Court of Appeal Supreme Court New South Wales Medium Neutral Citation: Gorczynski v Bendigo and Adelaide Bank Ltd [2016] NSWCA 170 Hearing dates: 8 July 2016 Date of orders: 08 July 2016 Decision date: 19 July 2016 Before: Basten JA at [1]; Sackville AJA at [10] Decision: (1) Dismiss the application for leave to appeal. (2) Order that the applicant pay the Bank's costs of the application. Catchwords: PRACTICE AND PROCEDURE – application for leave to appeal – primary Judge determined pursuant to s 73(1) of the Civil Procedure Act 2005 (NSW) that a matter had settled – determination made on Judge's own motion – whether Judge had power to do so – whether matter in dispute warrants leave being granted Legislation Cited: Civil Procedure Act 2005 (NSW), ss 56, 60, 73, 86, 90 Supreme Court Act 1970 (NSW), ss 23, 63 Uniform Civil Procedure Rules 2005 (NSW), r 36.1 Cases Cited: Grant v John Grant & Sons Pty Ltd [1954] HCA 23; 91 CLR 112 Masters v Cameron [1954] HCA 72; 91 CLR 353 The Owners of the Ship "Shin Kobe Maru" v Empire Shipping Company Inc [1994] HCA 54; 181 CLR 404 Category: Principal judgment Parties: Peter Gorczynski (Applicant) Bendigo and Adelaide Bank Ltd (Respondent) Representation: Counsel: Mr M E Luitingh (Applicant) Mr J Foley (Solicitor) (Respondents) Solicitors: Jane Button & Associates (Applicant) Gadens Lawyers (Respondents) File Number(s): 2016/62331 Decision under appeal Court or tribunal: Supreme Court of New South Wales Jurisdiction: Common Law Division Citation: [2016] NSWSC 55 Date of Decision: 03 February 2016 Before: McCallum J File Number(s): 2009/293542 [Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.] Judgment 1. BASTEN JA: I agree with the reasons of Sackville AJA for dismissing the application for leave to appeal, and would add the following considerations. 2. In dealing with the matter on the basis that there had been a settlement of the proceedings, McCallum J took into her own hands the resolution of what was, in substance, a small dispute, within the jurisdiction of the Small Claims Division of the Local Court, and one which certainly did not warrant the time of a judge of the Supreme Court, or the costs involved in Supreme Court proceedings. Recognising that the financial terms had been settled "subject to contract", the judge accepted that there was no final settlement recorded in the deed proffered by the Bank, in accordance with the principles commonly identified by reference to the decision in Masters v Cameron. [1] That requirement was imposed, not by Mr Gorczynski, but by the Bank, primarily in order to obtain the usual release and discharge from liability which accompanies a settlement of litigation. 3. Mr Gorczynski raised a concern in respect of two paragraphs in the deed, one of which the judge found was outside the scope of the agreement (a "non-disparagement" clause), which was therefore rejected as not part of the agreement. The judge also noted the concerns of Mr Gorczynski with respect to the width of the term "claims" in the release and discharge. The judge indicated the manner in which it could properly be understood and found an agreement limited in that way. That reading was in keeping with the principles applicable to the construction of deeds of release, commonly identified by reference to the High Court judgment in Grant v John Grant & Sons Pty Ltd. [2] 4. The complaints about the course taken by the primary judge were without substance. As explained by Sackville AJA, there was no procedural unfairness, each party having ample opportunity to raise any concerns it had as to the specific terms of the deed and to address those raised by the other party. 5. Further, although the judge took the initiative in terminating the litigation, she did not exceed the powers available to her. The power expressly relied upon was that to be found in s 73(1) of the Civil Procedure Act 2005 (NSW), allowing the Court "[i]n any proceedings" to determine "any question in dispute between the parties to the proceedings as to whether, and on what terms, the proceedings have been compromised or settled between them". The judge also referred to the overriding purpose of directions and procedures, set out in s 56 of the Civil Procedure Act. 6. Section 73 (and its analogues in other jurisdictions) has been understood to confer power on the court to deal with settlements in the proceedings to which they relate, rather than leaving the parties to commence separate proceedings to enforce a settlement. Accepting that to be the primary purpose of the provision, it is nevertheless expressed in broad terms as to the scope of the power conferred, terms which should not be read down by implied constraints. [3] Rather, the breadth of the power