further defence, because the amendments in relation to my client or our client are quite minor. …
I'm not sure what else can be done today Your Honour. We need to consider the matter carefully and the position of the plaintiff – perhaps we have another directions hearing shortly before Christmas, on the 17th perhaps.
HIS HONOUR: Yes. You already had third-party notices against Mr Denton and Mr Golvan - - -
MR ELLIOTT: Yes.
HIS HONOUR: And pursuant to the order on 27 August, you filed the amended third party notice against McNab McNab & Starke.
MR ELLIOTT: That's correct Your Honour.
HIS HONOUR: Yes.
MR ELLIOTT: There were discussions at the time - - -
HIS HONOUR: But you may still want to consider your position.
MR ELLIOTT: Yes. And those positions have changed.
HIS HONOUR: You're suggesting coming back on the 17th?
MR ELLIOTT: At least have the ability to do so if necessary Your Honour. In the mean time we can make orders for discovery. There's probably not much else to do.
…
HIS HONOUR: If we set a date for discovery in the new year and I always reserve liberty to apply, if you wanted to come back before Christmas, you can always arrange that - - -
MR ELLIOTT: Yes thank you Your Honour, I think that is appropriate order - - -
HIS HONOUR: - - - if there's some other step to be taken.
…
HIS HONOUR: Yes, did you want to say anything about that Dr Pannam.
DR PANNAM: No Your Honour, but I do want to say something about what I said before. It would be far more convenient, I think, if the orders we seek that the proceedings be dismissed against both Mr Denton and McNab & McNab. I think that's more appropriate.
…
MR TESARCH: Your Honour, just on the point of the dismissing of the proceedings, if perhaps there also be an order of no order as to costs.
HIS HONOUR: Yes, no order as to costs. Yes.
DR PANNAM: In both matters Your Honour, both the Denton matter and the McNab matter.
HIS HONOUR: Yes. Does any one want to say, any of the defendants, third parties, want to say anything about orders?
MR DONALDSON: Your Honour, we clearly consent to the orders in regard to dismissing the claim against Mr Denton. We support some orders for discovery. I suspect it depends on whether Shiff & Co wish to amend its statement of claim against us. We'll have to reflect on that depending on their position early next year. Otherwise, we would seek an order for general discovery."
Despite the history of this matter, in particular the argument on 29 August and 5 September 2003 concerning the precise wording of the form of order bringing the plaintiff's claim against the Lewenberg defendants to an end, it appears that no one, including myself, turned their mind to the possible consequences of the change in wording sought by Dr Pannam on behalf of the plaintiff.
At the hearing of this application I was informed by counsel that written Terms of Settlement and Release ("the Terms") were entered into between the plaintiff and the second defendant. They were produced by the solicitors for the second defendant in what was said to be standard form at the last minute, as the solicitors had only recently been advised that the plaintiff had agreed to the settlement. Paragraph 1 of the Terms confirmed what was implied by the terms in which Dr Pannam had announced the settlement. The plaintiff had simply decided not to continue with her claim against the second defendant (and presumably the third defendant.) Apart from agreeing "to bear his own costs of the action to date" no consideration moved from the second defendant to the plaintiff. Paragraph 3 of the Terms required the Releasor, the plaintiff, to take "all steps necessary to dismiss the action forthwith" against the Releasee, the second defendant. The Terms were brought to Court and handed to the plaintiff's representatives. I was further informed by counsel that after Dr Pannam had asked for an order discontinuing the plaintiff's claims against the second and third defendants, Mr Donaldson, the solicitor appearing for the second defendant, drew to Dr Pannam's attention that the Terms provided for dismissal. Dr Pannam then signed the Terms on behalf of the plaintiff and subsequently sought the order dismissing the claims.
