Supreme Court New South Wales Medium Neutral Citation: Szanto v Bainton & Ors [2012] NSWSC 60 Hearing dates: Monday, 30 January 2012 Decision date: 30 January 2012 Jurisdiction: Equity Division Before: White J Decision: Refer to paras [51], and [61]-[63] Catchwords: PRACTICE AND PROCEDURE - application to set aside orders for security for costs and to strike out statement of claim with only limited leave to replead - rule 36.15 of the Uniform Civil Procedure Rules - submitted that judgment was given irregularly, illegally or against good faith - plaintiff alleged procedural unfairness, bias or reasonable apprehension of bias, and errors in judgment - held judgment could only be set aside on appeal - substance of complaints considered Legislation Cited: Duties Act 1997 Landlord and Tenant Act 1899 Landlord and Tenant (Amendment) Act 1948 Conveyancing Act 1919 Cases Cited: Szanto v Bainton [2011] NSWSC 985 Perpetual Trustees Australia Limited v Heperu Pty Ltd (No. 2) [2009] NSWCA 387; (2009) 78 NSWLR 190 Autodesk Inc v Dyason (No. 2) [1993] HCA 6; (1993) 176 CLR 300 Szanto v Bainton [2011] NSWSC 278 Category: Interlocutory applications Parties: Peter Szanto (Plaintiff) Mark Jason Bainton (1st Defendant) Claire Louise Bainton (2nd Defendant) Troy Douglas (3rd Defendant) Nicholas Schmidt (4th Defendant) Representation: Plaintiff in person J Emmett (Defendants) Chapman & Chapman (Defendants) File Number(s): 2010/414171 Judgment 1HIS HONOUR : This is an application under Pt 36, r 36.15 of the Uniform Civil Procedure Rules to set aside orders made by Ward J on 25 August 2011 ( Szanto v Bainton [2011] NSWSC 985). 2Rule 36.15 provides: " 36.15 General power to set aside judgment or order (cf DCR Part 13, rule 1, Part 31, rule 12A; LCR Part 11, rule 1, Part 26, rule 3) (1) A judgment or order of the court in any proceedings may, on sufficient cause being shown, be set aside by order of the court if the judgment was given or entered, or the order was made, irregularly, illegally or against good faith. (2) A judgment or order of the court in any proceedings may be set aside by order of the court if the parties to the proceedings consent. " 3Ward J ordered that the plaintiff provide security for the costs of the first and second defendants in a sum of $55,000 inclusive of GST. Her Honour ordered that the proceedings be stayed until security for costs was provided and that the proceedings be dismissed if security for costs was not provided within six weeks of the date of the order. 4Ward J also ordered that the plaintiff's first amended statement of claim be struck out. Her Honour gave the plaintiff conditional leave to file and serve within eight weeks a further amended statement of claim limited to specified causes of action. Her Honour refused leave to the plaintiff to replead other causes of action. The conditions of the grant of leave to file a further amended statement of claim were that security for costs be provided in accordance with the preceding orders and that the plaintiff comply with an undertaking given at a hearing before me on 2 March 2011 to submit a contract to the Stamp Duties Office for stamping. 5In the argument before me the plaintiff, who is self-represented, re-agitated matters argued before Ward J. He submitted that her Honour erred in various respects, that the errors were of such seriousness that they amounted to irregularities such that it could be said that the judgment of 25 August 2011 was made irregularly. He also submitted that those errors demonstrated bias or, it may be, this is not clear, a case of reasonable apprehension of bias on the part of Ward J. 6The plaintiff also submitted that the first and second defendants had been guilty of improper conduct in the conduct of the litigation and that this was also a sufficient ground for an order to be made under r 36.15 setting aside the orders of 25 August 2011. 7In Perpetual Trustees Australia Limited v Heperu Pty Ltd (No. 2) [2009] NSWCA 387; (2009) 78 NSWLR 190, the Court of Appeal said (at [16] and [17]): " [16] The focus of Pt 36.15(1) is on the judgment or order that is attacked, and question is whether it was 'given, ... entered or ... made' irregularly etc. The focus is on irregularity in those steps, not on the merits of any decision, or the irregularity of other steps in the proceedings, or in the proceedings below. [17] The rule applies with particular force to default or consent judgments and orders, and those given or made ex parte. It can only have limited application to judgments and orders made or entered after a hearing on the merits at which all parties were represented and fully heard. " 8It is important that the power under r 36.15 not be used to bypass the ordinary avenues of appeal, or applications for leave to appeal. It is not sufficient for the moving party to demonstrate errors, let alone merely arguable errors, in the judgment in question. 9The plaintiff submitted that he had not been properly heard before Ward J and that the submissions that he made before her Honour had not been properly understood. He submitted that where it appears that the Court has proceeded according to some misapprehension of the facts or the relevant law and this misapprehension cannot be attributed solely to the neglect or failure of the party seeking the rehearing, the orders should be reconsidered and set aside. He referred in this respect to Autodesk Inc v Dyason (No. 2) [1993] HCA 6; (1993) 176 CLR 300 per Mason CJ at 301-302. However, this is not a case in which an application is made to the court that has determined the matter, but whose orders have not been entered, for a judgment to be reconsidered. Rather, it is an application to set aside orders that have been entered. In my view the principles of Autodesk Inc v Dyason (No. 2) are not applicable to the present circumstance. 