PRELEA v WESTPAC BANKING CORPORATION; WESTPAC BANKING CORPORATION v PRELEA SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL KIRBY P, SHELLER and Cripps JJA 29-30 June 1992, 3 July 1992 [1992] NSWCA 189 PRACTICE AND PROCEDURE — slip in judgment — slip corrected — all proceedings in relation to Contracts Review Act returned for trial in Commercial Division. PRACTICE AND PROCEDURE — Court of Appeal — appeal from interlocutory or final order granting leave to enter judgment — Held: Such an order is interlocutory — requires leave. Cox Bros (Aust) Ltd and Anor v Cox (1934) 50 CLR 314 applied. PRACTICE AND PROCEDURE ~— slip in orders — commercial proceedings — judge of Commercial Division (Cole J) strikes out defence of husband based on Contracts Review Act 1980 — orders defence of wife under that Act to be tried separately — overlooks like defence of husband — grants leave to enter judgment against husband — bank enters judgment against husband — acknowledges slip by judge — invites consensual correction — proper procedure for correction — held: Orders made setting judgment aside and remitting all defences and cross-claims based on Contracts Review Act to Commercial Division for trial. PRACTICE AND PROCEDURE — Court of Appeal — interlocutory or final order — leave to enter judgment — whether interlocutory or final — held: Such orders are interlocutory and require leave to appeal. Cox Bros (Australia) Pty Ltd and Anor v Cox (1934) 50 CLR 314; Coles vy Wood and Anor [1981] 1 NSWLR 736 (CA) applied — purported appeal as of right struck out. Contracts Review Act 1980 Supreme Court Act 1970, s101(2)(e). ORDERS The parties within seven days to bring in short minutes of orders to give effect to the reasons of the Court. Kirby P, Sheller and Cripps JJA Before the Court is an appeal and cross-appeal. Each concerns orders made by Cole J in the Commercial Division of the Supreme Court on 6 April 1992. To a large extent, it was common cause of the parties that a slip had occurred in his Honour's orders which it would be convenient for this Court to correct. However, because the notice of appeal as filed covers a wider range of matters than the cross-appeal and because the parties were in dispute as to the proper order for costs, it is necessary to explain the orders which this Court makes. ORDERS STRIKING OUT DEFENCES AND CROSS-CLAIMS By summons dated 4 September 1991, Westpac Banking Corporation Limited (the bank) sued Mr George Prelea and Mrs Paulette Prelea claiming against them $2,912,984.79, together with interest. The bank claimed that this debt was owing to it by reason of an indebtedness of Prelea Investments Pty Ltd, a company in which Mr and Mrs Prelea were interested and for the debts of which, it was alleged, they stood guarantors. The proceedings were assigned to the Commercial 2 UNREPORTED JUDGMENTS Division of the Supreme Court. In due course, Mr and Mrs Prelea filed a defence. This was further amended on 25 March 1992. By the defence, as so amended, various grounds of resistance to the bank's claim were stated. These defences were later supplemented by a further amended cross-claim by which Mr and Mrs Prelea and their company (as third cross-claimant) sued the bank and Australian Guarantee Corporation Limited (AGC) seeking orders pursuant to the Trade Practices Act 1974 (Cth) and the Contracts Review Act 1980. Ultimately, the bank and AGC applied to Cole J for peremptory relief to strike out the defences and cross-claims upon the basis that they disclosed no basis for a defence or cross-claim, as the case might be. Cole J struck out all but one paragraph of the statement of defence (concerning Mrs Prelea) and various paragraphs of the amended cross-claim. He gave the bank leave to sign judgment against Mr Prelea none of whose defences survived. He stood over for further hearing the defence relied upon by Mrs Prelea based on the Contracts Review Act and the cross-claim by the company against the bank and AGC. He ordered Mr and Mrs Prelea to pay the costs of the bank and of AGC arising out of their motion for summary relief. Within a few days of the publication of his Honour's reasons for making the above orders, and before formal judgment was entered, it became apparent to those advising the bank that a slip had occurred. Just as Mrs Prelea had relied upon a defence based on the Contracts Review Act (which was preserved for trial by his Honour's orders) so too had Mr Prelea. The slip on the part of the learned judge is readily understandable. Whereas the defence based on that Act and asserted by Mrs Prelea was expressed in clear terms, the defence for Mr Prelea was stated in shorthand and by reference to an incorrect paragraph of the defence in