as it operates in the Supreme Court is confirmed when it is read in the context of other powers conferred on the Court. Thus, s 56 of the Civil Procedure Act, to which the primary judge referred, states that the court must give effect to the overriding purpose of facilitating "the just, quick and cheap resolution of the real issues in the proceedings." In order to undertake that function, the court must have the necessary powers to assist it to identify what are the "real issues" in the proceedings. In order to determine what are the real issues in the proceedings it is necessary for the court to seek to ascertain the extent to which the parties can or have narrowed their dispute, so as to limit the proceedings to that part, if any, which remains unresolved. That was the course which the primary judge undertook. If any express power were required for the judge to act on her own initiative, the court had power to act "of its own motion" pursuant to s 86(3) of the Civil Procedure Act, subject always to according procedural fairness to each party. 7. The Court also has power to grant any remedy to which the party appears to be entitled, so that, as far as possible, all matters in controversy may be completely and finally determined, pursuant to s 63 of the Supreme Court Act 1970 (NSW). That may include relief which has not been sought in express terms. [4] To similar effect, s 90 of the Civil Procedure Act provides that the Court is "at or after a trial, or otherwise, … to give such judgment or make such order as the nature of the case requires". The breadth of these powers is consistent with the general jurisdiction of the Supreme Court, being that which may be necessary for the administration of justice. [5] 8. None of this is to suggest that there are no limits on the powers of the Supreme Court, a proposition which would be manifestly wrong. Nevertheless, as noted above, limits are not to be implied with respect to jurisdiction or powers conferred in unqualified terms. Limits imposed by the requirements of procedural fairness and by the creation of Commonwealth judicial power under the Constitution, are not engaged in the present case. 9. For these reasons, which relate to the absence of merit in the substantive challenge, as well as for the reasons expressed by Sackville AJA, the application for leave must be dismissed. 10. SACKVILLE AJA: In this matter, the applicant sought leave to appeal from a decision of a Judge of the Common Law Division (McCallum J) delivered on 3 February 2016. [6] At the conclusion of argument, the Court made orders dismissing the application for leave to appeal and requiring the applicant to pay the costs of the respondent (Bank). The Court reserved its reasons. These are my reasons for joining the orders of the Court. 11. The dispute between the parties arose out of the Bank's exercise of its power of sale under a mortgage of property owned by the applicant. The Bank obtained an order for possession of the property and subsequently sold the property. As a consequence of the sale the Bank received an amount in excess of that required to discharge the applicant's indebtness. 12. The Bank withheld an amount from the excess funds received on the sale as reimbursement for costs it claimed to have incurred after the sale. The applicant disputed the Bank's entitlement to do so. Orders Made by the Primary Judge 1. On 3 February 2016 the primary Judge, of her own motion, considered whether she should make a determination, pursuant to s 73(1) of the Civil Procedure Act 2005 (NSW) (CP Act), that the matter between the applicant and the Bank had settled. Section 73(1) of the CP Act provides as follows: "(1) In any proceedings, the court: (a) has and may exercise jurisdiction to determine any question in dispute between the parties to the proceedings as to whether, and on what terms, the proceedings have been compromised or settled between them, and (b) may make such orders as it considers appropriate to give effect to any such determination." 1. At the hearing held on 3 February 2016, the applicant was self-represented, while the Bank was represented by a solicitor. After receiving evidence from both parties and hearing submissions, her Honour determined that the matter listed before her for hearing on 19 November 2015 had settled, at least as to the substantive issues in dispute, between the parties in advance of the hearing date. In addition, her Honour made orders and directions to give effect to the determination. 2. First, the primary Judge ordered that the amount of $5,253.10, previously paid into court by the Bank, be paid to the applicant. Her Honour made this order on the ground that it was a term of the settlement between the parties that the amount should be paid to the applicant. 