FEDERAL COURT OF AUSTRALIA

Capital Webworks Pty Ltd v Adultshop.Com.Limited & Ors [2002] FCA 389

PROCEDURE – setting aside of orders – interlocutory springing order – leave to appeal granted – notice of appeal alleging prejudgment – whether discretion of court extends to vacating springing order on motion of party in whose favour it was made

Federal Court Rules O 35 r 7

Allstate Life Insurance Co v Australia & New Zealand Banking Group Ltd (No 18) (1995) 133 ALR 667 referred to

Western Suburbs Electrical Supplies Pty Ltd v Russell Electrical Services Pty Ltd (1994) 52 FCR 194 referred to

Wati v Minister for Immigration & Multicultural Affairs (1997) 148 ALR 578 referred to

Opalswan Pty Ltd v Commercial & General Acceptances Pty Ltd (RD Nicholson J, 19 December 1996, unreported) referred to

Wentworth v Rogers (No 9) (1987) 8 NSWLR 388 referred to

State Rail Authority of New South Wales v Codelfa Construction Pty Ltd (No 2) (1982) 150 CLR 29 referred to

Autodesk Inc v Dyason (No 2) (1993) 176 CLR 300 referred to

De L v Director-General, NSW Department of Community Services (1997) 190 CLR 207 followed

CAPITAL WEBWORKS PTY LTD v ADULTSHOP.COM.LIMITED and MALCOLM DAY and MELBOURNE INFORMATION TECHNOLOGIES AUSTRALIA PTY LTD

W49 of 2000

RD NICHOLSON J

4 APRIL 2002

PERTH

THE COURT ORDERS THAT:

1.                  The motion of the third respondent to set aside order 1 made on 28 February 2002 be refused.

2.                  Counsel be heard as to costs.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

REASONS FOR JUDGMENT

1                     The third respondent brings a motion orally to recall and vacate an order made on 28 February 2002.  The relevant order made on that date granted a notice of motion brought by the third respondent dated 25 February 2002, subject to the date for payment into Court being amended to 13 March 2002.  Transposing that amendment into the motion as so moved, the effect of the order (“the springing order”) was as follows:

“That unless the applicant pay into Court by 13 March 2002 the sum of $35,000 by way of security for the payment of the third respondent’s costs incurred up to and including the briefing and reviewing of the draft reports of two experts, as ordered in order 2 of 4 February 2002, the applicant’s statement of claim be struck out and the action dismissed against the third respondent and judgment be entered for the third respondent with costs.”

Order 2 of 4 February 2002 provided:

“Within 10 days the applicant provide further security for costs for the third respondent up to and including the briefing and reviewing of the draft reports of two experts for the third respondent in the amount of $35,000 by way of payment into Court with liberty to the third respondent to apply for further security through to trial thereafter.”

That order in turn followed from directions made on 11 December 2001 requiring the filing of any application for further security for costs by 24 January 2002 with the right to the applicant to file and serve any affidavit or submissions in response by 31 January 2002. 

2                     On 11 March 2002 the applicant lodged a motion seeking leave to appeal from the order made on 28 February 2002.  Leave was granted on 11 March 2002 by Carr J.

3                     On 19 March 2002 the third respondent brought the motion to vacate the springing order. 

Federal Court Rules

4                     The case for the third respondent relies on the provisions of O 35 r 7 which reads:

“RULE 7         SETTING ASIDE

7(1)     The Court may vary or set aside a judgment or order before it has been entered.

7(2)     The Court, where it is not exercising its appellate or related jurisdiction under Division 2 of Part III of the Act, may if it thinks fit vary or set aside a judgment or order after the order has been entered where:

(a)               the order has been made in the absence of a party, whether or not the absent party is in default of appearance or otherwise in default and whether or not the absent party had notice of the motion for the order;

(b)               the order was obtained by fraud;

(c)                the order is interlocutory;

(d)               the order is an injunction or for the appointment of a receiver;

(e)                the order does not reflect the intention of the Court; or

(f)                 the party in whose favour the order was made consents.

7(3)     A clerical mistake in a judgment or order, or an error arising in a judgment or order from an accidental slip or omission, may at any time be corrected by the Court.

7(4)     Subrule (2) shall not affect the power of the Court to vary or terminate the operation of an order by a supplementary order.”

5                     It will be observed that the power to vary or set aside a judgment or order before it has been entered or when it is interlocutory is unqualified in its terms.  Nevertheless the discretion is to be exercised judicially.  cf Allstate Life Insurance Co v Australia & New Zealand Banking Group Ltd (No 18) (1995) 133 ALR 667 at 675 per Lindgren J.