which the defence for Mrs Prelea was set out. Thus her defence is set out in para8. Instead of referring to para8, to incorporate a like defence on the part of Mr Prelea, the document refers to para6. The transcript of argument before Cole J indicates that there was no reference to the alleged applicability of the Contracts Review Act to Mr Prelea. Furthermore, Mr Prelea's affidavit did not, in clear terms, refer to that defence although upon one reading, and somewhat obscurely, it did so. In such circumstances, it is easy to understand how Cole J came to his conclusion that Mrs Prelea alone was relying on the Contracts Review Act and that Mr Prelea was not seeking to make out a defence on that basis. As the actual position in the pleadings was otherwise, the differentiation in his Honour's orders between the position of Mr and Mrs Prelea could not be sustained. If her defence based on that Act had to be excised to be separately tried, as it did, so did his defence so framed. Having come to this conclusion, the solicitor for the bank sensibly wrote to the solicitor for Mr and Mrs Prelea suggesting that the matter be relisted before Cole J "as a matter of urgency" to enable his Honour's judgment to be clarified in this respect. This letter was sent on 9 April 1992 before the judgment based upon the orders pronounced by Cole J had been taken out. There is absolutely no doubt that, at that time, Cole J would have been entitled to vary his orders, to excise the defence under the Contracts Review Act and to modify the other orders he had made, including the order granting leave to the bank to sign judgment against Mr Prelea for want of any defence. Cf Mutual Shipping Corporation of New York v Bayshore Shipping Co of Monravia [1985] 1 WLR 625, 633; [1985] All ER 520, 526 (CA). We entertain no doubt that, had the parties approached Cole J immediately after this suggestion was made on 9 April 1992, his Honour would UARELEA v WESTPAC BANKING CORPORATION; WESTPAC BANKING CORPORATION. v PRELEA (Kirby P, Sheller and Cripps JJA) have varied his orders in that way. This would have been the sensible course for the parties to have adopted. It should have been done by consent. It would have saved the proceedings in this Court, time and costs. However, on 24 April 1992 Mr Prelea lodged a purported notice of appeal against the orders of Cole J raising, amongst other things, the complaint that his Honour had erred in finding that no defence or cross-claim had been made by Mr Prelea (nor any relief sought by him) under the Contracts Review Act. On the very day that the notice of appeal was filed, and by facsimile, the solicitors for the bank wrote to the solicitors for Mr Prelea. They did so because of the receipt of a summons by Mrs Prelea and company, seeking leave on their part to appeal against the interlocutory orders of Cole J affecting them. At this stage, the bank was unaware that Mr Prelea had filed a purported notice of appeal of his own. The solicitors repeated the suggestion that the proceedings should be relisted before Cole J. They sought the concurrence of the solicitors for Mr Prelea: "... As a matter of urgency to enable his Honour's judgment to be clarified in relation to his Honour giving leave to our client to enter judgment against the first defendant... It is inappropriate for the first defendant to appeal his Honour's judgment without first giving his Honour an opportunity of clarifying his judgment. In our view, the filing of an appeal without having first given his Honour an opportunity of clarifying his judgment may be an abuse of process. Accordingly we seek your undertaking... that you will seek to have the matter relisted before his Honour Mr Justice Cole prior to filing a notice of appeal." The only response which the solicitors for the bank received to this proposal was service of the purported notice of appeal. Notwithstanding this, on | May 1992 they wrote again to their opponents: ... We are still of the opinion that the proceedings ought to be relisted before his Honour Mr Justice Cole to enable his Honour's judgment to be clarified in relation to his Honour giving leave to our client to enter judgment against the first defendant. May we suggest that the first defendant file a notice of motion in these proceedings seeking to have the judgment varied. Our client would not oppose such a motion if the basis upon which the judgment is sought to be varied is the apparent misreading by his Honour of para9 of the defence. If this is the basis for the first defendant's appeal, we repeat our contention that it is an abuse of process for your client to have filed the appeal." Having received no satisfactory response to this letter, on 8 May 1992 the