3. Secondly, the primary Judge found that it was a term of the settlement that the applicant was entitled to have the sum of $7,688.53 paid to him by the Bank. However, her Honour also considered that the applicant should pay part of the Bank's costs of the hearing on 3 February 2016, which she assessed at $2,500.00. Her Honour therefore directed that the sum of $2,500.00 should be deducted from the amount the Bank was required to pay the applicant, reducing that amount to $5,188.53. 4. Finally, her Honour directed the Bank to pay $3,500.00 to a barrister who had acted pro bono for the applicant in the proceedings between the Bank and the applicant. What is in Dispute? 1. The applicant filed a summons seeking leave to appeal from the directions of the primary Judge. The applicant sought orders setting aside the determination made by the primary Judge. In addition to the release of the funds the Bank had paid into court, the applicant sought an order that the Bank pay him the sum of $7,688.53, with no order as to the cost of the proceedings determined by the primary Judge. 2. Mr Luitingh, who appeared for the applicant, submitted that the amount truly in dispute on the leave application substantially exceeded the sum of $2,500.00 which her Honour decided should be deducted from the amount payable to the applicant. He based this submission on the contention (raised by the applicant in the proceedings before the primary Judge) that the settlement, if binding, prevents the applicant pursuing a claim that the Bank wrongly calculated the excess funds derived from the sale of the mortgaged property. The submission was apparently founded on a notice of motion filed by the applicant on 31 May 2010 in possession proceedings instituted by the Bank against the applicant. By that notice of motion, the applicant sought an order that the Bank provide a detailed account of its distribution of the proceeds of sale of the property. 3. One difficulty facing Mr Luitingh's submission was that there was no evidence suggesting that the Bank's calculations were erroneous. A second, and perhaps more significant, difficulty is that the primary Judge found that the settlement between the parties reflected the terms of draft consent orders sent by the Bank to the applicant. The consent orders, which were in evidence before the primary Judge, stated that the applicant had liberty to apply: "with respect to matters other than these orders. In particular, information as to how the [Bank] calculated the sum of $730,429.04 which it deducted from the proceeds of sale of the property." 1. In this Court, Mr Foley, who appeared for the Bank, confirmed that the Bank's position is and always has been that the settlement between the parties does not preclude the applicant from claiming that the Bank wrongly calculated deductions from the proceeds of sale or otherwise underestimated the excess net proceeds of sale. Mr Foley's statement is consistent with the primary Judge's findings and the documentary evidence. Mr Luitingh, although asserting that the Bank's position had not been made clear earlier, did not suggest that the Bank could not be held to its concession. 2. It follows that the amount in dispute on this application for leave to appeal was, in substance, the primary Judge's direction that the applicant should pay a proportion of the Bank's costs of the hearing on 3 February 2016, assessed at $2,500.00. I have approached the application on that basis. Background 1. The Bank's submissions helpfully set out the background to the current application in considerable detail. The following is largely based on the Bank's summary: • On 1 April 2009, the Bank commenced proceedings against the applicant in the Common Law Division seeking an order for possession of the applicant's property by reason of his default under the mortgage. • On 17 November 2009, the Bank obtained default judgment against the applicant. The Bank took possession of the property on or about 27 January 2010. At the time the Bank took possession, a third party had registered a writ against the title to the property. • The Bank exercised its power of sale and completed the sale on 14 May 2010. The net proceeds of the sale exceeded the applicant's indebtedness to the Bank. On the Bank's calculations, the excess was relatively modest. • On 31 May 2010, the applicant filed the notice of motion to which I have referred and sought urgent relief in relation to the excess funds held by the Bank in consequence of the sale. On 9 June 2010, Hidden J made an order that the excess funds be paid into court. • On or around 13 September 2010, the Bank paid $16,836.00 into court. This sum comprised the