FEDERAL COURT OF AUSTRALIA

Fewin Pty Limited v Prentice (No 2) [2019] FCA 53

ORDERS

THE COURT ORDERS THAT:

1.    The interlocutory application filed by the applicants on 12 July 2018 be dismissed.

2.    The applicants pay the respondent’s costs.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

MARKOVIC J:

1    On 7 December 2017 Maxwell William Prentice, the respondent to this proceeding, filed an interlocutory application seeking a stay of the proceeding until costs of $189,888 ordered in proceeding NSD1222/2015 (Costs Order) were paid or, in the alternative, that any leave that is granted to the applicants, Fewin Pty Limited (Fewin) and Ronald Michael Coshott (Mr Coshott), to file their proposed amended statement of claim be conditional upon the payment of those costs into Court (Stay Application).

2    The Stay Application was heard on 18 December 2017, together with an application made by the applicants to amend their statement of claim. At the parties’ request judgment on the Stay Application was reserved until a date after a Full Court of this Court delivered its judgment in proceeding NSD1137/2017 in which Mr Coshott and Robert Coshott appealed the Costs Order (Full Court Judgment).

3    Following the delivery of the Full Court Judgment, on 8 June 2018 I made orders, among others, that pursuant to r 26.15 of the Federal Court Rules 2011 (Cth) (Rules) this proceeding be stayed until the applicants pay the Costs Order and that the applicants pay the respondent’s costs of the Stay Application (June 2018 Orders): see Fewin Pty Limited v Prentice [2018] FCA 852 (Fewin v Prentice).

4    On 12 July 2018 the applicants filed an interlocutory application seeking an order pursuant to s 23 of the Federal Court of Australia Act 1976 (Cth) (FCA Act) and r 39.05(c) of the Rules that the June 2018 Orders be set aside.

background

5    The relevant background to the making of the June 2018 Orders is set out at [4]-[10] and [47]-[61] of Fewin v Prentice. The following additional matters are relevant to the present application.

6    On 26 October 2017 in proceeding NSD786/2015 between Mr Coshott and Fewin as appellants and Mr Prentice as respondent the Court made an order granting leave to Mr Coshott and Fewin for the issue of a writ for levy of property in the form of the draft submitted (Writ).

7    On 14 November 2017 the Sheriff of New South Wales issued a notice of custodian of seizure purporting to seize Mr Prentice’s sailing vessel known as “Ticket of Leave” located at the Royal Sydney Yacht Squadron at Kirribilli.

8    On 15 November 2017 Mr Prentice lodged an interim application in proceeding NSD786/2015 (Interim Application) seeking orders that the execution upon the Writ be stayed pending the determination of the Interim Application and that the Writ be set aside.

9    The Interim Application was set down for hearing on 30 April 2018 before his Honour Justice Lee. Leading up to the hearing Lee J made a number of orders, including on 9 February 2018 an order requiring Mr Prentice to provide “a schedule describing and summarising the nature, status and orders in all extant proceedings which are related to these proceedings” (February Order). It is not clear what document was provided to his Honour in compliance with the February Order. However, in evidence before me were two documents which I understood were provided to Lee J for the purposes of the Interim Application:

(1)    the first was a document titled “Bankrupt estate of Robert Gilbert Coshott Reconciliation of costs orders and interest calculation To 7 February 2018” (Costs Orders Reconciliation). The Costs Orders Reconciliation at item 7 included the Costs Order and showed interest calculated on that order but did not include any reference to this proceeding; and

(2)    the second was a document titled “Briefing Document as aid to Justice Lee and not intended to be proof of any underlying fact prepared on behalf of Maxwell William Prentice” (Briefing Document) (in relation to which see [18] below).

10    The Briefing Document sets out a description of various parties and of 39 different proceedings commenced in various courts including this Court. This proceeding was listed as item 36 with the following description:

Proceeding by Fewin Pty Limited and Ronald Michael Coshott against Maxwell William Prentice set down for hearing on 18 December, 2017, judgement (sic) presently reserved on interlocutory issues.

The proceeding is a claim against Maxwell William Prentice associated with breach of duty in the performance of duties.