bank entered judgment against Mr Prelea. The summons for leave to appeal by Mrs Prelea and the company was dismissed by this Court (differently constituted) on 11 June 1992. On 25 June 1992 the bank by motion, sought an order that the order made by Cole J permitting it to sign judgment against Mr Prelea be set aside; that the judgment entered by it on 8 May 1992 be set aside; and that the balance of the proceedings be referred to the Commercial Division of the Supreme Court for further directions. This motion came before the Court constituted by a single Judge of Appeal (Sheller JA) on 29 June 1992. His Honour referred the motion to the Court as presently constituted. There was then no representation before the Court for Mr Prelea. Placed before the Court was a letter from Mr Prelea's solicitor expressing "doubts about the Court's powers to deal with the application in the manner you have sought". In the light of this letter, the Court abridged the time within which the bank could file a notice of cross-appeal by which to seek the relief it had sought in the motion. It also directed that the solicitor on the record for Mr Prelea should be informed that the 4 UNREPORTED JUDGMENTS Court would expect him to attend upon the return of the cross-appeal which the Court ordered to be listed on the following day together with the appeal. CROSS-APPEAL AND DISPUTE AS TO COSTS When the proceedings were relisted on 30 June 1992, both the bank and Mr Prelea were represented. The Court was informed that the outstanding proceedings upon Mrs Prelea's defence under the Contracts Review Act had been set down for hearing in the Commercial Division of the Supreme Court on 9 September 1992. Because many of the issues would clearly be the same in Mr Prelea's defence based upon that Act, there are obvious advantages of convenience to suggest that Mr Prelea's outstanding defence based upon the Act should be litigated at the same time as his wife's. In the way stand the orders of Cole J, now given force by the judgment entered by the bank on 8 May 1992. The solicitor for Mr Prelea indicated that his client neither consented to orders to correct the judgment nor opposed that course if it seemed proper to the Court. He hinted darkly at a want of jurisdiction in the Court to make the orders of correction. However, he could not indicate the basis of his doubts. Any doubts which existed concerning the power of the Court to provide the relief sought by the bank pursuant to its motion are removed by the filing of the cross-appeal which is now before the Court. The Court has clear jurisdiction to correct the slip which occurred in the orders of Cole J and in the judgment which followed. It is appropriate that it should do so, no party seeking to argue to the contrary. It is just that it should do so immediately so that the reopened issue of Mr Prelea's defence under the Contracts Review Act might be tried at the same time as Mrs Prelea's defence under that Act. Two problems only arise. In respect of each of them it is appropriate to mention one further development in this sorry saga. On 9 June 1992 the solicitors for Mr Prelea caused to be filed in the Court of Appeal registry a further notice of appeal. In every respect this notice was in the same terms as the purported notice of appeal filed on 24 April 1992. However, by its time of filing, the judgment of 8 May 1992 had been entered against Mr Prelea by the bank. It was thus an appeal against a final judgment and not against the orders of Cole J given earlier which had simply given leave to the bank to enter judgment against Mr Prelea in accordance with the rules of court. The significance of this distinction is as follows. The bank sought an order that Mr Prelea pay the costs of his appeal from Cole J and of the cross-appeal, on a solicitor and client basis. It supported its application for this unusual order upon two bases. The first was that, in the face of repeated offers, made prior to the entry of judgment that the parties should approach Cole J, in effect, to correct his orders instead of proceeding to appeal, Mr Prelea had unreasonably insisted upon an appeal. He had thereby unnecessarily incurred costs which could quite readily have been avoided by the procedure which the bank had repeatedly suggested to him. Secondly, the bank asserted that the purported appeal of Mr Prelea, as filed on 24 April 1992, was in any case misconceived. At that stage there was no final judgment properly so called. There was simply an order giving leave to enter final judgment pursuant to the rules of the Supreme Court. Long-standing authority of the High Court of Australia determines, in respect of a similar order granting leave under the rules