New South Wales Supreme Court CITATION : Bennett v Goodwin [2006] NSWSC 347 HEARING DATE(S) : 27 April 2006 JUDGMENT DATE : 27 April 2006 JURISDICTION : Equity JUDGMENT OF : Campbell J EX TEMPORE JUDGMENT DATE : 04/27/2006 DECISION : Declaration of existence of security interest made. Amendment of order refused. CATCHWORDS : PROCEDURE - Supreme Court procedure - miscellaneous procedural matters - whether appropriate to make declaration of existence of a security interest, when no consequential orders claimed - PROCEDURE - Supreme Court procedure - miscellaneous procedural matters - application of slip rule to amend an order made in consequence of legal advisor's failure to put a relevant argument - circumstances when appropriate to use slip rule to correct legal advisor's omission LEGISLATION CITED : Supreme Court Act 1970 Uniform Civil Procedure Rules 2005 Bennett v Goodwin [2005] NSWSC 513 Bennett v Goodwin [2005] NSWSC 930 CASES CITED : Bennett v Goodwin [2005] NSWSC 1256 Bennett v Goodwin [2005] (unreported, Campbell J, 27 September 2005) L Shaddock & Associates Pty Ltd and Anor v The Council of the City of Parramatta (No 2) (1983) 151 CLR 590 PARTIES : Gail Margaret Bennett - Plaintiff Clark Philip Ross Goodwin - First Defendant FILE NUMBER(S) : SC 5085/04 COUNSEL : M Bechelli, solicitor - Plaintiff N Obrart - First Defendant SOLICITORS : Kingston Swift - Plaintiff Jackson Smith - First Defendant IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION EQUITY LIST CAMPBELL J THURSDAY 27 APRIL 2006 5085/04 GAIL MARGARET BENNETT v CLARK PHILIP ROSS GOODWIN & ANOR JUDGMENT – Ex Tempore 1 HIS HONOUR: I have given numerous judgments in this matter. The principal questions in dispute between the parties were decided by a judgment delivered on 2 June 2005: Bennett v Goodwin [2005] NSWSC 513. That judgment decided that money was owing to the plaintiff by the defendant, and quantified it, apart from one element of the claim. That arose from a loan agreement the relevant terms of which were set out at paragraphs [32] to [36] of the judgment. 2 It is quite clear that at all times the agreement contained a provision where the defendant's interest in a property known as 'Summer Leaves' would be security for the debt which was owed. 3 The property in question is one of which the defendant and his mother were co-proprietors. As well, it was mortgaged. The defendant's mother was not a party to the proceedings. The complication which that raised for the conduct of the proceedings was well to the fore during the entirety of the running of the case. While the plaintiff's application had sought an order for the sale of the property, to enforce the equitable charge which arose on the agreement to make the property security for the debt, any such equitable charge could be enforced only by a court order for sale. 4 In the final paragraph of the judgment of 2 June 2005 I recorded that: "As quantum cannot be established until the hearing on 19 July 2005 has taken place and interest calculations have been carried out, and as it will be necessary to give the defendant's mother and the mortgagees an opportunity to be heard before a decision is made about whether an order for sale is actually made, it is not appropriate to make any orders at this stage." 5 There was a further hearing, on the aspect of quantum which had been left outstanding, which resulted in another judgment on 8 September 2005: Bennett v Goodwin [2005] NSWSC 930. 6 Following that judgment, there was a further hearing on 27 September 2005, which resulted in a judgment of that date, which is unreported, on the question of costs. The application for costs that the plaintiff made at that time was dependent upon some Calderbank offers which had been made. The order which was made was one which required the defendant to pay the costs of the plaintiff to and including 27 April 2005 - a date which was fourteen days after the making of one of the Calderbank offers - and required the defendant to pay the costs of the plaintiff on an indemnity basis from and including 28 April 2005. 7 After lengthy discussions between the parties, orders were eventually made. 8 It seemed, towards the end of 2005, as though it may be necessary for the question of whether an order for sale should be made to be decided by the court, after appropriate notice to the defendant's mother. A Notice of Motion was filed by the plaintiff on 15 November 2005 which sought to join the defendant's mother. While an order for her joinder was made on 22 November 2005, by that time it had become apparent that the property was in any event going to be sold, by a mortgagee exercising its power of sale. 9 In a judgment given on 6 December 2005, concerning the costs of the motion seeking her joinder (Bennett v Goodwin [2005] NSWSC 1256) I recorded, in paragraph [2] that as a result of the earlier proceedings the question of whether an order for sale of the property should be made was not disposed of. 10 Now, the plaintiff seeks the making of a declaration that the debt, interest on it, and costs which are part of the judgment debt, are secured by an equitable mortgage over the defendant's interest in the land in question. It has never really been in dispute that, if the plaintiff is owed a debt, that debt and interest and costs is secured. 11 Ordinarily, the obligation of the court to decide all matters in dispute between parties would require there to be more than a mere declaration that a security interest existed. Ordinarily, if the circumstances were such that the time for enforcement of that security interest in some fashion had arisen, the Court would make all orders which were necessary to enable that enforcement to take place. In that way, the obligation of the court under section 63 Supreme Court Act 1970 to dispose of all questions between the parties would be satisfied. 