11    At the conclusion of the hearing of the Interim Application on 30 April 2018 before Justice Lee the following exchange took place between his Honour and Mr Johnson, counsel for Mr Prentice:

HIS HONOUR:    I just wonder whether the better idea is perhaps to indicate to you that I would – I think I would be prepared to provide a stay even it’s in stages, that is, until the determination of the appeal against – one or other of the appeals or perhaps both. I don’t know.

MR JOHNSON:    But the benches were substantially the same, I should say. There was one change in the second appeal.

HIS HONOUR:     Were there? Yes. Well, until a period following the determination of that, giving you liberty both to, as it were, relist it. Then, you know, with the exchange of mutual undertakings which you can go discuss. But, essentially, preserve the status quo. You won’t lose your boat. And until there has been a final reckoning, then there won’t be, as it were, new enforcement action fee in respect of these additional – the debts that you haven’t – the ones that you have in your favour.

MR JOHNSON:    Yes, your Honour.

12    Thereafter senior counsel for Mr Coshott and Fewin provided Mr Johnson with draft orders to be made in proceeding NSD786/2015. I infer that Mr Prentice agreed to orders in substantially the form provided.

13    On 3 May 2018 when proceeding NSD786/2015 was next before the Court Justice Lee made orders (NSD786/2015 Orders) in substantially the same form as the draft short minutes of order exchanged between the parties including, relevantly, an order (Order 3) that:

Until further order, the respondent on the one hand and the applicants, James Coshott, Ljiljana Coshott, Robert Coshott and Schlotzsky’s Nominee Company Pty Ltd on the other are forbidden, whether by themselves, their respective servants or agents, from taking any or any further enforcement action or steps (including in relation to any insolvency proceedings, but excluding any process for the quantification or assessment of costs) in respect of any debts they have or may have as against each other.

(emphasis added)

14    On 14 May 2018 the applicants filed an affidavit sworn by their solicitor, James Lyons of Murphy Lyons, in this proceeding which annexed a copy of the NSD786/2015 Orders (Lyons Affidavit). The Lyons Affidavit was not served on Mr Prentice at the time and no application was made by the applicants in this proceeding to reopen the Stay Application and to rely on that affidavit prior to the Court making the June 2018 Orders. Mr Lyons said that he had incorrectly assumed that the Lyons Affidavit would be brought to my attention upon its filing and that nothing more needed to be done in that regard.

15    On 12 June 2018 Gillis Delaney, solicitors for Mr Prentice, requested a copy of the Lyons Affidavit, having become aware of it when Mr Lyons, who attended to take judgment when the Court made the June 2018 Orders, informed the Court that it had been filed.

16    Between 12 and 14 June 2018 Murphy Lyons and Gillis Delaney exchanged correspondence about the June 2018 Orders:

(1)    Murphy Lyons indicated that if Mr Prentice intended to file an application to set aside the NSD786/2015 Orders then the applicants would not apply to set aside the June 2018 Orders on condition that if Mr Prentice was unsuccessful in his application, he would consent to an order setting aside the June 2018 Orders;

(2)    in response Gillis Delaney indicated that in their opinion Order 3 did not conflict with the June 2018 Orders and that Mr Prentice would thus not be making any application to the Court in relation to the NSD786/2015 Orders or the June 2018 Orders;

(3)    Murphy Lyons noted that in light of Mr Prentice’s position they were instructed to apply to set aside the June 2018 Orders and sought Mr Prentice’s consent to such an order; and

(4)    Gillis Delaney responded noting that Mr Prentice would not consent to an order vacating the June 2018 Orders and that, if an application was brought to vary or vacate those orders, Mr Prentice wished to be heard.

17    On 3 August 2018 proceeding NSD786/2018 was listed before Lee J for case management hearing. The NSD786/2015 Orders were not vacated or varied at that time and the proceeding was stood over to a further date.

18    After the hearing of the application to set aside the June 2018 Orders, this proceeding was relisted at the request of Mr Prentice who wished to seek leave to reopen his case and lead further evidence on the application to set aside the June 2018 Orders. Mr Prentice’s application, which was filed on 13 September 2018, was ultimately resolved by consent on 18 October 2018 when, relevantly, the following order and notation were made:

THE COURT ORDERS BY CONSENT THAT:

1.    The Court receive into evidence the document entitled “Briefing Document as aid to Justice Lee and not intended to be proof of any underlying fact prepared on behalf of Maxwell William Prentice” (Schedule).