Dr Pannam, who again appeared with Mr Maiden for the plaintiff, said at the hearing of this application, and I accept, that at the time he "saw no practical difference between the two" and that if he had he would not have asked the Court to make the dismissal order and would have drawn the point to the attention of Mr Elliott. Dr Pannam reminded me that neither he nor his junior acted for the plaintiff at the time the issue had previously been debated before me and that, as he so succinctly expressed it:
"I must say that for my part I don't carry the mysteries of s.23B(5) in my head, and indeed the first time I ever had to consider that particular provision is in the context of the present application."
Mr Dixon, who appeared for the first third party on this application told me, and I accept, that he was instructed that there was nothing in the mind of the solicitor representing the second defendant/first third party on 3 December 2004 that if the order was worded as a dismissal certain advantages might follow which would not have been available if the order was worded as a discontinuance. The dismissal wording was suggested in order to accord with the (standard) wording of the Terms.
I was also informed by counsel that there were no written Terms of Settlement between the plaintiff and the third defendant. It seems to me tolerably clear from certain subsequent events detailed below, and I find, that no thought had been given by those representing the third defendant/third third party to the different consequences which might flow from a dismissal of the plaintiff's claim rather than a discontinuance of that claim.
Subsequent Events
The order made on 3 December 2004 was authenticated on 12 January 2005. There had been no application by Shiff & Company for the hearing to be resumed on 17 December 2004. Instead, the matter came before the Court on 25 February 2005 pursuant to the adjourned summons for directions. On that day I gave the defendant leave to file and serve a further amended third party statement of claim and ordered that each third party file his or its defence on or before 11 March 2005. I also gave the third third party leave to join Mr Anthony Southall QC as a fourth party. It was said that McNab McNab & Starke was entitled to indemnity or contribution from Mr Southall, who had settled the plaintiff's initial statement of claim, for negligent advice given in breach of his retainer from the plaintiff.
The third third party filed its defence to the defendant's claim on 3 March, the second third party filed his defence on 10 March and the first third party on 15 March 2005. In paragraph 18B of the first third party's defence the dismissal of the plaintiff's claim against him was pleaded as part of a plea that the defendant had no entitlement to claim contribution from the first third party pursuant to s.23B of the Wrongs Act. There was no immediate reaction by the defendant to this plea by the first third party.
At the next directions hearing on 29 April 2005 Mr Elliott mentioned that the third third party had sought the defendant's consent to the third third party filing an amended defence raising the same issue of the dismissal of the plaintiff's claim against it. The defendant opposed any leave being given to the third third party to rely on any such amendment. I have assumed that the idea for this amendment came from a reading of the first third party's defence. Further consideration of this application to amend and of Mr Elliott's foreshadowed application to vacate the earlier order was adjourned to 13 May 2005. On 29 April 2005 I also gave the third third party leave to join Ms Julia Adams, an associate partner of Shiff & Company as a second fourth party. As previously stated, Mr Shiff and Ms Adams had represented Mrs Tapoohi at the mediation.
The Position Adopted by the Parties
The defendant's application was supported by the second third party. It was opposed by both the first third party and the third third party and by the first fourth party. It was also opposed by the plaintiff but principally on the ground that the defendant was not prejudiced by the order remaining on foot because it did not preclude the defendant from recovering contribution from either the first or the third third party. Finally, the second fourth party adopted a neutral position, although counsel also sought to reserve the right to take the point later on that the second fourth party should not be prejudiced by something that had happened before she was joined as a party to the proceeding.
Resolution of the Application
As I have previously stated, I announced at the hearing that I would grant the application with my reasons to be published at a later date. I turn then to my reasons for reaching that conclusion.
The first matter to consider, it seems to me, is whether a judge at first instance has the power to vacate or set aside all or part of his or her order when that order has been authenticated. The existence of such a power in an appropriate case is well established. Indeed, no party opposing the application suggested otherwise. In In Re Bruce[4] the Full Court of this Court stated that they were of opinion that:
"… the Court of Insolvency, like every other court, or judge of a court, has power to set aside an order made by it or by him upon being satisfied either that the order has been made improvidently, or that facts have been withheld from him which should have been disclosed to him, but which were not disclosed either through negligence or some other cause. Every court and every judge has, we think, power to do that, and to set aside any act of their or his own shown to have been done under circumstances which operated to deprive his mind of the power of exercising a fair judgment at the time."