Notice of appeal

6                     A notice of appeal was filed on 12 March 2002 pursuant to the leave granted on 11 March 2002.  The grounds in support of the appeal are expressed as follows:

(1)               The learned judge erred in refusing to provided the appellant with a reasonable opportunity to file an affidavit in opposition to the respondent’s notice of motion dated 25 February 2002 for the springing order (“Motion”).

(2)               By refusing to provide the appellant with a reasonable opportunity to file an affidavit in opposition to the Motion, the learned judge had prejudged the Motion.

(3)               In making the springing order against the appellant, the learned judge failed to accord the appellant natural justice.

(4)               In making the springing order against the appellant, the learned judge failed to have regard to the question of whether it was a proper case for the making of the springing order, the effect of which would be to extinguish a good arguable cause of action against the respondent.

Applicant’s contentions

7                     Firstly it is said for the applicant that this is not a case in which the provisions of O 35 r 7(3) can be invoked because this is not an instance of accidental slip or omission but rather the result of a considered decision.

8                     It is said that if the motion proposed by the third respondent was granted it will deprive the applicant of its right to pursue on appeal its submission that the motion had been prejudged and will be:

(a)                an interference with the supervisory jurisdiction of the Full Court;

(b)               a purported use of a discretion which was exhausted when the application for leave to appeal was filed;

(c)                an exercise of a discretion for a purpose for which it was never intended and which is, therefore, an improper purpose.

9                     Then it is said that it would be of no comfort for the applicant to be afforded an opportunity to reargue the motion before a judge who it contends had prejudged the issue. 

10                  The combination of these matters is said to be not a satisfactory or just quid pro quo or a legitimate use of O 35 r 7.

11                  In the event that the Court finds that a discretion exists under O 35 r 7 to set aside the springing order, the applicant submits that where leave to appeal has been granted it is undesirable to exercise that discretion because:

(a)                it encourages a multiplicity of interlocutory applications before the Court, as is evidenced in this case by the applicant’s motion for leave to appeal and the third respondent’s motion for recalling and vacating the springing order; and

(b)               it has the potential to undermine the finding of another judge of the Court who, when granting leave to the applicant to appeal, had found that the order of the first judge had been attended with sufficient doubt as to warrant the grant of leave to appeal.

Third respondent’s contentions

12                  For the third respondent it is accepted that the discretionary power entrusted to the Court by O 35 r 7(2) of the Federal Court Rules is exceptional.  However, it is said it is not limited to cases of slip or oversight:  Western Suburbs Electrical Supplies Pty Ltd v Russell Electrical Services Pty Ltd (1994) 52 FCR 194 at 198; Wati v Minister for Immigration & Multicultural Affairs (1997) 148 ALR 578 at 584 – 7.  Furthermore, as the order here has not been entered it would be open to the Court to act pursuant to O 35 r 7(1):  cf Opalswan Pty Ltd v Commercial & General Acceptances Pty Ltd (RD Nicholson J, 19 December 1996, unreported).

13                  In relation to the cases examined by the Full Court in Wati at 584 – 6, it is submitted that they are cases dealing with applications by a party against whom the original order was made.  It is said that here the unusual feature of the case is that it is the party who sought the original order who now seeks an order setting it aside.  Consequently the application does not offend the public interest in finality of litigation because it is not an instance of a party who has lost an application seeking to reopen an order or reargue or make further submissions in relation to that order. 

14                  Additionally it is submitted that if the gravamen of the applicant’s concern, as alleged in the notice of appeal, is prejudgment, then the setting aside of the springing order will not deprive the applicant from bringing an application for disqualification. 

15                  The case for the third respondent also seeks the exercise of the discretion in favour of its motion on the grounds that it will avoid unnecessary expense and delay.  It is said that to proceed directly to deal with the applicant’s arguments on the substantive issues in relation to security for costs and whether a springing order should be granted having regard to any affidavit material which the applicant seeks to file will be more advantageous in that respect than in several months time following the hearing of the appeal. 

16                  The submissions for the third respondent acknowledge that orders proposed by it would preserve the applicant’s right to seek such costs orders in relation to its appeal as it considers appropriate.

17                  As to whether the applicant will be deprived of its right to appeal it is submitted for the third respondent that rather the vacation of the springing order should be seen as perfecting that right. 

18                  Finally, reliance is placed on the absence of prejudice to the applicant and public interest in avoiding delay and cost in the hearing of the appeal. 