…

THE COURT NOTES THAT:

4.    The parties agree that the Schedule was provided to Justice Lee by counsel for Mr Prentice, Mr JT Johnson, on 30 April 2018 as an aide memoire.

legal principles

19    The applicants apply to set aside the June 2018 Orders pursuant to s 23 of the FCA Act and r 39.05(c) of the Rules. Section 23 of the FCA Act empowers the Court to make orders of such kinds, including interlocutory orders, in matters in which it has jurisdiction.

20    The June 2018 Orders are interlocutory. Rule 39.05(c) relevantly provides that the Court may vary or set aside an interlocutory order after it has been entered.

21    The power under r 39.05 is discretionary and should be exercised with caution: see Australian Securities and Investments Commission v ActiveSuper Pty Ltd (No 4) [2013] FCA 318 at [6]. But it has been recognised that the overriding principle governing the exercise of the power is the interests of justice: see Luo v Zhai (No 6) [2016] FCA 805 at [15].

22    In Keynes v Rural Directions Pty Ltd (No 4) [2011] FCA 304 Besanko J considered an application to set aside orders made pursuant to s 31A of the FCA Act giving summary judgment in favour of two defendants. His Honour noted at [30] that even though the orders the subject of the application before him were interlocutory, the need for finality in litigation was important. At [32] his Honour cited with approval passages from Brimaud v Honeysett Instant Print Pty Ltd (1988) 217 ALR 44, which the parties before me seemed to accept reflected the approach to be taken:

The third defendant referred to a passage in the reasons for judgment of McLelland J in Brimaud v Honeysett Instant Print Pty Ltd (1988) 217 ALR 44 at 46-47. I did not understand the plaintiffs to take issue with any of the principles stated in the passage. Although lengthy, I set it out in full:

The private injustice and public undesirability of permitting the relitigation of matters already litigated once is recognised in a number of principles of law, notably the rules relating to res judicata and issue estoppel, the more flexible rules under the rubric of vexation and abuse of process illustrated in such cases as Stephenson v Garrett [1891] 1 QB 677 and Hunter v Chief Constable, West Midlands Police [1982] AC 529 ; [1981] 3 All ER 727, and the restrictive provisions governing the adducing of further evidence on the hearing of an appeal even by way of rehearing: see, for example s 75A(8) of the Supreme Court Act 1970 (NSW).

Interlocutory orders, of their very nature, create no res judicata or estoppel, and the court retains jurisdiction to set aside, vary or discharge an interlocutory order up to the time of the final disposition of the proceedings. However the general rationale of the principles last referred to applies even in the case of interlocutory orders. It would be conducive to great injustice and enormous waste of judicial time and resources if there were no limit on the power of a party to have any interlocutory application or order relitigated at will.

The overriding principle governing the approach of the court to interlocutory applications is that the court should do whatever the interests of justice require in the particular circumstances of the case. In giving effect to that general principle, and in recognition of the public and private interests earlier referred to, rules of practice have been developed in accordance with which the discretionary power of the court to set aside, vary or discharge interlocutory orders will ordinarily be exercised. Not all kinds of interlocutory orders attract the same considerations. For present purposes one may put to one side orders of a merely procedural nature (as to which see for example Wilkshire & Coffey v Commonwealth (1976) 9 ALR 325) and injunctions (or undertakings) made or given by agreement and without contest “until further order” (as to which see for example Warringah Shire Council v Industrial Acceptance Corp (unreported, SC(NSW), McLelland J, 22 November 1979).