[4](1886) 12 VLR 696 at 709 per Higinbotham, Williams and Holroyd JJ
This passage was cited with approval by Batt and Buchanan JJA in Kabat Investments Pty Ltd v Compleat Imports Pty Ltd[5], in the context of their Honours assuming without deciding that "there is a power to vacate orders even when perfected". Other authorities cited by Batt and Buchanan JJA were Autodesk Inc v Dyason [No. 2][6] and University of Wollongong v Metwally [No. 2][7].
[5][2002] VSCA 134 at [10]
[6](1993) 176 CLR 300 at 317 per Dawson J
[7](1985) 60 ALR 68
I refer also to the following passage from the decision of Brennan J sitting as a Judge of the Supreme Court of the Australian Capital Territory in Permanent Trustee Co (Canberra) Ltd v Stocks & Holdings (Canberra) Pty Ltd[8]:
"The general rule is that a perfected judgment cannot be recalled or varied, for the public interest requires that the judgment when it is entered should conclude the litigation: interest reipublicae ut sit finis litium. Until the final judgment is entered, the court retains a power to reconsider the matter, but, when entered, the jurisdiction to reconsider is gone: Re St Nazaire (1879) 12 Ch D 88; Re Suffield and Watts (1888) 20 QBD 693; Texas Co (Australasia) Ltd v Federal Commissioner of Taxation (1940) 63 CLR 382 at 457; Preston Banking Co v William Allsup & Sons [1895] 1 Ch 141 at 144.
There are some exceptions to this general rule. The exceptions fall into three classes: those which are founded upon the inherent jurisdiction of the court to ensure that its procedures do not effect injustice; those which are authorized by statute; and those which override the general rule in order to give relief where the judgment is obtained by fraud or by an agreement which is void or voidable."
[8](1976) 15 ACTR 45 at 47-48
I therefore conclude that in appropriate circumstances there is a power for a Judge to vacate an order earlier made.[9] Indeed, In Re Bruce[10] is binding authority to this effect. Nevertheless, as the authorities make clear, it is a power to be used sparingly and with great caution.[11] The reason for this, as Brennan J made clear in the above quotation, is the public interest in the finality of litigation. However, as counsel for the defendant submitted, no such consideration applied here. The earlier order did not bring any finality to the litigation. Both the second defendant and the third defendant remain in the proceeding as third parties with allegations still being made against them which are the same as, or similar to, those being made before the making of the earlier order.
[9]See also State Rail Authority of New South Wales v Codelfa Construction Pty Ltd (1982) 150 CLR 29; Rajunder Narain Rae v Bijai Govind Sing (1839) II Moo Ind App 181; Vienkata Narasimha Appa Row v Court of Wards (1886) 11 App Cas 660; Re Orders made by the Honourable Justice Balmford, unreported, 16 September 1997; National Australia Bank Ltd v Petit-Breuilh (No. 3) [2000] VSC 291
[10](1886) 12 VLR 696
[11]State Rail Authority of New South Wales v Codelfa Construction Pty Ltd (1982) 150 CLR 29 at 38 per Mason and Wilson JJ and at 45 per Brennan J; Metwally v University of Wollongong [No. 2] (1985) 60 ALR 68 at 70 per Gibbs CJ, Mason, Wilson, Brennan, Deane and Dawson JJ; Autodesk Inc v Dyason [No. 2] (1993) 176 CLR 30 at 302 per Mason CJ, at 308 per Brennan J, at 317 per Dawson J, and at 322 per Gaudron J
I turn then to considering whether in the circumstances of this case the defendant would suffer an injustice if the earlier order were not vacated or set aside.
