Setting aside and variation of judgments and orders

[2-6600] Setting aside a judgment or order given, entered or made irregularly, illegally or against good faith

A judgment or order may be set aside if given, entered or made irregularly, illegally or against good faith: r 36.15(1).

The focus of r 36.15(1) is on the judgment or order that is attacked and the question is whether it was “given, entered or made irregularly, illegally or against good faith”. The focus is on an irregularity in these steps not on the merits of any decision or the irregularity of other steps in the proceedings: Perpetual Trustees Australia Ltd v Heperu Pty Ltd (No 2) (2009) 78 NSWLR 190 at [16].

In that case, it was observed at [17] that r 36.15(1) applies with particular force to default or consent judgments or orders and those given or made ex parte and that 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.

For an example of a judgment set aside if given or entered irregularly, see Arnold v Forsythe [2012] NSWCA 18 and Violi v Commonwealth Bank of Australia [2015] NSWCA 152.

For an example of a judgment set aside as entered against good faith, see Chand v Zurich Australian Insurance Ltd [2013] NSWSC 102.

For an unsuccessful attempt to rely upon s 63 of the CPA as giving the court power to set aside a judgment or order: see Perpetual Trustees Australia Ltd v Heperu Pty Ltd (No 2), above, at [20]–[49].

[2-6610] Setting aside a judgment or order by consent

A judgment or order may be set aside by consent order: r 36.15(2).

[2-6620] Setting aside or varying a judgment or order before entry of the order or judgment

The court may set aside or vary a judgment or order if a notice of motion for such an order is filed before the entry of the judgment or order sought to be set aside: r 36.16(1).

Such an order is variously referred to as “recalling”, “reopening”, “reviewing” or “reconsidering” a judgment or order.

The following principles are extracted from the judgment of Mason CJ in Autodesk Inc v Dyason (No 2) (1993) 176 CLR 300 at 301–303. (His Honour dissented on the ultimate issue in the case but his statements of general principle were not questioned in the majority judgments.) The decision turned on the inherent jurisdiction of the High Court but the same principles would apply to the subrule.

1. 

The power is to be exercised “with great caution” in view of the public interest in the finality of legal proceedings.

2. 

The power may be exercised where, through no fault on the applicant’s part, the applicant has not been heard on a matter decided by the court.

3. 

The jurisdiction also extends to cases where a court has good reason to consider it has proceeded on a misapprehension as to the facts or the law (such as a failure to recognise that a line of authority relied upon in the determination had been overruled or a mistaken assumption that certain evidence had not been given at an earlier hearing).

4. 

The jurisdiction is not a back door for re-arguing the case. It is not to be used for the purpose of re-agitating arguments already considered by the court or because a party has failed to present the argument in all its aspects or as well as it might have been put.

In Wentworth v Woollahra Municipal Council (1982) 149 CLR 672, at 684, it was said that, “[g]enerally speaking, [the power to reopen] will not be exercised unless the applicant can show that by accident without fault on his part he has not been heard.” It was, however, explicitly stated in Autodesk, by Mason J (at 302) and by Gaudron J (at 322), that the jurisdiction to re-open is not confined to such circumstances. No other judge in Autodesk disagreed with those statements.

Since r 36.16(1) requires the filing of a notice of motion, it has no application to a setting aside or variation by the court of its own motion.

In Autodesk Inc v Dyason, above, at 302, Mason J (speaking of the High Court’s inherent jurisdiction) referred specifically to the power of the court to recall a judgment or order on the judge’s own initiative where the judge believed he had “erred in a material matter in his approach to the case”. The Supreme Court would have the same inherent power to recall a judgment or order of the court’s own motion before the judgment or order is entered.

Where an apparent error can readily be addressed without the need to resort to expensive and time-consuming appeal proceedings, that course should be permitted and encouraged: Nominal Defendant v Livaja [2011] NSWCA 121 at [23]. In some cases, for example where a trial judge, without the benefit of transcript, is delivering an oral judgment from handwritten notes, the public interest in the finality of litigation may carry less weight than in other circumstances: Livaja at [23].

It is unclear whether the District Court and the Local Court have a corresponding implied power to recall a judgment or order of the court’s own motion. However, the point is unlikely to arise having regard to the provisions for the almost automatic entry of judgment in the UCPR and the terms of r 36.16(3B) dealt with below.

In Consolidated Lawyers Ltd v Abu-Mahmoud [2016] NSWCA 4, Macfarlan JA (Bathurst CJ and Tobias AJA agreeing) observed at [39]–[41] that where it appears that the primary judge has overlooked a significant point in formulating the court’s judgment, the course that should be adopted in the absence of particular, valid reasons for not doing so, is for an application to be made to the judge pursuant to r 36.16 to set aside or vary the judgment. The ground of the application should be that the judge had not dealt with a significant submission.