In the present case I am dealing with an interlocutory order of a substantive nature made after a contested hearing in contemplation that it would operate until the final disposition of the proceedings. In such a case the ordinary rule of practice is that an application to set aside, vary or discharge the order must be founded on a material change of circumstances since the original application was heard, or the discovery of new material which could not reasonably have been put before the court on the hearing of the original application: see Woods v Sheriff of Queensland (1895) 6 QLJ 163 at 164–5; Hutchinson v Nominal Defendant [1972] 1 NSWLR 443 at 447–8; Chanel Ltd v F W Woolworth & Co [1981] 1 All ER 745 ; [1981] 1 WLR 485; Adam P Brown Male Fashions v Philip Morris (1981) 148 CLR 170 at 177–8; 35 ALR 625 at 629–30; Butt v Butt [1987] 1 WLR 1351 at 1353; Gordano Building Contractors Ltd v Burgess [1988] 1 WLR 890 at 894.

Applicants’ submissions

23    The applicants submitted that Order 4 of the June 2018 Orders is patently inconsistent with Order 3 of the NSD786/2015 Orders. That being so, they contended that it is in the interests of justice for the Court to set aside the June 2018 Orders. The applicants gave three principal reasons why that was so.

24    First, the applicants submitted that there was a patent inconsistency between Order 3 of the NSD786/2018 Orders and Order 4 of the June 2018 Orders. They submitted that the Court’s intention in making Order 3 was to maintain the status quo between the named parties pending completion of the outstanding litigation between them. They noted that in proceeding NSD786/2015 Mr Prentice had applied to stay the execution of the Writ on the basis of a set off of various costs orders between the parties.

25    The applicants contended that Order 3 is not confined to an action for enforcement in respect of a debt but that it forbids the named parties from taking “any or any further enforcement action or steps”. They said that the amount of $189,888 included in Order 4 of the June 2018 Orders is, in effect, “a debt” that may be enforced pursuant to s 53 of the FCA Act and that it is therefore within the inclusive language of Order 3 namely, “any debts they have or may have as against each other”.

26    Secondly, in the alternative, the applicants submitted that, even if the Court was to find that Order 4 of the June 2018 Orders was not patently inconsistent with the NSD786/2018 Orders, those latter orders sought to preserve the status quo pending the resolution of all proceedings between the parties and, to that extent, Order 4 of the June 2018 Orders would be at odds with the object of the Court’s approach in proceeding NSD786/2015. That is, on the applicants’ case, the maintenance of the status quo intended by the NSD786/2015 Orders means that no money should flow from either party until arrangements are made by the parties for that to occur.

27    The applicants contended that the effect of the June 2018 Orders is that the prohibition on both parties implicit in the NSD786/2015 Orders was removed from Mr Prentice but continues to apply to them. They said that two things arose as a result: first, they were required to pay costs now, whatever the eventual position between the parties may be after all proceedings have been finalised; and secondly, the consequence of the stay in the June 2018 Orders means that Mr Prentice is, in effect, allowed to enforce the debt by preventing the continuation of this proceeding such that the status quo between the parties will be displaced.

28    Thirdly, the applicants submitted that, as a party to proceeding NSD786/2015 and the moving party on the Stay Application, Mr Prentice had an obligation both to include a reference to this proceeding when responding to the February Order and to seek to have proceeding NSD786/2015 relisted in order to inform Lee J of the June 2018 Orders. The applicants said that Mr Prentice failed to bring the orders that he had sought in the Stay Application to Lee J’s attention “in plain terms” and accordingly his Honour did not make any express reference to this proceeding in the NSD786/2015 Orders. The applicants contended that nonetheless the substance of the NSD786/2015 Orders requires the maintenance of the status quo between the parties ahead of a broader reckoning between the parties.

29    The applicants submitted that, in contrast, they had taken steps to bring the NSD786/2015 Orders to my attention before the June 2018 Orders were made by filing the Lyons Affidavit. They contended that upon doing so the Lyons Affidavit became part of the Court record and, had the Court been properly notified of its existence, it could have considered it prior to delivering judgment. While that did not occur, the applicants contended that the evidence is relevant and that the Court should take account of it and rely on it as a basis to set aside the June 2018 Orders.

consideration

30    Whether the June 2018 Orders ought to be set aside depends on whether the June 2018 Orders are inconsistent with Order 3 of the NSD786/2015 Orders. In considering that issue, the applicants urge the Court to consider the context in which the NSD786/2015 Orders were made.