10Part of the plaintiff's application was based upon the refusal of Ward J to accede to the plaintiff's application to adjourn the hearing that had been listed before her Honour on 12 August 2011. In support of that application the plaintiff had relied before her Honour on a number of matters. These included that the first and second defendants had issued a subpoena to the Department of Immigration to obtain details of the plaintiff's travel to and from Australia and the periods of his presence in this country. This was relevant to the question whether there was jurisdiction to order security for costs against the plaintiff as an overseas resident. The plaintiff contended that the first and second defendants were in breach of the rules in not serving on him as soon as practicable a copy of the subpoena issued to the Department of Immigration. The plaintiff also complained that, contrary to orders made by the Registrar on 25 May 2011, an affidavit of the first and second defendants' solicitor of 6 July 2011 had not been filed. The submissions to Ward J were made by the plaintiff, not in person, but by telephone link to Los Angeles. 11The plaintiff also contended that he had received extensive submissions by way of demurrer from counsel for the first and second defendants with which he was not in a position to deal. 12The first and second defendants' notice of motion filed on 11 May 2011 had sought, amongst other relief, orders that the statement of the first amended statement of claim be struck out on the basis that it disclosed no reasonable cause of action and on the basis that it had a tendency to cause embarrassment or delay or was otherwise an abuse of process. 13Ward J refused the application for adjournment. The same matters were raised on the argument today before me. This is not an appeal from her Honour's refusal of the adjournment. 14Insofar as her Honour's rejection of that application was said to indicate bias, or a reasonable apprehension of bias, that contention must be firmly rejected. Indeed, the material before her Honour, which is before me again today, was that the affidavit about whose non-filing the plaintiff complained had been served by email at the right time. It seems the affidavit was wrongly rejected by the counter staff in the Registry in reliance on the Supreme Court Practice Note SC Gen 4 and in apparent ignorance of the order of the Registrar that the affidavit be filed. In any event, the affidavit was filed before her Honour and is in the same terms as the affidavit that was served. There was no prejudice to the plaintiff from the non-filing of that affidavit. It did not bespeak any improper conduct on the defendants' part. 15In relation to the subpoena, the material before her Honour was that the copy of the subpoena was served on the plaintiff, albeit late. Nonetheless it was served before the return date. Although the plaintiff, by email correspondence, foreshadowed making an application for the setting aside of the subpoena, no such application was made. Nor would there have been any sound basis for such an application, so far as it appears. 16So far as the service of the submissions of counsel for the defendant is concerned, the Registrar had made a timetable for the exchange of submissions and the complaint seems to be as to the length of time provided for in that timetable. 17It could not properly be said that the rejection of the adjournment application bespoke bias, or a reasonable apprehension of bias. 18The plaintiff then submitted that Ward J was in error in the way with which her Honour dealt with the application for security for costs, and, although this was not at the forefront of the argument, with the way in which her Honour dealt with the application to strike out the statement of claim. The plaintiff referred in particular in oral argument to the following matters: 1. The way with which her Honour dealt with the undertaking given by the plaintiff before me on 2 March 2011 in the course of the hearing of an application to extend a caveat; 2. The plaintiff complained about her Honour's finding that the plaintiff was in substance the plaintiff in the action, and thus amenable to an order for security for costs; 3. It was said that her Honour showed bias, or perhaps a reasonable apprehension of bias, in determining the quantum of security for costs; 4. Complaint was made in relation to the reception of hearsay evidence; and 5. Complaint was made in respect of the way with which her Honour dealt with the defendants not having filed a defence as had been ordered by me on 12 April 2011. 19Next, the plaintiff relied again on the late service of the subpoena to which I have earlier referred, and the alleged failure to file the affidavit of 6 July 2011 of the first and second defendants' solicitor. 20Lastly complaint was again made of procedural unfairness in relation to the plaintiff's inability to respond to the matters raised by way of demurrer by the defendants' counsel. 