REASONS FOR JUDGMENT

1                     On 8 July 2010, the court made the following orders in this proceeding:

1.                  The application be dismissed.

2.                  There be no order as to costs. 

2                     On 11 August 2010, the applicant filed a Notice of Motion returnable today in which he sought an order that the proceeding be reinstated and that judgment be granted in his favour against the second respondent in the sum of US$250,000.  On the return of that motion, there was no appearance on behalf of the second respondent.  I have been assured by counsel for the applicant, based on the instructions which he has received, that the second respondent was served with the Notice of Motion of 11 August 2010 and the supporting affidavit of Robert Mark Goldstein.

3                     According to that affidavit, the circumstances which led to the consent orders on 8 July 2010 were as follows.  In early July 2010, the proceeding as a whole was resolved as between the parties.  That resolution was reflected in a deed of settlement dated 7 July 2010.  Relevant provisions of the deed included the following:

1.1       Settlement of Federal Court Proceeding by Payment to Sharbutt

1.1       The dispute between Sharbutt and Wood the subject of the Federal Court Proceeding is resolved on the basis that there shall be payment from Wood to Sharbutt in full and final settlement and satisfaction of all the claims, including interest and costs, made by Sharbutt against Wood in the Federal Court Proceeding.

1.2       Wood shall pay to Sharbutt the total sum of US$250,000 (TWO HUNDRED AND FIFTY THOUSAND DOLLARS) (“Settlement Sum”) in two (2) instalments as follows:

(a)        $100,000 (ONE HUNDRED THOUSAND DOLLARS) on or before 12 noon on Thursday, 5 August 2010; and

(b)        $150,000 (ONE HUNDRED AND FIFTY THOUSAND DOLLARS) on or before 12 noon on Friday, 3 September 2010.

1.4       The parties acknowledge and agree that the payment of the Settlement Sum by Wood is:

(a)        with an express denial of liability by Wood of each and every claim and allegation made by Sharbutt;

(b)        in full and final settlement and satisfaction of all claims made by Sharbutt in the Federal Court proceeding;

(c)        for the purpose, inter alia, of avoiding litigation;

2.         Discontinuance

2.1       Each party undertakes to take all steps necessary to discontinue the Federal Court Proceeding by providing to the Court consent orders for the discontinuance of the Federal Court Proceeding with no order as to costs (but with a right of reinstatement in favour of Sharbutt) forthwith upon Wood making payment of the Settlement Sum.

2.2       Unless directed otherwise by the Court, the parties shall seek consent orders for the vacation of the trial date of 12 July 2010 prior to that date and as soon as practicable.

3.         Releases

3.1       Upon the execution of this Deed, Sharbutt and Wood mutually release and forever discharge each other absolutely from any and all claims, suits, actions, demands, causes of action or any other proceedings whatsoever which they may have or, but for the execution of this Deed might have had against each other with respect to any act, cause, matter or thing referred to in or connected with or arising out of the claims made in the Federal Court proceeding.

3.2       Nothing in the above sub‑clause shall preclude Sharbutt from bringing any necessary action based upon Wood’s default under this Deed.

4.         Default by Wood

4.1       In the event that Wood does not comply with his obligations under this Deed, then Sharbutt shall be at liberty to immediately reinstate the Federal Court Proceeding and shall have irrevocable authority to enter judgment in that proceeding (or alternatively, in any new proceeding as may be required) against Wood:

(a)        for the Settlement Sum in full;

(b)        together with Sharbutt’s reasonable costs of entry of such judgment,

(c)        LESS any proportion of the Settlement Sum actually paid by Wood hereunder;

4.2       In the event of any default by Wood:

(a)        Sharbutt shall have irrevocable authority to produce this Deed in support of his application for judgment.

(b)        an affidavit by the solicitor for Sharbutt shall be sufficient evidence of the failure by Wood to comply with his obligation under this Deed to make such payment.