amount calculated by the Bank as the excess proceeds of sale ($22,349.67), less past costs incurred by the Bank in dealing with the excess funds ($5,253.10) and a further amount ($260.57) apparently mistakenly withheld by the Bank. This last amount was subsequently paid by the Bank to the applicant on 23 December 2014. • On 26 May 2015, Hamill J ordered that the amount paid into court (plus interest) should be released to the applicant. • On 18 August 2015, the applicant filed a motion seeking pro bono assistance in connection with his application to recover the sum of $5,253.10, being the portion of the proceeds of sale applied by the Bank to its post-settlement costs. • On 22 September 2015, McCallum J ordered the Bank to pay the sum of $5,253.10 into court and directed that the applicant receive a referral for pro bono assistance. The Bank complied with McCallum J's order to pay the funds into court. • Between 12 and 18 November 2015, discussions took place between the Bank's solicitor and the applicant's counsel concerning settlement of the dispute. On 18 November 2015, the Bank accepted an offer made on behalf of the applicant, subject to a deed of release being executed. On that day, the Bank prepared a draft deed. • On 19 November 2015, McCallum J was told that the matter had settled, subject to exchange of counterparts of the deed of release. After the hearing had concluded, it appears that the applicant's counsel requested the Bank's representatives to make some amendments to the draft deed. • On 27 November 2015, the matter was relisted before McCallum J. The applicant's counsel informed the Court that the settlement had "evaporated", but that his view nonetheless was that the matter had finally settled. • During the hearing on 27 November 2015, McCallum J raised the possibility that she might resolve the question of a settlement on her own motion, pursuant to s 73(1) of the CP Act. The solicitor for the Bank said that he had no instructions on that suggestion. Counsel for the applicant said that his instructions were to seek a hearing date for the outstanding motion. Her Honour stated that she would grant a hearing date, but that the first issue would be whether the settlement about which the Court had been informed should be regarded as binding. • On 18 December 2015, the Bank's solicitor wrote to the applicant's counsel. The letter, which was in evidence before the primary Judge, included the following: "Our email to the Court of Thursday, 19 November 2015, which was sent with your agreement, confirmed that the parties had formed a binding settlement agreement which resolved all issues presently before the Court, in the terms set out above." [Emphasis added.] In the letter, the Bank offered to make some amendments to the deed in response to the applicant's concerns. However, the Bank did so: "[w]ithout conceding that an agreed settlement does not exist and while reserving our client's rights to seek enforcement of the settlement agreement." • On 1 February 2016, the applicant's counsel advised the Court that his retainer had been terminated. • On 3 February 2015, the matter returned to Court. Mr Foley informed the primary Judge that the Bank was not making an application under s 73(1) of the CP Act, but it had no objection to her Honour acting on her own motion. The applicant, who was not legally represented at the hearing, said that he was prepared to deal with the issue of whether a binding settlement had been reached. Her Honour then proceeded on her own motion to hear the question of whether the parties had entered into a binding settlement of the dispute between them. • In response to a demand by the applicant for immediate payment of the amount due to him, the Bank paid $5,188.53 to the applicant on 18 February 2016. 1. The applicant's written submissions identified no less than nine questions involved in the application for leave to appeal. These were as follows: "(a) Did the Court err in determining an application that was not before it? (b) Did the Court err by reading the without prejudice materials filed and relied on by the respondent? (c) Did the Court err in making a determination pursuant to section 73 in the manner in which she did? (d) Did the Court properly consider the applicants [sic] submissions and grant the applicant an opportunity to meet a case on the issues raised by the court? (e) Is the appellant [sic] entitled to the sum paid into court as determined by her Honour notwithstanding her reasons? (f) Is the respondent entitled to costs as determined by her Honour? (g) Did the court properly consider matters as to costs? (h) If her Honour did not err, do the settlement terms determined by her preclude the applicant from pursuing his claims for an accounting of all sums paid from the sale proceeds of the property at 23 the Avenue, Newport, a determination of any claim arising and payment of any additional surplus plus interest? (i) If the answer to the above question is yes, is the respondent entitled to retain any additional sums from that surplus as a contingent liability so as to defend the claim." 