21Even if all of these matters were established, they would not justify the making of orders under Pt 36, r 36.15. They might justify the setting aside of the orders of Ward J on appeal, but they would not justify the orders being set aside by a single judge under that rule. The complaints, if established, would not indicate either bias or a reasonable apprehension of bias. Even if they did, that would not be a proper basis for setting aside the orders under Pt 36, r 36.15. An appeal lies to the Court of Appeal, by leave if leave is otherwise required, where a primary judge is biased or there is a reasonable apprehension of bias. 22In any event, I do not think that the attacks made on her Honour's judgment have been made good. 23Dealing first with the matter of the undertaking, the plaintiff claimed to be entitled to purchase a property in Riley Street, Woolloomooloo, pursuant to his exercise of an option to purchase. He was an assignee of the benefit of the option to purchase. 24On 2 March 2011 I heard the plaintiff's application for further extension of a caveat that he had lodged in respect of the property in which he claimed an interest under the option to purchase. In the course of the hearing I raised the question whether the agreements upon which the plaintiff relied could be admitted if duty had not been paid (see s 304 of the Duties Act 1997). 25It was the plaintiff's position that the contract of purchase that arose from the exercise of the option had not been terminated by the first and second defendants and that he was entitled to maintain the caveat and entitled to orders for specific performance of the contract. I admitted the relevant documents on the plaintiff giving to the Court the usual undertaking by a person liable, and I specified the period of seven days as the time by which instruments were to be transmitted by the plaintiff to the Commissioner of State Revenue. I later concluded that there was not a serious question to be tried and that the defendants were not entitled to terminate the contract ( Szanto v Bainton [2011] NSWSC 278). That conclusion did not relieve the plaintiff from his obligations under the undertaking. 26There was evidence before Ward J that the undertaking had not been complied with. As I have said, her Honour made it a condition of leave to replead that the undertaking be complied with. The plaintiff submitted to her Honour, and to me, that he had discussed the matter with officers from the Office of State Revenue and he was not liable to pay duty on the instrument. Whether that is so or not, it would not relieve the plaintiff from his obligations to comply with the undertaking, even if the effect of his complying with the undertaking was that the Office of State Revenue found that no duty was payable, or that no duty was payable by him. 27Thus, far from this being a matter which suggests any irregularity on the part of Ward J in the orders made on 25 August 2011, I consider that the way her Honour dealt with the matter was unexceptionable. 28The plaintiff took issue with the way in which her Honour had determined that he was, in substance, a plaintiff. He submitted that, in substance, he was defending his position. He had been, he says, wrongly evicted from possession of the property. 29Moreover, the first defendant had commenced proceedings in the Consumer Trader and Tenancy Tribunal seeking orders for possession. The Tribunal rejected that application on the ground that it lacked jurisdiction. The plaintiff submits that the proceedings should have been then transferred by the Tribunal to this Court and that if this had been done, it would be apparent that the true plaintiff was the first defendant and not him. 30The question of whether the plaintiff was, in substance, the plaintiff or whether the plaintiff was, in substance, the defendant seeking to protect his position against the claims of the first and second defendants is a matter that her Honour considered and dealt with (see in particular at [64]-[66]). If there was any error in her Honour's conclusion, and I am not to be taken as inferring that there was, that would be a matter for the Court of Appeal. 31It might be relevant that in the first amended statement of claim the relief the plaintiff sought was not only an order for restoration of possession of the property, but also orders for specific performance, the award of $2 million as " expectation damages for breach of contract ", damages for emotional injury, what was said to be an " award of constructive title to real property ", $75,000 compensation for expropriation of personal property, and $10 million in punitive and exemplary damages. At least in relation to claims other than the claim for restoration of possession of property, it is hard to see how the plaintiff could not be characterised as being the substantial plaintiff. 32In relation to the claims of alleged bias in determining the quantum of security for costs, the plaintiff pointed to the way with which her Honour dealt with a sum of $800 that is admittedly held by the solicitors for the first and second defendants on trust for him. That sum represents what is said to be the proceeds of sale of the plaintiff's personal property that was sold by the first and second defendants following their retaking possession of the property. The plaintiff says that the property was in fact worth $75,000. The question of the first and second defendants' entitlement to sell the property was a matter in respect of which the plaintiff was given leave to replead. Contrary to what was submitted by the plaintiff from time to time, the first and second defendants have not admitted having converted, that is to say having wrongly converted, the defendant's property. 