of the Supreme Court of Victoria, that such an order is interlocutory and not final for the purposes of 8 35 of the Judiciary Act 1903 (Cth) as it formerly appeared. See Cox Brothers (Australia) Ltd and Anor v Cox (1934) 50 CLR 314. In a brief statement in that case, the Full High Court (Gavan Duffy CJ, Starke. Dixon. Evatt and McTiernan JJ) ruled on UARELEA v WESTPAC BANKING CORPORATION; WESTPAC BANKING CORPORATIONS: v PRELEA (Kirby P, Sheller and Cripps JJA) the classification of such orders. There appears to be no valid point of distinction between the then rules of the Supreme Court of Victoria and those of the Supreme Court of this State. Nor is there any relevant distinction in the purposes of s35 of the Judiciary Act 1903 (Cth) as it then stood and s101(2)(e) of the Supreme Court Act 1970. It was not suggested that any of the later decisions of the High Court of Australia which have discussed the "interlocutory" and "final" distinction throw any doubt upon the Cox Bros decision. Its continuing authority would appear to have been accepted by the Full Court of the Federal Court of Australia. See Deputy Commissioner of Patents v Board of Control of Michigan Technological University (1980) 43 FLR 9, 22. Its principle would also appear to have been accepted by this Court. See Coles v Wood and Anor [1981] 1 NSWLR 723, 726. Accordingly, prior to the entry of judgment against him, the "appeal" purportedly filed by Mr Prelea against the orders of Cole J was irregular. No appeal then lay as of right. Mr Prelea, like his wife and their company, required leave to appeal. He, like them, should have proceeded by summons. In such circumstance the purported appeal would ordinarily be struck out or dismissed as incompetent. However, there remains the second notice of appeal. It was filed after judgment was entered pursuant to the leave granted by Cole J. It suffers from no such defect as affected the first notice of appeal. But two irregularities of a different kind affected it. It was filed just shortly after the 28 days from the entry of judgment expired. And it was never served on the bank. Indeed, counsel for the bank first learned of it during the course of argument in this Court. Nonetheless, no objection was taken upon the ground of the default of time or of the want of service. Ordinarily, the Court would cure each of these irregularities. No prejudice was suffered by the bank. The form of the second notice of appeal was precisely the same as the first. CONCLUSION: THE SLIP SHOULD BE CORRECTED The foregoing has been set out at more length than is perhaps deserved in order to come to the real issue which remains between the parties. This was the proper order as to costs. The bank sought the special order previously stated. For Mr Prelea it was urged that the Court should simply order that the costs, having been occasioned by the mistake of Cole J, should be costs in the proceedings to abide its ultimate outcome. There is some merit in the bank's contention that Mr Prelea should have taken the course which was suggested for the bank but three days after his Honour's orders were pronounced and immediately the slip discovered. On the other hand, the position is complicated by two developments already mentioned. The first is the action of the bank itself in proceeding to enter judgment against Mr Prelea notwithstanding its knowledge of the slip which had occurred and its repeated contention that Mr Prelea could and should resort to Cole J to correct that slip. Once the bank entered judgment such correction would have been more difficult to attain in the Division, even if it were then still possible. The entry of judgment, in effect, necessitated the appellate proceedings which are now before this Court. Secondly, both the original purported notice of appeal and the second notice of appeal raise complaints on the part of Mr Prelea against Cole J's orders which concern issues other than the defence which Mr Prelea raises under the Contracts Review Act. Generally these may be described as Mr Prelea's defences of estoppel and cross-claim based upon the Trade Practices Act each of which Cole J struck out. The Court conjured with the possibility of accepting the bank's 6 UNREPORTED JUDGMENTS undertaking that it would not, if the defence by Mr Prelea under the Contracts Review Act were dismissed, subsequently raise any contention of res judicata or issue estoppel in a later appeal should that prove necessary. However, to avoid this complication it seems more appropriate that the Court should simply excise from the orders of Cole J so many of them as were related to the defence or cross-claim which Mr Prelea seeks to litigate based upon the Contracts Review Act. These