FEDERAL COURT OF AUSTRALIA Cairnsmore Holdings Pty Ltd v Bearsden Holdings Pty Ltd [2008] FCA 700 CAIRNSMORE HOLDINGS PTY LTD (ACN 109 826 404) AS TRUSTEE FOR THE CAIRNSMORE TRUST AND VERNON HOWLAND v BEARSDEN HOLDINGS PTY LTD (ACN 002 836 133) AND JAMES PEARSON HODGE NSD 2183 OF 2006 JACOBSON J 16 MAY 2008 SYDNEY IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY NSD 2183 OF 2006 BETWEEN: CAIRNSMORE HOLDINGS PTY LTD (ACN 109 826 404) AS TRUSTEE FOR THE CAIRNSMORE TRUST First Applicant VERNON HOWLAND Second Applicant AND: BEARSDEN HOLDINGS PTY LTD (ACN 002 836 133) First Respondent JAMES PEARSON HODGE Second Respondent JUDGE: JACOBSON J DATE OF ORDER: 16 MAY 2008 WHERE MADE: SYDNEY THE COURT ORDERS THAT: 1. Order 3 made on 20 December 2007 be vacated, and the following be substituted: The judgment for $727,898.03 under Order 1 made on 20 December 2007 against the first respondent includes the judgment against the first respondent for $351,835.00, but not for interest thereon, as referred to in Order 2 made on 20 December 2007. 2. A further Order to be numbered Order 1A, as follows: Judgment for the first applicant against the first respondent for interest on the sum of $52,163.85 (the $52,163.85 forming part of the judgment sum of $727,898.03 referred to in Order 1) from 26 July 2005 to date pursuant to Schedule 5 of the Uniform Civil Procedure Rules 2005 (NSW). 3. Time for respondents to appeal against orders made 20 December 2007 be extended such that any notice of appeal or application for leave to appeal is to be made on or before 6 June 2008. 4. No order as to costs. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY NSD 2183 OF 2006 BETWEEN: CAIRNSMORE HOLDINGS PTY LTD (ACN 109 826 404) AS TRUSTEE FOR THE CAIRNSMORE TRUST First Applicant VERNON HOWLAND Second Applicant AND: BEARSDEN HOLDINGS PTY LTD (ACN 002 836 133) First Respondent JAMES PEARSON HODGE Second Respondent JUDGE: JACOBSON J DATE: 16 MAY 2008 PLACE: SYDNEY SUPPLEMENTARY REASONS FOR JUDGMENT 1 On 29 October 2007, I gave oral reasons for judgment in this matter. Due to various other commitments, it was not until 26 November 2007 that the final edited version of the reasons for judgment was published. 2 When I gave my reasons for judgment in October, I ordered that the parties bring in short minutes of order to reflect my reasons. It was not until the published reasons were available on 26 November that the parties addressed the question and I was given lengthy written submissions. 3 I made orders on 20 December 2007. Order 3 provided that: The judgment for $727,898.03 under Order 1 includes the sum of $351,835.00 plus interest referred to in Order 2, and the first and second respondents are not liable for more than $727,898.03 under both of those judgments. 4 This order is to be compared with Order 2, which expressly states that it is a judgment for $351,835 and interest in favour of both Cairnsmore and the second applicant, Mr Howland, against both Bearsden and the second respondent, Mr Hodge. Order 2 expressly recognised the intention of the Court that interest be payable on what was described in the reasons for judgment as "the first instalment" on the basis agreed between the parties. 5 On 1 May 2008 an application was made to the Court under the slip rule to vary Order 3. Mr Svehla, who appears for the applicants, submitted that there was an accidental slip or omission in Order 3 which failed to reflect the intention of the parties, and the Court, as to the payment of interest. 6 I think that Mr Svehla is correct for the reasons set out in detail in his lengthy written submissions in support of the motion brought under the slip rule. In particular I was left to calculate the precise amounts for myself without the assistance of any oral submissions from the parties. It does appear to me that I calculated the judgment sum of $727,898.03 set out in Order 1 of my orders of 20 December by adding three components. These were: · $351,835 (the first instalment); · $52,163.85 (the recoverable expenses); and · $323,899.18 (the costs amount) 7 I arrived at this global sum, having regard to [18] of the applicant's written submissions delivered after my published reasons, however, I am satisfied that [18] of those submissions did not refer to interest and that this fails to reflect the terms of Order 2 which expressly recognised that the intention of the Court was that interest be payable on the first instalment. 8 However, a difficulty arises as to whether or not I ought to make the order sought by Mr Svehla in the motion. This is because there was correspondence between the parties in January 2008. In particular, on 9 January 2008, the solicitor for the respondents wrote a letter to the effect that the respondents would not exercise their appeal rights if the applicants were content with the orders made on 20 December 2007. This letter was written one day before the time limit for lodging an appeal expired. 