New South Wales Court of Appeal CITATION: Spina v Permanent Custodians Limited (No 2) [2009] NSWCA 419 HEARING DATE(S): On the papers. JUDGMENT DATE: 17 December 2009 JUDGMENT OF: Tobias JA at [1]; Campbell JA at [2]; Young JA at [3] DECISION: Orders reformulated. LEGISLATION CITED: Civil Procedure Act 2005, ss 14, 56 Uniform Civil Procedure Rules 2005, Part 36.16.3C CATEGORY: Consequential orders Hancock v Arnold (No 2) [2009] NSWCA 19 CASES CITED: Newmont Yandal Operations Pty Ltd v The J Aron Corporation and The Goldman Sachs Group Inc (2007) 70 NSWLR 411 Roads and Traffic Authority of NSW v Refrigerated Roadways Pty Ltd (No 2) [2009] NSWCA 336 PARTIES: Joe Spina (Appellant) Permanent Custodians Limited (Respondent) FILE NUMBER(S): CA 40313/08 COUNSEL: A Leopold SC and J Clifton (Appellant) S A Gregory (Respondent) SOLICITORS: Grogan & Webb (Appellant) Hicksons Lawyers (Respondent) LOWER COURT JURISDICTION: Supreme Court - Equity Division LOWER COURT FILE NUMBER(S): SC 2393/06 LOWER COURT JUDICIAL OFFICER: Hammerschlag J LOWER COURT DATE OF DECISION: 30 June 2008 LOWER COURT MEDIUM NEUTRAL CITATION: Angelina Spina v Permanent Custodians Ltd [2008] NSWSC 561 IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40313 of 2008 TOBIAS JA CAMPBELL JA YOUNG JA Thursday 17 December 2009 SPINA v PERMANENT CUSTODIANS LIMITED (NO 2) Judgment 1 TOBIAS JA: I agree with Young JA. 2 CAMPBELL JA: agree with Young JA. 3 YOUNG JA: The Court gave judgment in this appeal on 22 July 2009. 4 The Court allowed the appeal from the Equity Division and made orders in substitution for those made below. Included in those orders was Order 2B(i) which varied a mortgage so that the appellant was, inter alia, prevented from making a claim under it for "costs and expenses [that] were incurred in the course of these proceedings (or in the course of the appeal), except in relation to the costs referred to in Order D made below in the appeal proceedings". 5 The Court also made Order 2 I: "On the cross-claim, no order as to costs below except for the costs of preparing and filing the pleadings and affidavit evidence." 6 Liberty was given to apply to reformulate these orders if application was made within 14 days. 7 The 14 days expired on 5 August 2009. 8 However, it would seem on 4 August 2009 consent orders were made by the Registrar and duly entered that the time for applying to reformulate be extended to 18 August 2009. 9 There is great doubt as to whether such an order, even by consent, should have been entertained in view of Part 36.16.3C of the Uniform Civil Procedure Rules 2005 which provides that the court is not to extend time to vary orders. Subject to the possibility (not realised in the facts of the present case) of application being made under s 14 Civil Procedure Act to dispense with a requirement of the rules (cf Hancock v Arnold (No 2) [2009] NSWCA 19 at [9]-[12]; Roads and Traffic Authority of NSW v Refrigerated Roadways Pty Ltd (No 2) [2009] NSWCA 336 at [5]-[10]), the notice of motion must be filed within the 14 days with no extensions. 10 The order may well have been made because para [152] of the reasons for judgment note that application may be made up to 18 August 2009, though this was not reflected in the final order. 11 However, the order, having been made, even if it was per incuriam, stands unless set aside. 12 Unfortunately, it gets worse. There were problems with unavailability of counsel and the solicitors agreed on a further extension of 14 days, ie to 1 September 2009. They lodged a form of consent order, but this time it was referred to a judge and no order was actually made. The solicitors, however, assumed that the consent order had been made. 13 On 2 September 2009, even after the assumed extension had expired, the appellant filed a notice of motion to vary orders 2B(i), 2H and 2 I. 14 On the papers being referred to me, I saw the procedural problems apparent or inherent in what I have said above. I called counsel into chambers to see if there was a "legal" way forward. 15 On 22 September 2009, Mr J Clifton for the appellant and Mr S A Gregory for the respondent called on me. It was apparent that they did not realise the procedural problems as is apparent from subsequent written submissions. However, they both agreed that the matter of the adjustments in the orders could be dealt with under the "slip rule" (Part 36.17 UCPR). Directions were made for the matter to proceed on written submissions. I did not require any further notice of motion. 