Scope of discretion

19                  The effect of the provisions of O 35 r 7 were considered by the Full Court in Wati at 584 – 587.  The authorities there referred to stress the need for “great caution” and the existence of circumstances which are “quite exceptional”.  In my view that reasoning cannot solely be accounted for by the fact that those cases principally if not solely address applications by those against whom an order has been made: see for example Wentworth v Rogers (No 9) (1987) 8 NSWLR 388 at 394 – 5; State Rail Authority of New South Wales v Codelfa Construction Pty Ltd (No 2) (1982) 150 CLR 29 at 38 per Mason and Wilson JJ and at 45 – 6 per Brennan J; Autodesk Inc v Dyason (No 2) (1993) 176 CLR 300 at 317 per Dawson J.

20                  This becomes apparent when regard is had to the position as summarised by the High Court in De L v Director-General, NSW Department of Community Services (1997) 190 CLR 207 at 215 as follows:

“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, (Autodesk Inc v Dyason [No 2] (1993) 176 CLR 300 at 302) where “there is some matter calling for review”, (Smith v NSW Bar Association (1992) 176 CLR 256 at 265) or where “the interests of justice so require”.  (Autodesk Inc v Dyason [No 2] (1993) 176 CLR 300 at 322).  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”, (Wentworth v Woollahra Municipal Council (1982) 149 CLR 672 at 684; cf State Rail Authority of NSW v Codelfa Construction Pty Ltd (1982) 150 CLR 29 at 38, 45 –46; Nintendo Co Ltd v Centronics Systems Pty Ltd (1994) 181 CLR 134 at 168) ie without the attribution of neglect or default to the party seeking reopening.  (Autodesk Inc v Dyason [No 2] (1993) 176 CLR 300 at 303)  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.  (Autodesk Inc v Dyason [No 2] (1993) 176 CLR 300 at 302; Wentworth v Rogers (No 9) (1987) 8 NSWLR 388 at 394 – 5; Logwon Pty Ltd v Warringah Shire Council (1993) 33 NSWLR 13 at 28 – 29.”

Reasoning

21                  The principle of finality of litigation as described by the High Court in De L is not a principle which is necessarily rendered irrelevant (as the contentions for the third respondent would have it) by the fact that the party in whose benefit the order is made here seeks to have the order vacated.  The springing order is a final order addressing the world at large.  On its face, and in the absence of exceptional circumstances, it exhausts the power of the Court to resolve the matter which was before it when the order was made. 

22                  I do not consider that exceptional circumstances are constituted by the fact that there will be a cost and delay in the appeal.  That is simply the way the law works under present provisions, leave having been granted.  The applicant has the benefit of delay to argue the appeal. 

23                  I do not accept the contention for the applicant that the orders should not be set aside because the appropriateness of a springing order would then come back before the judge who had made the order in relation to which it is contended there had been prejudgment.  I agree with the submissions for the third respondent that this could be met by the matter being dealt with in the usual way relating to alleged prejudgment. 

24                  I agree with the submission for the applicant that the present is not an instance in which the slip rule in O 35 r 7(3) has any application.

25                  What is unique about the present circumstances is that the party seeking to have the orders set aside by way of appeal does not consent to having the orders vacated by way of consent or by exercise of discretion of the Court, if the Court were so persuaded.  That makes apparent the interest of the applicant in pursuing the appeal as a means of attaining other forensic objectives.  That in itself is not exceptional; it is a concomitant of the exercise of the right of appeal.

26                  As I read the authorities, however, the position is that judgments or orders dispose of the matter before the Court except where there are those exceptional circumstances which give rise to the need to vary the orders in the interests of justice.  In my view the motion for the third respondent does not fall within the admitted categories of recognised discretion.  What the third respondent seeks to do is to reopen the springing order not in the interests of justice but to attain a contrary result to that which it moved the Court to attain.  It moves the Court to make a fresh substituted order, not to amend or vary the orders it previously sought for some reason germane to their proper formulation in the interests of justice.  That former course would be contrary to the principle of finality.  Furthermore, it is apparent that the interests of justice can be met by the hearing of the appeal and the determination of the contentions made for the applicant.  Vacation of the orders could itself give rise to equal or greater delay or cost in an appeal directed to testing the powers of the Court to take that step.  In all these circumstances it is not appropriate to exercise the discretion to vacate the springing order.

Conclusion

27                  For these reasons I consider that the motion brought on behalf of the third respondent should be refused.

Associate:

Dated:              4 April 2002