Perpetual Trustees Victoria Limited v Richard Kingsley Sheehan and Anor [2003] NSWSC 651

New South Wales Supreme Court

CITATION : Perpetual Trustees Victoria Limited v Richard Kingsley Sheehan and Anor [2003] NSWSC 651 HEARING DATE(S) : 07/07/03; 10/07/03; 11/07/03 JUDGMENT DATE : 23 July 2003

JUDGMENT OF : Shaw J DECISION : (1) Defendants to file points of claim on or by 28 July 2003; (2) Plaintiff to file and serve a defence to that claim on or by 4 August 2003; (3) The matter to be put into the call up list before the list judge on 8 August 2003; (4) Costs of the proceedings on the motion should be reserved.

CATCHWORDS : Practice and Procedure - application to set aside consent orders - judgment not entered - fraud - capacity - whether should be by way of separate proceedings - LEGISLATION CITED : Supreme Court Rules 1970 Part 40 r 9(1) CASES CITED : Smith v New South Wales Bar Association (1992) 176 CLR 256; Spies v Commonwealth Bank of Australia (1991) 24 NSWLR 691; Perpetual Trustees Victoria Ltd - Plaintiff PARTIES : Richard Kingsley Sheehan - First defendant Maureen Patricia Sheehan - Second defendant FILE NUMBER(S) : SC 13593/01 P Dowdy - Plaintiff COUNSEL : In Person - First defendant M Duncan - amicus curiae SOLICITORS : Heidtman & Co - Plaintiff In Person - Defendants

IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION

Shaw J

23 July 2003

13593 of 2001 Perpetual Trustees Victoria Limited (Plaintiff)

v

Richard Kingsley Shehan (First defendant);

Maureen Patricia Sheehan (Second defendant)