16 The submissions were received in early October. However, on one view of them, they travel further than the slip rule to matters of interpretation. The appellant's submissions also seem to retreat a little from the proposed course of resolving the problems caused by the form of order 2 I. 17 It seems to me that, as both parties are content to resolve a problem with respect to the orders by motion in the proceedings then even if the problem might arguably lie outside the ambit of the slip rule, the court may invoke its inherent powers to put an end to the dispute and fulfil the philosophy of the Civil Procedure Act 2005, s 56 et seq: see Newmont Yandal Operations Pty Ltd v The J Aron Corporation and The Goldman Sachs Group Inc (2007) 70 NSWLR 411. 18 As to order 2B, both parties agree that the reference to "Order D" is a clear error and the reference to "Order D" should be corrected to refer to "Order 3". 19 The respondent seeks to add to Order 2B(i) so that it will conclude "except in relation to the costs referred to in Order 2 I or Order 3 made below in the appeal proceedings." 20 The respondent also wishes to have order 2 I clarified so that it reads: "On the cross claim, no order for costs below except that the plaintiff pay the defendant's costs of preparing and filing the pleadings and affidavit evidence."' 21 The appellant's suggested reformulation is that the "cross claimant is to have no costs of the cross claim, but the cross defendant is to have 85% of her costs of preparing and filing her pleadings and affidavit evidence on the cross claim." 22 The heart of the problem is order 2 I. Both parties say it is ambiguous in that it does not specify whose costs it covers. 23 The appellant puts that Order 2H shows that the appellant is to receive 85% of her costs below of the claim and order 2 I is then complementary in saying that she is not to get any costs of the cross claim save for preparation of pleadings and affidavits. 24 The appellant puts that the word "claims" in order 2H means the claim made in the statement of claim and the defence to the amended cross claim. 25 The respondent says that the Court intended by Order 2 I that the cross defendant (Spina) pay the cross claimant's (Permanent's) costs of the cross claim (limited to the costs of preparing and filing the pleadings and affidavit evidence). 26 The respondent says that this is consistent with the principle that costs follow the event. Furthermore, one can see that the genesis of the order was the draft order submitted by the appellant, see judgment at [150]. This was that there be no order for costs on the cross claim. This was amended to allow for costs of preparation of the pleadings and affidavits. 27 It should be remembered that the cross claim below was for debt and for possession of the mortgaged property. 28 The result of the appeal was that the respondent was entitled to keep some part of its money judgment on the cross claim, it was not entitled to the full amount claimed. 29 It was, thus, necessary for the respondent to file and provide evidence of the debt it alleged was owing and which was charged on the subject property by the mortgage. 30 The time taken on the cross claim was minimal. It was abundantly clear that unless some order was made in favour of the plaintiff on the claim, the cross claim would automatically succeed. 31 In my view, the respondent's arguments are correct. First, against the appellant's submission, it is artificial to speak of a defence to a cross claim in terms of a "claim". Secondly, the respondent's submissions are logical. 32 Accordingly, the orders should be amended in accordance with the respondent's submissions, that is as per paragraph 22(1) of the affidavit of CH Neufeld sworn herein on 16 September 2009. 33 Both parties seek costs of the motion and allied matters post 22 July 2009. Normally, these would be part of the costs of the appeal. However, the respondent, the unsuccessful party to the appeal, was successful in the post judgment matters. 34 This leads me to the view that there should be no costs after 22 July 2009. This view is reinforced by the procedural irregularities and misunderstandings of both sides from which only a merciful court provided rescue. *************************************** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. 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