9 Mr Galitsky, who appears for the respondents, informs me that the position at that time was that the respondents took the view that they did have grounds of appeal in relation to the way in which the judgment sum was calculated. In particular, they say that there was an appeal right in relation to the way in which the costs amount was determined. He submits that in light of the fact that payments were made after 10 January 2008 that the effect of what has happened is that those payments were made in reliance upon an understanding engendered by the applicants or their solicitors that no further claim would be made against the respondents for additional sums over and above those expressed in Order 1. 10 The position is that on 18 January 2008, Bearsden Holdings paid $350,000 of the judgment sum to the solicitor for the applicants. A further sum of $90,000 was paid on 18 February 2008. Thereafter the respondents were in default in their obligation to pay the judgment debt and a statutory demand was issued. Subsequently further instalments were paid by the respondents and on 30 April 2008, one day before the application was made pursuant to the slip rule, the final amount of approximately $152,000 was paid. 11 The position therefore was that the day before the application by the applicants the full amount of the judgment debt set forth in Order 1 of 20 December 2008 together with post-judgment interest was paid. 12 Mr Svehla submits that the true position is that the respondents elected to take the course which they did. He points to the fact that the letter from the respondents' solicitors was not written until 9 January, one day before the expiration of the appeal period, and he says that the course adopted by the respondents was not taken as a result of any act or omission on the part of the applicants or their solicitors. 13 Whatever the force of that submission, it is clear that I have discretion as to whether to exercise the power pursuant to the slip rule. In my view, having been satisfied that there is an error which falls within the provisions of the slip rule, the appropriate course is to vary my orders in the way submitted on behalf of the applicants, but that the discretion ought not to be exercised in a way which would now shut out the respondents from exercising any appeal rights they wish to pursue in relation to the way in which the judgment debt was calculated in the Orders made on 20 December 2007. 14 I should add that the slip rule application also relates to the fact that no judgment for interest on the recoverable expenses, which was the second component of the judgment, was made. For the same reasons as given above, I am satisfied that this, too, is covered by the slip rule. 15 I propose to make orders in terms sought by Mr Svehla to give effect to the slip rule, however I think it is appropriate that the respondents not be prejudiced in relation to any of their appeal rights that they may have lost as a result of the course pursued. 16 The letter from Mr McKenzie of 9 January 2008 refers not only to costs issues but also to "other issues." It is true that the letter is stated in broad terms and that there is no particularity of any other appeal grounds set out in the draft notice of appeal which was Annexure C to Mr McKenzie's affidavit. However, as I have said, I think the appropriate course is to ensure that no prejudice be suffered by the respondents by reason of the belated application of the applicants pursuant to the slip rule. 17 Accordingly, I will make the following orders: (1) Order 3 made on 20 December 2007 be vacated, and the following be substituted: The judgment for $727,898.03 under Order 1 made on 20 December 2007 against the first respondent includes the judgment against the first respondent for $351,835.00, but not for interest thereon, as referred to in Order 2 made on 20 December 2007. (2) A further Order to be numbered Order 1A, as follows: Judgment for the first applicant against the first respondent for interest on the sum of $52,163.85 (the $52,163.85 forming part of the judgment sum of $727,898.03 referred to in Order 1) from 26 July 2005 to date pursuant to Schedule 5 of the Uniform Civil Procedure Rules 2005 (NSW). (3) Time for respondents to appeal against orders made 20 December 2007 be extended such that any notice of appeal or application for leave to appeal is to be made on or before 6 June 2008. (4) No order as to costs. I certify that the preceding seventeen (17) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Jacobson. Associate: Dated: 16 May 2008 Counsel for the Applicant: J Svehla Solicitor for the Applicant: Parry Carroll Counsel for the Respondent: S Galitsky Solicitor for the Respondent: Haylen McKenzie Date of hearing: 1 and 16 May 2008 Date of Judgment: 16 May 2008