31    While the overriding principle dictating the exercise of the discretion under r 39.05(c) is the interests of justice, what that will require will vary according to the circumstances of each case. Here the parties had the opportunity to lead evidence and make submissions in relation to the Stay Application after which judgment was delivered. Although the June 2018 Orders are interlocutory, given the circumstances in which they were made and the application which they resolve, they are not merely procedural. In addition, they carry with them an element of finality in relation to the issue with which they are concerned. Against that background, in my opinion, it falls to the applicants to demonstrate that there is good reason to set them aside.

32    Before proceeding further to consider whether the applicants have demonstrated that is so, I wish to address the Lyons Affidavit. That affidavit was filed electronically prior to the delivery of judgment. However, as I have already observed, it was not at that time served on Mr Prentice and no application was made to the Court by the applicants to reopen their case to rely on the Lyons Affidavit. To the extent it may be have been suggested, albeit faintly, that in those circumstances the Court ought to have been aware of and have regard to the Lyons Affidavit in determining the Stay Application, that suggestion is rejected.

33    The applicants relied on Patel v Minister for Immigration and Citizenship (No 4) (2012) 208 FCR 128 (Patel). In that case the appellant had emailed submissions to a Deputy Registrar of the Court but, for reasons which were unexplained, those submissions were not brought to the attention of the trial judge nor placed on any part of the Court file, including by lodgement in accordance with the Rules, before dispositive orders were made. In those circumstances, after considering the Court’s power to do so and the relevant authorities, Collier J held at [45] that the Court had the power to, and should, reopen its decision made on the assumption that no submissions had been filed by the appellant and should consider the appellant’s submissions.

34    In contrast to Patel, this was not a case where orders had been made for the filing of further evidence and, in compliance with such orders, material had been delivered to the Court which was not brought to my attention. Here, having heard the application over the course of half a day, judgment was reserved. If the applicants wished to rely on further evidence, it was incumbent on them to make such an application and give notice to Mr Prentice of their intention to do so. While the Lyons Affidavit, having been filed, may have formed part of the Court’s file maintained for the purpose of the proceeding, it did not, absent such an application being successfully made, form part of the evidence to which the Court would have regard for the purpose of determining the Stay Application.

35    I turn then to consider the applicants’ substantive arguments.

36    The first issue to consider is whether the June 2018 Orders are inconsistent with Order 3 of the NSD786/2015 Orders. In my opinion, they are not.

37    Order 3 prevents Mr Prentice, on the one hand, and the applicants (among others), on the other, “from taking any or any further enforcement action or steps (including in relation to any insolvency proceedings, but excluding any process for the quantification or assessment of costs) in respect of any debts that they have or may have as against each other”. That order needs to be read as a whole, not in the fragmented way urged by the applicants. That is, the words “further enforcement” relate to the word “action” and the word “steps” such that what is intended is that the named parties are not to take any further enforcement action or further enforcement steps in relation to any debt that they have or may have against one another while the order remains in force.

38    Enforcement has an established meaning in the context of orders. Part 41 of the Rules concerns enforcement. Rule 41.10, headed “Execution generally”, provides that a party may apply to the Court to make an order, issue any writ, or take any other step that can be taken in the Supreme Court of the State or Territory in which the judgment or order has been made, as if it were a judgment or order of that court. Assuming, in the context of the NSD786/2015 proceeding that the relevant court for the purposes of r 41.10 is the Supreme Court of New South Wales, the available methods of enforcement are writs for the levy of property, garnishee orders and charging orders: see ss 109 to 129 Civil Procedure Act 2005 (NSW).

39    Having regard to that established meaning, the Stay Application was not an “enforcement action” or “enforcement step” in relation to a debt, namely the Costs Order. Rather, it was an application made by Mr Prentice to prevent him suffering the injustice of “being saddled twice with unpaid costs”: see Fewin v Prentice at [65] citing Hutchinson v Nominal Defendant (1972) 1 NSWLR 443 at 450. The effect of the June 2018 Orders was to prevent the applicants from prosecuting this proceeding until they paid the Costs Order. It did not “require” payment of that amount. The applicants could choose not to pay the sum and forgo the opportunity to prosecute this proceeding which would continue to be stayed.