12 Today, however, it emerges that there is an additional complication. There are numerous other claims, which are of various different legal types, to the surplus proceeds of sale. I am told that there are some eight other entities which seek to receive the surplus proceeds of sale after the mortgagee has been paid out. There have been attempts to resolve the respective priorities of those parties, but those attempts have not succeeded. Thus, at present, it seems as though there will need to be litigation to decide their respective priorities. 13 In the circumstances, where other parties will need to become involved, and where it will not be necessary for the defendant to be involved in any future litigation which there might be about priorities, it seems to me that it is now appropriate to make the declaration which is sought. I shall do so. 14 Another application made today is under rule 36.17 Uniform Civil Procedure Rules 2005, the slip rule. It provides: "If there is a clerical mistake, or an error arising from an accidental slip or omission, in a judgment or order, or in a certificate, the court, on the application of any party or of its own motion, may, at any time, correct the mistake or error." 15 That rule, while commonly encountered in a context where a clerical mistake in the entering of an order has been made and needs to be corrected, is not confined to that situation. In L Shaddock & Associates Pty Ltd and Anor v The Council of the City of Parramatta (No 2) (1983) 151 CLR 590, the High Court (Mason ACJ, Wilson and Deane JJ) held that the slip rule can extend to authorise the correction of an omission resulting from an inadvertence of a party's legal representative (at 594-5). 16 The correction which is sought under the slip rule is to correct the order for costs which was made on 27 September 2005, to take advantage of a provision in the loan agreement which requires the defendant to indemnify the plaintiff against, inter alia, all costs involved in enforcement of the security granted by the loan agreement. 17 If that clause had been relied upon in the argument on 27 September 2005, it is hard to see that there would have been any sensible answer to a claim for the plaintiff to be paid all costs of enforcement on an indemnity basis, not merely costs incurred on or after 28 April 2005. However, that course was not taken. The solicitor for the plaintiff says that this was a result of his own inadvertence, in not drawing the clause to the attention of counsel who argued the case. 18 In Shaddock, the High Court said, at 597 that: "... an order under the slip rule is not available as a matter of course. There is a discretion in the court to refuse an order if something has intervened which would render it inexpedient or inequitable that it be made... The general principle in support of finality in litigation together with the fact that a party against whom a judgment in a money sum is entered is entitled to regard that judgment as finally determining the extent of his liability combine to stress the importance of prompt action under the slip rule. The seriousness of the delay in this case is, however, minimized by the fact that the applicants promptly made known to the Council their claim for interest and the delay in making the application to the court is, to no small extent, explained by the content of the correspondence between the parties during the months prior to the filing of the application." (citation omitted) 19 In that case, the High Court had given a decision on 28 October 1981, judgment pursuant to it was entered at the end of November 1981, and a motion to amend the order, to claim interest in the period after the judgment in the court below had been given and the date of the High Court's order, was claimed only by a motion dated 22 July 1982 (according to 151 CLR 597), said by the reporter to be filed on 17 September 1982 (according to 151 CLR 591). Thus, the overall delay in that case was of the order of nine (or eleven) months. 20 In the present case, there has also been a delay of many months in seeking to alter the costs order made on 27 September 2005. However, it has not been covered by any informal notification of an intention to claim indemnity costs under the clause, or by any correspondence between the legal representatives which relates to that particular topic, so far as the evidence goes, though there has been correspondence on numerous other topics. 21 There are, as I have mentioned, numerous other claimants, to the funds, some of which have lodged caveats over the property. I am told that an application for a sequestration order pursuant to a creditor's petition will be made on Tuesday of next week against the defendant. 22 In my view, the present is not a suitable case for using the slip rule to amend the order for costs. That order was made many months ago, and following considered argument, and other potential claimants who might be affected by any such exercise of the slip rule have emerged since the order was originally made. I decline to make that order. 23 In the result, I declare that the amount of the judgment obtained in these proceedings together with interest on the judgment and the amount of the plaintiff's costs of the proceedings assessed in accordance with the order made 27 September 2005 are secured by way of an equitable mortgage over the interest of the defendant in the land contained in Folio Identifiers 1/366722, 2/206527, and 3/206527. 24 That declaration may be entered forthwith. 25 Each party on the application today has had a measure of success, and a measure of failure. There will be no order as to the costs of the Notice of Motion. 26 While the declaration made decides, in a fashion binding between the plaintiff and the defendant, the existence of the equitable mortgage, it decides nothing about the priority which the plaintiff's rights under that equitable mortgage have as against any other claimant to the surplus proceeds of sale. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.