Mr Elliott submitted, on behalf of the defendant, that it was not necessary for the purposes of the application to seek to have the Court finally determine whether or not the particular defence sought to be raised would ultimately be successful. I agree that a mere risk that this could be the result is sufficient. In a previous judgment in this proceeding[12] I referred with approval to what Ashley J had said in Wintle (No. 3)[13]. In that case, his Honour had decided that he did not have to be satisfied that the making of similar orders would "certainly erect a barrier to the successful pursuit of contribution claims made by those parties." It was sufficient that if the orders were made "they would or might erect such a barrier." This means that I do not have to decide the correctness of the plaintiff's detailed and attractive submission that, properly interpreted, s.23B(5) of the Wrongs Act did not mean that the making of the earlier order precluded the defendant from recovering contribution from either the first or the third third party.
[12][2003] VSC 379 at [31]
[13][2002] VSC 369 at [23]
Further, in my opinion, it is important to remember that it is a matter for the Court what, if any, orders are made and how they are to be worded. Simply because the plaintiff and the second defendant (and presumably the third defendant) had agreed that orders would be sought dismissing the plaintiff's claim against them, did not mean that such orders would inevitably be made with that wording or at all. In this context, Mr Elliott relied on other parts of the judgment of Ashley J in Wintle (No. 3). First, counsel drew attention to his Honour's statements that a party has a right to be heard in opposition to an application by other parties for orders by consent (including the giving of judgment) and that in such a case the Court is not bound simply to rubber stamp the consent.[14] His Honour further stated that:
"… the Court should be jealous to protect its processes. No doubt it encourages parties to litigation to settle their differences. But it is not the necessary corollary of such encouragement that the Court should accede to an application for consent orders made in consequence of compromise arrived at by some parties to a proceeding where the effect of the orders will or may be to stifle the hearing and determination of other aspects of the proceeding which involve one of the parties to the proposed consent orders."[15]
[14][2002] VSC 369 at [15] and [16]
[15][2002] VSC 369 at [17]
However, as those opposing the application pointed out, the defendant had not sought to be heard in opposition to the application. Mr Dixon submitted, on behalf of the first third party, that if the defendant's counsel had been taken by surprise at the announcement of the settlements between the plaintiff and the second and third defendants he should have sought an adjournment. This was what had occurred earlier in this proceeding when a similar issue arose. Moreover, the defendant had not sought to re-visit the making of the order at a hearing on 17 December 2004, as had been suggested by the defendant's counsel as a possible course of action. Indeed, Mr Dixon submitted, it was only the proposed amendment to the third third party's defence which brought to light any criticism by the defendant of the wording of the earlier order. Mr Dixon therefore submitted that the defendant had in effect elected not to raise any opposition to the dismissal of the plaintiff's claims against the second and third defendants.
Ms Grice, on behalf of the third third party, made similar submissions. She submitted that "the potential ramifications" of the making of the earlier order were "well known to the defendant" on 3 December 2004 by virtue of "the identical issue" having been previously debated in this proceeding. She also drew attention to the defendant's failure to take any step to have the order varied before it was authenticated.
A further argument advanced by Mr Dixon, on behalf of the first third party, was that any vacating or setting aside of the earlier order would or might have the effect of depriving the first third party of an existing and regularly pleaded defence. This meant that granting the application would or might cause the first third party prejudice. This, it was submitted, meant that it could not be said that the interests of justice required the earlier order to be vacated or set aside.
Whilst there is some validity in these criticisms of the defendant's delayed reaction to the wording of the earlier order, the important consideration in my mind is the particular circumstances in which the earlier order was made. In my opinion, it would be an injustice to the defendant and to other existing or future parties to this proceeding if the first third party or the third third party were allowed to take advantage of the wording of an order of the Court made in circumstances where the application was brought on without prior notice to the defendant or the second third party and where no one, including myself, had at the time of the making of the order given thought to the possible consequences of its wording. All of this led to a situation where, in the words of the Full Court in In Re Bruce[16], my mind was deprived of "the power of exercising a fair judgment at the time."