JUDGMENT 1 Shaw J: In this matter, by consent, judgment was issued by Simpson J for the plaintiff against the first and second defendants for the possession of property at Baulkham Hills in New South Wales. Leave was issued to grant a writ of possession forthwith. 2 The agreed terms of settlement, incorporating the orders, were signed personally by the first and second defendants and also by the solicitor for the plaintiff. They were dated 11 June 2003. The Court made the orders, but they have not been formally entered. 3 The application before the Court, by way of notice of motion filed on 7 July 2003 by the defendants, seeks to set aside those orders and the terms of settlement. Certain ancillary orders are also sought including the reinstatement of the claim of the plaintiff and the defences, the delay of a trial for a period to allow for surgical procedures to be undertaken in relation to the first defendant, the joining of a cross claim by the second defendant and other matters that do not need to be set out in this judgment. 4 The plaintiff has undertaken, as I understand it, not to proceed to enter judgment until proceedings concerned with the setting aside of the orders and settlement have been finally disposed of in this Court. Counsel for the plaintiff has pointed out: (a) It is a matter for the defendants as to whether they proceed with the sale of the residence by auction on or before 31 July 2003 as was contemplated by the terms of settlement. However, the plaintiff reserved its rights as to the consequences of non compliance with the orders; (b) It is accepted that par [4] of the orders is erroneous in that a reference to s 94 of the Supreme Court Act 1970 should be to s 95 of that Act and that this should be amended pursuant to the slip rule; (c) It is also acknowledged that any surplus arising out of the sale of the property would accrue to the defendants as the registered proprietors though this is not expressly set out in the terms of settlement. 5 The grounds upon which the judgment is impeached are, broadly, discernable from the affidavits filed by the defendants. It is said by the first defendant that he was a the material times a disability pensioner and wheelchair bound with serious ill health that requires a substantial intake of morphine and other drugs to deal with muscle cramps. The affidavit also deposes to other serious medical conditions involving pain, inability to sleep, headaches and cramps. Accordingly, it is said that at the time of the signed settlement the first defendant was operating 'as if in a fog'. It is alleged that there was enormous pain and in entering the settlement he was not fully informed of the arrangement nor acting rationally, particularly in the light of the high level of medication he was taking. 6 He says, and at the present time this evidence is untested, that he believes that: at the time I could have been presented with anything and provided I was told it was necessary to complete the matter I would have signed it. 7 In relation to the second defendant, Mrs Sheehan, it is said that she was unrepresented and therefore lacked legal advice. Broadly, these are the grounds upon which it is said that the judgment should be set aside. 8 Mr Duncan, of counsel, appeared as amicus curiae to put matters to the Court on behalf of the second defendant and the Court has been assisted by his submissions. The agreement between the parties was said to be faulty on a number of bases, both technical and in substance. 9 Mr Duncan accepted that the notice of motion as currently framed was misconceived but put submissions to the effect that the proceedings should not be dismissed altogether, especially in light of the fact that it was conceded by the plaintiff that fresh proceedings could be commenced. This seems to be practical and in accordance with the efficient disposition of matters in this Court. 10 It is clear and common ground that the orders made by Simpson J have not been entered, and as was said by the High Court in Smith v New South Wales Bar Association (1992) 176 CLR 256 at 265: It has long been the common law that a court may review, correct, or alter its judgment at any time until its order has been perfected. 11 The High Court also made reference to the Rules of this Court. 12 There is undoubted power in this Court to set aside the judgment and orders which have not been entered. Part 40 r 9(1) of the Supreme Court Rules 1970 provides that: The Court may set aside or vary a judgment where notice of motion for the setting aside or variation is filed before entry of the judgment. 13 The High Court indicated that this power was discretionary and was to be exercised having regard to the public interest in the finality of litigation. The judgment continues to the effect that if reasons for judgment have been given, the power is only to be exercised where there is some matter calling for review. In the present case, there are no reasons, because the matter was dealt with by consent. 14 However, in reliance on the authority of Spies v Commonwealth Bank of Australia (1991) 24 NSWLR 691, the plaintiff submits that the setting aside of the judgment, although within the power of the Court, should not be entertained on this notice of motion, but rather the notice of motion should be dismissed with the defendants being granted leave to file further substantive proceedings. In my view there are two significant points of distinction between Spies and the present case. First, Spies was a case which occurred after judgment had been formally entered and so Pt 40 r 9 of the Rules was inapplicable. Secondly, the ratio of Spies was essentially concerned with an allegation of fraud. That was the basis upon which the judgment in that case was sought to be set aside. It was held that jurisdiction to set aside a consent order obtained by fraud should be invoked by a new action brought for that purpose and not by notice of motion in the original proceedings. It was also held that where an action is brought to set aside a consent order on the ground of fraud that the plaintiff was required to allege facts which established that he has reasonable prospects of success. 15 In the present case, as I perceive it, the serious allegation of fraud is not alleged. Rather, as I have indicated, it is a question of ill health, incapacity or lack of appropriate legal advice that are asserted as grounds which would justify the setting aside of the judgment of Simpson J. Hence, I think that Spies is distinguishable, and that no procedural injustice would be incurred by this Court hearing and determining the notice of motion in the original proceedings. 16 However, the plaintiff rightly asserts that the grounds upon which the judgment is impeached should be particularised and they should have the opportunity to deal with those grounds by way of evidence and submission. 17 The only submission the defendants made with respect to proposed orders handed up by the plaintiff (as its alternative submission) was in relation to a date for further directions. In all of the circumstances I think that the defendants are adequately protected and that the date suggested is appropriate in order to give the plaintiff sufficient time to consider and prepare any answer it needs to make to the specific grounds and reasons (or material facts) upon which the application to set aside the judgment is made. 18 Accordingly, I think the alternative approach of the plaintiff is appropriate in the circumstances and the Court orders: 1) The defendant should file points of claim on or by 28 July 2003 setting forth the material facts upon which they ground their application to set aside the judgment of Simpson J on 10 June 2003; 2) The plaintiff should file and serve a defence to the points of claim on or before 4 August 2003; 3) The matter should be stood over for further directions before the list judge on the next call up list of 8 august 2003; 4) Costs of the proceedings on the notice of motion should be reserved. *****