33Ward J recorded (at [97]) the submission on behalf of counsel for the first and second defendants that the appropriate amount for which security should be ordered was $50,000 plus GST. Counsel indicated that if the Court were to be so minded, account could be taken of the $800 currently held in the solicitor's trust account in relation to the sale of the plaintiff's personal possessions so as to allow for an order for security in the sum of $54,200. The amount of security that her Honour ordered was $55,000 inclusive of GST. 34In deciding that the latter was the appropriate amount of security to be ordered, her Honour took account of the defendants' solicitor's estimate of the likely future costs of their defending the proceedings. Her Honour accepted the solicitor's estimate. Her Honour also observed that the first and second defendants have had no security for past costs and that an order for costs had already been made in the first defendant's favour which the solicitor had noted on a solicitor/client basis were $10,970 plus GST. Her Honour also noted that the estimate of costs did not include the costs of the application that was before her Honour on 12 August 2011. 35It was the taking of all of these matters into account that led to the quantum of security being fixed in the sum of $55,000 inclusive of GST. 36There is no proper basis to allege that the way with which her Honour dealt with the quantum of security for costs indicated any bias, or reasonable apprehension of bias, on her Honour's part. 37I might also add that the plaintiff contended that the defendants already had the benefit of the sum of $30,000 paid under the contract for purchase of the property following exercise of the option and the value (said to be $75,000) of his property that was sold. As I understood the submission it was that these amounts could properly be considered as security for the first and second defendants' costs and ought to have been taken into account in determining the appropriate quantum of security. That argument is misconceived. Security for costs is ordered against the eventuality that the defendants might succeed in the action. If the defendants succeed in the action, the plaintiff would not be entitled to recover the sums of $30,000 and $75,000 claimed. In that event the defendants should be entitled to look to the security to be provided by the plaintiff. 38In relation to the contention that Ward J improperly allowed hearsay evidence to be adduced, it is sufficient to say first that the plaintiff could not point to any objection that was taken at the hearing before her Honour to the affidavits of the first and second defendants on the grounds of hearsay. Secondly, contrary to the plaintiff's argument, s 75 of the Evidence Act 1995 permits the admission of hearsay on interlocutory application where evidence is adduced as to the source. This is not confined to first hand hearsay. Thirdly, even if there was any error in these respects, that would not justify an order under the rule. Nor was I taken to any material which could justifiably be objected to on the grounds of hearsay. 39Part of the plaintiff's response to this was to say that the proceeding before her Honour was not an interlocutory proceeding. To the contrary, it was said that Ward J finally determined that security for costs should be provided and the quantum of the security, and finally determined that the existing statement of claim should be struck out with only limited liberty to replead. 40It has often been said that it is difficult to draw a logical line of distinction between proceedings that are properly to be classified as interlocutory, and those that are properly to be classified as final. The classification is at least as much a matter of precedent as logic. Thus an order for summary dismissal is treated as an interlocutory determination, even though, unless set aside on appeal, the order finally extinguishes a plaintiff's claim. It is sufficient to say that the proceedings before Ward J were clearly interlocutory. 41Next, complaint was made about the fact that the first and second defendants have not filed a defence in compliance with orders I made on 12 April 2011. I directed that the plaintiff file and serve a further amended statement of claim by 29 April 2011 and that the defendants file and serve a defence to that statement of claim by 23 May 2011. Before Ward J the defendants submitted that they were justified in not filing a defence because those orders had been made without their having had an opportunity to be heard in relation to them. It was said that they ought not to be required to file a defence to the plaintiff's pleading. Her Honour accepted those submissions (at [52] and [69]). This is not an irregularity that could justify the setting aside of her Honour's orders. 42The other objections had been raised on the application for adjournment and have been dealt with above. 43The plaintiff raised other matters of law. He contended that the defendants had not been entitled to take possession of the premises for at least 12 months after the dismissal of the proceedings in the Consumer Tenancy and Trading Tribunal and relied upon s 68 of the Landlord and Tenant Act 1899, or perhaps s 98A of the Landlord and Tenant (Amendment) Act 1948. 44The plaintiff also seemed to place some reliance upon what he said was the absence of a certificate in relation to a cooling off period under s 66ZF of the Conveyancing Act 1919. 45Neither of these matters is relevant. 