4                     According to Mr Goldstein’s affidavit, the second respondent failed to make the payment of US$100,000 due on 5 August 2010 and attempts by correspondence and other forms of communication to have him rectify that omission were fruitless.  In the circumstances, the applicant exercised what it perceived to be its right under clause 4.1 of the deed to reinstate this proceeding and to press for judgment against the second respondent in full.  The difficulty which confronts the applicant, however, is the final nature of the orders made by consent on 8 July 2010 and the absence of any qualification that the dismissal of the proceeding be accompanied by a right to reinstate. 

5                     Before turning to the law in that respect I should say that the orders made on 8 July 2010 were made by the procedure for which O 35 r 10A of the Federal Court Rules provides.  On that day I received in my chambers a memorandum signed on behalf of each of the parties indicating their consent to orders as follows: (1) The proceedings be struck out; (2) No order as to costs.  A handwritten endorsement which I made on that memorandum makes it clear that I did not consider orders in those terms to be appropriate.  Instead, I invited the parties to file a consent to the form of orders that were ultimately made.  They acted in accordance with that suggestion, and raised no objection to it.  The reason that I proceeded in that way was that the Federal Court Rules do not provide for proceedings to be struck out save in the very special circumstances referred to in O 11 r 16, a provision which has no relevance to the present matter. 

6                     On 8 July 2010, the court was not informed of the circumstances giving rise to the consent order sought by the parties, and was not aware of the existence of the deed of settlement executed on 7 July 2010.

7                     The starting point for the situation with which I am now confronted is that the proceeding was completed to finality by the orders made on 8 July 2010, and the court has no jurisdiction to revisit those orders.  That is the position which obtains under the general law.  In Bailey v Marinoff (1971) 125 CLR 529, the High Court dealt with an appeal from the New South Wales Court of Appeal in which the latter court made orders subsequent to the date upon which an earlier self-executing order had provided for the appeal before it to be dismissed. 

8                     The main judgments were given by Menzies and Walsh JJ, with each of whom Barwick CJ and Owen J agreed.  Menzies J said (at 531-532):

This appeal is not concerned with the power of a court of the alter orders in pending litigation.  It is concerned with the power of the court to make an order in litigation which, without any error or lack of jurisdiction, has been regularly concluded and is no longer before the court.  To recognise the problem is, I think, to solve it.  However wide the inherent jurisdiction of a court may be to vary orders which have been made, it cannot, in my opinion, extend the making of orders in litigation that has been brought regularly to an end.

Walsh J identified the problem before the court in the following terms (at 534):

It is whether as a matter of law, the Court has an inherent power to deal further with an appeal which by its formal order, not being at variance with its intended order, has already been dismissed. 

After considering a number of English authorities to which the court had been referred, his Honour said (at 537) that Goodwin v Southern Tablelands Finance Co. Pty. Ltd. (1968) 42 ALJR 309 was to be regarded:

… as a direct authority for the proposition that there is no inherent power to vary an order by which an appeal stands dismissed in a case such as the present one in which the order was formally drawn up and entered before any application to vary it was made and in which, therefore, no question arose as to the power of the Court to vary an order of that kind if the order, although it was or has become an unconditional order for the dismissal of an appeal, has not yet been taken out.

Barwick CJ said (at 530):

Once an order disposing of a proceeding has been perfected by being drawn up as the record of a court, that proceeding apart from any specific and relevant statutory provision is at an end in that court and is in its substance, in my opinion, beyond recall by that court.  It would, in my opinion, not promote the due administration of the law or the promotion of justice for a court to have a power to reinstate a proceeding of which it has finally disposed. 

More recently in DJL v The Central Authority (2000) 201 CLR 226, 245, Gleeson CJ and Gaudron, McHugh, Gummow and Hayne JJ quoted Barwick CJ’s observations with apparent approval. 

9                     It was submitted today, on behalf of the applicant, that Bailey v Marinoff did not govern the present situation because it was concerned only with an appeal and not with a proceeding at first instance.  Counsel, however, very properly recognised that the principle for which Bailey v Marinoff is authority is a general one, and applies as much to a final judgment made by a court at first instance as it does to a judgment on appeal.  Each of  Barwick CJ and Menzies and Walsh JJ in that case took the view that the circumstances before them were governed by Goodwin, and because Goodwin was an unreported judgment of which only a brief note appeared in the Australian Law Journal Reports, Menzies and Walsh JJ supplied some further details which made the relevance of that authority to the situation then before them apparent.  The note which appears in Goodwin 42 ALJR at 309 is as follows:

Appeal dismissed from a judgment of Kitto J. refusing an application to file appeal books made after the date specified in a previous order of the court granting further time to lodge appeal books but ordering that in default with compliance with that order by a specified date or such later date as a Justice might appoint the appeal should stand dismissed.