may then be tried in the Commercial Division with the like issues concerning Mrs Prelea. The remaining orders of Cole J concerning the defence of estoppel and the claim under the Trade Practices Act may remain the subject of the second appeal, which was undoubtedly valid when filed. If, in due course, there is any dissatisfaction with the determination of the proceedings relating to the Contracts Review Act, any further appeal arising from such determination can be consolidated with the appeal of Mr Prelea, which will remain on foot in respect of the matters not returned to the Commercial Division. This course has the advantage of consistency with the orders of the Court on 11 June 1992 dismissing the summons for leave to appeal by Mrs Prelea and the company. It has the convenience of returning all of the issues which the parties wish to litigate arising out of the Contracts Review Act to be tried in the Commercial Division and at the one time. It leaves the remaining complaints against the interlocutory orders of Cole J to be determined, if need to be, when the trial of the issues raised by the defences under the Contracts Review Act has been completed. As to costs, it is not appropriate to make the special orders sought by the bank. This is because the bank effectively terminated the possibility of the course being adopted, which it had at first urged, by entering judgment against Mr Prelea. Furthermore, the appeal before the Court on Mr Prelea's part raises issues which go beyond the slip which the bank was willing to correct. The Court has not passed on the merits of those additional issues. For all we know they may have merit and may justify the appeal which Mr Prelea lodged. The normal order for costs should therefore be made. It might conveniently be made by allowing the cross-appeal so far as it relates to the setting aside of the judgment against Mr Prelea so that he might be allowed to defend the bank's claim upon the basis of the defence filed under the Contracts Review Act. That cross-appeal was necessitated by the stance taken by Mr Prelea, as described above. Orders The parties should within seven days of the publication of these reasons bring in short minutes of orders to reflect the reasons of the Court. These orders should provide for the following: 1. Cross-appeal allowed; 2. Set aside the judgment entered on 8 May 1992 against the cross-respondent, George Prelea, pursuant to the orders pronounced on 6 April 1992 by the Honourable Mr Justice Cole; 3. In lieu thereof, order that so many of the orders of Mr Justice Cole as struck out those paragraphs of the Amended Defence and Second Further Amended Cross-Claim of the said George Prelea concerning the Contracts Review Act be set aside; 4. Order that the issues raised by the Amended Defence and the Second Further Amended Cross-Claim, as referred to in 3, be returned to the Commercial Division of the Supreme Court to be tried as that Division provides; JOBNAME: No Job Name PAGE: 7 SESS: 1 OUTPUT: Thu Oct 25 13:42:56 2007 /reports/caseml]/case/urj/9202970 UWRRELEA v WESTPAC BANKING CORPORATION; WESTPAC BANKING CORPORATION v PRELEA (Kirby P, Sheller and Cripps JJA) 5. Order an extension of time for the filing and service upon the Westpac Banking Corporation of the second notice of appeal filed by the said George Prelea on 9 June 1992, such second notice of appeal to be deemed to have been filed and served within time; . Strike out the original purported notice of appeal filed by the said George Prelea as incompetent. No order as to costs; . Stand over to be heard on a date fixed by the Registrar the hearing of the issues remaining in the said second notice of appeal of George Prelea; such appeal to be heard on a date to be fixed by the Registrar after the trial of the remaining issues between the parties in the Commercial Division; and . Order the cross-respondent to pay the cross-appellant's costs of the cross-appeal but to have in respect thereof, if otherwise so qualified, a certificate under the Suitors' Fund Act 1951. 15 The Court will, if the parties can reach no agreement on the terms of para3 above, hear the parties to speak to the orders which should be made. However, it is the intention of the Court that its orders should be made without delay so that the aim can be achieved that the issues concerning the Contracts Review Act, and all of them, will be heard on and after 9 September 1992, as the Commercial 20 Division has provided in respect of the defence brought by Mrs Prelea under that Act. Counsel for the appellant: H Freedman (Solicitor) Solicitors for the appellant: Milne, Berry and Berger Counsel for the respondent: AW Street Solicitors for the respondent: Minter Ellison