46As to the reliance upon the Landlord and Tenant Act or Landlord and Tenant (Amendment) Act, the court has not embarked on a hearing on the merits of the plaintiff's claim that he was wrongly evicted. To the contrary, Ward J gave leave to the plaintiff, on the conditions to which I have previously referred, to plead such a claim provided the pleading was in accordance with the rules. The plaintiff did not seek to justify the manner in which the pleading was drawn. The pleading was notable, as her Honour said, for its statement of conclusions and the absence of the pleading of material facts. 47As to the absence of a certificate under s 66ZF of the Conveyancing Act, it is hard to see what the relevance of that would be to any claim, given that the absence of the certificate would simply mean that the cooling-off period provided for by s 66ZB would remain available. 48The plaintiff complained of Ward J's description of the statement of claim as an " emotional diatribe " (at [121]). He contended that this was an improper characterisation of his pleading, betoking bias. The dictionary definition of " diatribe " is in substance that of a " bitter and violent denunciation, attack or criticism ". The allegations made in the amended statement of claim referred to by her Honour, in particular at [113]-[116], seem to me to amply justify that description. In any event, I have already said that in my view it would not be a proper ground for setting aside the orders of the judge pursuant to r 36.15 by another single judge that it was said that the first judge had demonstrated bias or reasonable apprehension of bias. 49Finally, the plaintiff has misconceived her Honour's reasons in stating, as he does, that her Honour had accepted that the defendants' sale for $800 of the plaintiff's property, valued at $75,000, was somehow just and proper. As I have said, the entitlement of the defendants to sell the plaintiffs' property, and whether they obtained a proper price for that property, are matters that have not yet been tried. 50For these reasons the plaintiff's notice of motion is misconceived. 51I order that the plaintiff's notice of motion dated 7 September 2011, filed on 8 September 2011 and entitled " Notice of Motion and Motion to Vacate Judgment of 25 August 2011 " be dismissed. I will hear the parties on costs. For more abundant caution, I order that the stay of the orders of 25 August 2011 be discharged. [Parties addressed on costs.] 52The first and second defendants seek an order that the plaintiff pay their costs of the application on the ordinary basis. They also seek an order that the costs can be assessed forthwith, and will be payable forthwith after agreement or assessment. Unless the Court otherwise orders, the costs of this application would not become payable until the conclusion of the proceedings (Uniform Civil Procedure Rules, r 42.7). 53The plaintiff asks that costs not be payable until a reasonable time has passed for him to consider the reasons that I have just delivered orally, and to consider whether he should seek leave to appeal from those reasons. 54As a matter of practicality he will have that time, even if I make a contrary order under r 42.7(2) as there will be some time before the parties can reach agreement, or not reach agreement, on the quantum of the costs. 55If agreement is not reached there will inevitably be a lapse of time before a costs assessment is completed. 56One of the grounds upon which a contrary order can be made under r 42.7(2) is where the interlocutory application was an unnecessary and unwarranted application. In my view, for the reasons I have given, this application was misconceived. I do not think that the defendant should be out of pocket any longer than is possible by reason of the application. 57I order that the plaintiff pay the first and second defendants' costs of the plaintiff's notice of motion. I order that such costs may be assessed forthwith and will be payable forthwith after agreement or assessment. 58The plaintiff seeks an extension of the period for the provision of security for costs. On 15 September 2011 Ward J stayed the orders of 25 August 2011 until the determination of the plaintiff's motion filed on 8 September 2011 or further order of the Court. That stay has now been discharged. The plaintiff submits that because he has been pursuing his application, he has not been pursuing the provision of security for costs. He seeks an extension of three weeks, so that the order requiring security for costs to be provided within six weeks should commence to run from today. 59Whilst the first and second defendants do not consent to such order, counsel for the first and second defendants does not oppose the order. He says that the defendants do not point to any prejudice they would suffer by the order sought by the plaintiff. In those circumstances I am prepared to accede to the application. 60The same extension should be given in respect of the time for filing and serving the further amended statement of claim in accordance with her Honour's orders. 61I order that the time by which the plaintiff is to provide the security for the costs of the first and second defendants be extended to six weeks from today. 62I order that the time referred to in order 4 of the orders of Ward J of 25 August 2011 be extended to six weeks from today. 63I order that the time for the filing and service of a further amended statement of claim in accordance with order 5 of Ward J's order of 25 August 2011 be extended to eight weeks from today. 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. Decision last updated: 13 February 2012