[16](1886) 12 VLR 696 at 709
One can see from the approach of Ashley J in Wintle (No. 3) and from my earlier decision in this proceeding how the matter might have developed had I been alerted to the potential consequences in response to my questions such as whether the settlement extended to what would become third party claims by the defendant and whether any of the other parties wished to say anything about the orders. In Wintle (No. 3), Ashley J said that the case was not one in which to presently decline to make the orders sought would prejudice either of the parties to the compromise save that "SIFC will lose the advantage of its stratagem". I have previously stated that I accept the assurance of those involved that there was no such "stratagem" in this case. However, his Honour continued:
"On the other hand, to make the orders sought would or might gravely disadvantage CSR and Hardie by precluding them from successfully seeking contribution against SIFC. To those observations I add this: by not making the orders SIFC, CSR and Hardie will be left free to pursue their respective contribution proceedings. But if the orders were made, it is possible that SIFC would obtain a singular advantage: retain its ability to successfully pursue contribution from CSR and Hardie, whilst those other defendants would or might be precluded from successfully pursuing their contribution proceedings against it."[17]
[17][2002] VSC 369 at [21]
As Mr Elliott submitted, the private agreements between the plaintiff and the second defendant and the third defendant respectively should not be able to circumvent the ability of the Court to judicially determine on the merits the extent to which, if at all, the second defendant/first third party and the third defendant/third third party are liable to contribute to any loss which might have been caused by the defendant or other parties. Mr Elliott further submitted, and I agree, that this conclusion is a fortiori when orders could be made to protect the rights gained by each of the other defendants under their settlements but which would also ensure that the rights of the first defendant and other parties, such as the second third party, were not prejudiced. I also agree with Mr Elliott's submission that the proposed order meets this objective.
Having reached the conclusion that, for the above reasons, the earlier order should be vacated or set aside and be replaced by an order discontinuing the plaintiff's claims against the second and third defendants, I do not need to finally decide the further argument advanced by Mr Elliott that the liberty to apply reserved by the order made on 3 December 2004 extended to this application. Mr Elliott very properly drew my attention to the decision of the Full Court of this Court in In Re Porteous, deceased where it was held that the reservation of liberty to apply did not enable the Court "to make what is substantially a different order."[18] Mr Elliott accepted that as this application involved the making of a substantially different order I was bound to reject his argument.[19] However, he then sought to argue that the approach laid down by the Full Court applied only to final orders and that the earlier order was interlocutory, which meant that this application could have been brought pursuant to the reservation of liberty to apply
[18][1949] VLR 383 at 385 per Herring CJ, O'Bryan and Fullagar JJ
[19]Reference was also made to Burke v Gillett [1996] 1 VR 196 at 198 where Tadgell J, with whom Ormiston and Smith JJ agreed, queried whether the practice described in In Re Porteous deceased should still be strictly adhered to now that the Full Court was "practically an ultimate court of appeal".
I am not persuaded that this is a correct analysis of the Full Court's decision, but as I have said, I do not need to decide this issue. I do, however, note that the particular point of the reservation was to give the defendant the opportunity to bring the matter back for a hearing ahead of the next directions hearing on 25 February 2005. In this case the suggested date was possibly to be 17 December 2004. The defendant did not do this on that date or any other date before the hearing on 25 February 2005, and even then the wording of the earlier order was not mentioned. Therefore, in my opinion, in any event the effect of the reservation of liberty to apply had expired by the time of the next directions hearing on 25 February 2005.
Conclusion
For the above reasons, I have decided to set aside paragraph 1 of my order made on 3 December 2004 and in lieu thereof order that the plaintiff's claim against the second defendant and the plaintiff's claim against the third defendant be discontinued with no order as to costs, and that the writ be amended accordingly.
As most of the parties wished to consider my reasons before making submissions on the costs of the application, I will hear those submissions once the parties have had that opportunity.
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