40    In any event, Mr Prentice made the Stay Application on 7 December 2017. It was heard on 18 December 2017 and judgment was reserved. Those events occurred prior to 3 May 2018 when the NSD786/2015 Orders were made. Thus it could not be said that Mr Prentice took any action or step, let alone an enforcement action or step, in relation to a debt after the time the NSD786/2015 Orders were made. The only thing that occurred after that date was the delivery of judgment and the making of the June 2018 Orders by the Court.

41    The second issue raised by the applicants as a basis upon which they should be entitled to reopen the Stay Application and set aside the June 2018 Orders is that the NSD786/2015 Orders were intended to maintain the status quo. As Mr Prentice submitted, Order 3 must be construed on its face and any intention divined from the words in the order itself. The terms of Order 3 are plain. As set out at [13] above, for as long as the order remains in place, the parties are prevented from taking any or any further enforcement action or steps in relation to debts that exist between them, other than in relation to the quantification of costs. Those orders were made in the context of Mr Prentice applying for a stay of a writ for the levy of property issued against his boat. That is the relevant context in which the draft orders were agreed by the parties and provided to the Court on 3 May 2018 in the NSD786/2015 proceeding.

42    The status quo to be maintained is that, for the time being and it seems until various judgments of the Full Court are handed down (which were reserved at the time the Briefing Document was created), no enforcement action is to be taken by any of the named parties against the other in relation to debts that they have between them. As set out above, the June 2018 Orders are not, in my opinion, inconsistent with Order 3 nor have the applicants established that they are contrary to an intention to maintain that status quo.

43    The final issue to consider is the assertion that Mr Prentice failed to bring the Stay Application to the attention of Lee J as part of the Interim Application. To the extent that it is relevant to the application currently before me for consideration, I note the following matters.

44    First, although represented by different counsel and, in the case of Mr Prentice, different solicitors, both Mr Prentice and the applicants were party to the Interim Application. If there was an obligation to raise the Stay Application as a relevant consideration at any point during the course of the hearing of the Interim Application up to the time when the NSD786/2015 Orders were made, that obligation fell on both parties.

45    Secondly, the applicants criticise Mr Prentice for not referring to the Stay Application in the Costs Orders Reconciliation. But to the extent Mr Prentice attempted to provide a list of outstanding costs orders, as the title of the document suggests, the Costs Order which was the subject of the Stay Application was included under proceeding NSD1222/2015, the proceeding in which it was made. No costs order had been made in this proceeding at that time which may explain why it was not included in the Costs Orders Reconciliation. In any event, if the applicants had any concerns about the completeness of the Costs Orders Reconciliation that was a matter which they could have raised at the time.

46    Thirdly, reference was made to this proceeding in the Briefing Document provided to his Honour Justice Lee on the hearing of the Interim Application as an aide memoire, albeit the document does not describe the nature of the applications made in this proceeding, including the Stay Application, on which the Court was at the time reserved. Once again, if the applicants were concerned by the description provided in the Briefing Document they could have raised it at the time.

47    Fourthly, the NSD786/2015 Orders were clearly the subject of discussion between the parties. I would infer that, if the parties thought that the Stay Application was relevant to or affected by those orders, they would have raised it with the Court or sought a relevant carve out. They did not.

48    Neither the applicants nor Mr Prentice have sought to vary or discharge the NSD786/2015 Orders since the June 2018 Orders were made. Indeed they expressly declined an invitation from the Court in proceeding NSD786/2015 to do so. Rather, the applicants have made the current application seeking to discharge the June 2018 Orders. That is, they have elected to have those orders which act solely against them discharged rather than discharge the NSD786/2015 Orders which provide mutual benefit and burden to the applicants and Mr Prentice. To adopt the vernacular, it seems that the applicants wish to have their cake and eat it too.

49    Having regard to the above matters, I am not satisfied that it is in the interests of justice to set aside the June 2018 Orders and I decline to exercise my discretion to do so.

conclusion

50    The applicants’ interlocutory application filed on 12 July 2018 should be dismissed. As the applicants have been unsuccessful they should pay Mr Prentice’s costs. I will make orders accordingly.

Associate:

Dated:    31 January 2019