In his reasons in Bailey v Marinoff, Menzies J said the following about Goodwin (at 533):

There it had been ordered by this Court that an appeal should stand dismissed in default of compliance with an order to lodge appeal books by a date stated.  There was no such compliance.  Subsequently an application was made to Kitto J. to extend the time for lodging appeal books.  This application was dismissed.  Kitto J. said, “There is no pending appeal in this Court in which I can act.  The appeal stands dismissed by order of the Full Court and that being so I cannot revive it and I do not think the Full Court could revive it.”

An appeal to the Full Court was dismissed: the Full Court held, with respect to the earlier order of the Full Court, that it was not within the power of the court to vary the order.  Once the appeal was dismissed, that was the end of the matter.  This decision, which was not brought to the attention of the Court of Appeal, is authoritative and, in my respectful opinion, is correct. 

10                  It is true that Goodwin, like Bailey v Marinoff, was a proceeding on an appeal from a lower court.  However, the principle for which each case stands is that when a court, whether at first instance or on appeal, makes a final order disposing of a proceeding before it, there is no proceeding left in which it may make any subsequent order, both as a matter of established jurisprudence and as a matter of principle.  Save within certain special categories which have been established and to which I shall refer in a moment, the court cannot disinter, as it were, a proceeding which has been disposed of by a final judgment.

11                  That brings me to the provisions of the Federal Court Rules which have relevance to the present circumstances.  I should emphasise that the Federal Court Rules are made against a recognition of the general position to which I have referred, rather than constituting the fundamental rules which give rise to that position.  Order 35 r 7 deals with the situations in which a judgment may be set aside or varied.  Subrule (1) provides that the court may vary or set aside a judgment or order before it has been entered.  That subrule is not presently relevant because the consent orders made on 8 July 2010 have been entered.  Subrule (2) provides that the court may vary or set aside a judgment or order after it has been entered where one or more of six listed circumstances obtains.  Those circumstances, as I perceive them, reflect traditional common law categories under which a final order may be varied or set aside.  One of them, for example, is that the order was obtained by fraud.  In the circumstances of the present case, the applicant relies upon paragraphs (e) and (f) of subrule (2) which permit an order to be set aside or varied if the order does not reflect the intention of the court, or if the party in whose favour the order was made consents to the setting aside or variation. 

12                  Counsel for the applicant submitted that I should take the view that the order made on 8 July 2010 did not reflect the intention of the court.  It is clear, however, that the only intention which the court had on that day was to exercise the power given under O 35 r 10A, namely, to make an order in accordance with the terms of a written consent filed by the parties.  The court did not turn its mind to the question whether that consent reflected the parties’ intentions or sufficiently encapsulated the kind of settlement which they may have proposed.  I accept, as is clear, that the deed of settlement contemplated that the proceeding should be brought to an end by a means very different from that ultimately proposed before the court, but the fact is that the parties did not proceed by way of discontinuance, and at the time the court had no idea that such a proceeding would have been consistent with their agreement under the deed. 

13                  As I understand submissions put on behalf of the applicant, it is suggested that the intention of the parties in the memorandum of consent orders originally filed by them was that the proceeding ought to have been struck out rather than dismissed.  That was followed with a further submission that the striking out of a proceeding carries with it an inherent potential for reinstatement in appropriate circumstances.  I must say I found the submission difficult to appreciate in the context of the Federal Court at least, because, save in the limited respect to which I have referred, the Federal Court Rules do not allow for proceedings to be terminated by being struck out.  The act of striking out something more commonly applies under the Rules to a document which is deficient in some way, such as a pleading.  However that may be, it is as clear as may be that the intention of the parties, even in the first memorandum which they filed on 8 July 2010, was that an order should be made finally bringing the proceedings to an end, and that that order should be made without qualification and without any reservation of a power to reinstate.