1. The main contention advanced by Mr Luitingh in his oral argument was that the primary Judge wrongly assumed that she had power on her own motion to make a determination under s 73(1) of the CP Act. In assessing that contention, it is necessary to take account of s 86(3) of the CP Act, which provides as follows: "Subject to this Act and to rules of court, the court may make any order that it has power to make either of its own motion or on the application of a party or any other person entitled to make such an application." 1. Mr Luitingh accepted that s 86(3) of the CP Act confers power on the Court, subject to the requirements of procedural fairness, to make any order of its own motion that it otherwise has power to make. However, Mr Luitingh submitted that in this case there was no power to make an order under s 73(1) of the CP Act because there was no "question in dispute between the parties to the proceedings as to whether, and on what terms, the proceedings have been compromised or settled between them". He contended that both parties were in agreement that the matter had not settled and that on 3 February 2016 there was no relevant dispute in existence between them. 2. The Bank's letter of 18 December 2015, the relevant terms of which have been set out earlier, [7] clearly stated the Bank's position that the parties had reached a binding agreement on 19 November 2015. It is equally clear that the applicant's position, albeit not shared by his counsel, was that the parties had never reached a final and concluded agreement to resolve the remaining issues in dispute. 3. Although the Bank might perhaps have been expected to take a more active role at the hearing before the primary Judge on 3 February 2016, nothing occurred at that hearing to indicate the Bank's position had altered since the letter of 18 December 2015. The Bank's solicitor read an affidavit to which the letter was annexed. The solicitor agreed with an observation made by the primary Judge in the course of argument that there seemed to be a "cogent basis" for concluding that the parties had reached a binding settlement. The submissions made on behalf of the Bank acknowledged that there might be difficulties in the path of that argument but supported it. 4. After hearing the Bank's submissions, the primary Judge invited the applicant to make his submissions. He did so, contending (not without force) that the parties had not resolved all outstanding issues on 19 November 2015. 5. In these circumstances, I do not consider that the applicant has made out an arguable case that there was no question in dispute between the parties on 3 February 2016 when the primary Judge exercised on her own motion the power conferred by s 73(1) of the CP Act. 6. The applicant may have an arguable case that the primary judge erred in finding that the parties reached a final and concluded agreement on 19 November 2015. Even if that is so, it is not sufficient to justify the grant of leave to appeal. As I have explained, it remains open to the applicant, if so advised, to seek an accounting from the Bank in relation to the disbursement of the proceeds from the sale of the property. As I have also explained, in substance the present dispute is limited to the order made by the primary Judge that the applicant pay the Bank costs assessed at $2,500.00. Not only is there no injustice to the applicant in refusing leave to appeal, it is plain that the costs of an appeal would be wholly disproportionate to the very small amount in dispute. [8] 7. No other basis was advanced on behalf of the applicant to justify the grant of leave to appeal. In particular, nothing was put that suggested that the applicant was denied procedural fairness or that her Honour's direction as to costs miscarried. 8. For these reasons, I joined in the Court's orders to dismiss the summons seeking leave to appeal, with costs. ********** Endnotes 1. [1954] HCA 72; 91 CLR 353. 2. [1954] HCA 23; 91 CLR 112. 3. The Owners of the Ship "Shin Kobe Maru" v Empire Shipping Company Inc [1994] HCA 54; 181 CLR 404 at 420-421. 4. Uniform Civil Procedure Rules 2005 (NSW), r 36.1. 5. Supreme Court Act, s 23. 6. Bendigo & Adelaide Bank Ltd v Gorczynski (No 3) [2016] NSWSC 55 (Primary Judgment). 7. See at [23] above. 8. CP Act, s 60. 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: 21 March 2018