14                  At the more general level, I am disposed to think that paragraph (e) of O 35 r 7(2) is concerned with the situation in which a proceeding has been determined by a judgment of the court, and yet in which the orders ultimately made do not in various ways reflect the intention of that judgment.  Only by a most convoluted straining of the language might this paragraph of the subrule be considered apposite to the situation in which a proceeding has been determined by consent, and without the court being required to give any attention to the merits of the matter. 

15                  The applicant sought to rely also upon paragraph (f) of subrule (2) in the following sense.  It was submitted on his behalf that the order was made in his favour because the settlement reflected by the deed of 7 July 2010 provided benefits to him which, although involving substantial compromises on the nominal value of the claims which he had in the proceeding, were real and positive ones, and it was the settlement of the case in court which enabled him to establish his right to receive those benefits under the deed.  He comes before me today to say that, as a party in whose favour the deed was made, and therefore in whose favour the order was made, he consents to have the proceeding reinstated.

16                  I must say that I consider this to be a quite unrealistic reading of the scope of this paragraph of the subrule.  On the face of it, the first order made on 8 July 2010 was that the applicant’s application be dismissed.  There is nothing in that order which favours the applicant.  The reality is that the applicant’s consent to that order was an element of the consideration which he brought to the table in the negotiations which led to the making of the deed of 7 July 2010.  The order was not in his favour:  to the contrary, it was quite adverse to him in that it disposed of a proceeding in which he had claimed damages and other payments. 

17                  Counsel for the applicant relied also upon O 35, r 7(3), which provides that:

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. 

Counsel’s submission was that the word “slip,” should not be confined to what he described as purely grammatical or syntactical errors, but rather has the potential to extend to any error made by the parties in seeking an order from the court in particular terms.  Quite clearly the orders of 8 July 2010 were not accompanied by any clerical mistake, and neither, in my view, were they accompanied by any accidental slip or omission.  This subrule gives effect to what has always been a power of the court, and of every court, namely, to correct errors which come about under what has been described as the ‘slip rule’.  If there was an error which underlay the consent orders sought by the parties on 8 July 2010, it was an error made by the parties in the form in which they sought that consent.  The judgment itself, and the orders the subject of the present application, were not affected by any accidental slip or omission.

18                  The applicant has a further problem in his reliance upon subrule (3) of rule 7, and that is that his Notice of Motion does not seek to invoke that provision, and it does not seek a correction of the order made on 8 July 2010 to deal with an accidental slip or omission.  When I asked counsel exactly what correction he would seek to have made in relation to the order of 8 July 2010, he was able only to inform me that the order which should now be made is one that the proceeding be reinstated.  The second respondent has had no notice of any amendment or correction to the order other than that the proceeding be reinstated, and I do not believe that I am in any position to act under subrule (3) without first having given the second respondent an opportunity to be heard on the question whether the order is attended by an accidental slip or omission of the kind referred by counsel for the applicant.  In relation to this subrule, my view is that there was no accidental slip or omission, but that in any event the present Notice of Motion is not sufficient to allow the court to address the question of whether there has been an accidental slip or omission, and if so how it may be corrected.

19                  Finally, counsel for the applicant relied upon O 35 r 7(4) which provides that:

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

I do not consider that the kind of order which the applicant seeks, namely the reinstatement of the proceeding, can be described as nothing more than a variation or termination of the operation of the order of 8 July 2010 by a supplementary order.  Again, there is here the problem of the second respondent not having been put fairly on notice of any attempt to obtain a supplementary order.  Counsel was not able to throw any light on how the authorities may have dealt with the power referred to in subrule (4), and I am not disposed to think that it should be read in a way that would effectively reverse the established jurisprudence referred to in Bailey v Marinoff and Goodwin as discussed above. 

20                  In the circumstances I have formed the view, as I made clear in the course of counsel’s submissions this afternoon, that I do not think the court has the power to reinstate this proceeding.  I probably have the power to dismiss the Notice of Motion because it has been brought before the court, and I have dealt with it, and I think that that is the only order which should be made on this occasion. 

Associate:

Dated:         12 October 2010