For further examples relating to the power to set aside or vary a judgment or order before entry, see Ritchie’s at [36.16.45] and [36.16.50] and Thomson Reuters at [r 36.16.100] and [r 36.16.120].

[2-6625] Postponement of effect of entry

If a notice of motion for setting aside or variation of a judgment or order is filed within 14 days after the judgment or order is entered, the court may set aside or vary the judgment or order under r 36.16(1) as if the judgment or order had not been entered: r 36.16(3A). This power does not extend to a judgment or order that was not specified in the notice of motion: Malouf v Prince (No 2) [2010] NSWCA 51.

Further, the court may of its own motion set aside or vary a judgment or order within 14 days after entry as if it had not been entered: r 36.16(3B).

Despite r 1.12, the court may not extend the time limited by r 36.16(3A), (3B) or (3C).

There is an overlap between r 36.16(3B), and r 36.17, the slip rule (as to which, see [2-6680]).

[2-6630] Setting aside or varying a judgment or order after it has been entered — general rule

As a general rule, apart from the exceptions which follow, judgments or orders which have been formally recorded or entered can only be varied or discharged on appeal:

Once an order disposing of a proceeding has been perfected by being drawn up as the record of a court, that proceeding apart from any specific and relevant statutory provision is at an end in that court and is in its substance … beyond recall by that court: Bailey v Marinoff (1971) 125 CLR 529 at 530.

See also Grierson v The King (1938) 60 CLR 431 at 436; Gamser v Nominal Defendant (1977) 136 CLR 145; DJL v The Central Authority (2000) 201 CLR 226 at 245; and Meehan v Glazier Holdings Pty Ltd (2002) 54 NSWLR 146.

[2-6640] Default judgment

Rule 36.16(2) of the UCPR provides that the court may set aside or vary a judgment or order after judgment is entered if the judgment or order is a default judgment other than a default judgment given in open court. That orders have taken effect does not extinguish these powers: Goater v Commonwealth Bank of Australia [2014] NSWCA 382.

The following principles are extracted from the judgment of Hope JA in Adams v Kennick Trading (International) Ltd (1986) 4 NSWLR 503 at 506–507:

  • the court has to look at the whole of the relevant circumstances and decide whether or not sufficient cause has been shown

  • the existence of a bona fide ground of defence and an adequate explanation for the default are the most relevant matters to consider

  • the defendant must swear to facts which, if established at the trial, will afford a defence: Simpson v Alexander (1926) SR (NSW) 296 at 301

  • if the judge concludes that the applicant is lying about the alleged defence and is thus dishonest in raising it, the defence is not “bona fide”

  • the applicant does not necessarily fail for want of an adequate explanation for the default. It depends on the circumstances. “[I]f merits are shown, the Court will not prima facie desire to let a judgment pass on which there has been no proper adjudication”: Evans v Bartlam [1937] AC 473 at 489,

  • the absence of an explanation for the default, particularly if it is coupled with prejudice to the plaintiff, may justify the denial of relief, but only when considered with other relevant circumstances.

The importance of a defence on the merits relative to countervailing considerations (per Evans v Bartlam, above) has been emphasised. In Byron v Southern Star Group Pty Ltd t/as KGC Magnetic Tapes (1995) 123 FLR 352, Priestley JA said at 364:

Frequently, persons have been let in to defend who have had little or no explanation for their delay but who have shown reasonable grounds of defence; in some cases such persons are put on severe terms concerning provision of security or payment into court or the like, but the court sees to it that subject to compliance with such terms, a person who has an arguable defence and wishes to have it determined on the merits, will be heard by the court before judgment.

In Cohen v McWilliam (1995) 38 NSWLR 476 at 480–481, Priestley JA re-affirmed what he had said in Byron and, by way of illustration, quoted with approval from the Full Federal Court decision in Davies v Pagett (1986) 10 FCR 226 at 232, as follows:

The fundamental duty of the court is to do justice between the parties. It is, in turn, fundamental to that duty that the parties should each be allowed a proper opportunity to put their cases upon the merits of the matter. Any limitation upon that opportunity will generally be justified only by the necessity to avoid prejudice to the interests of some other party, occasioned by misconduct, in the case, of the party upon whom the limitation is sought to be imposed.

On the other hand, the explanation for default may be sufficient. See the passage quoted below from Taylor v Taylor (1979) 143 CLR 1.

[2-6650] Absence of a party

Rule 36.16(2)(b) provides that the court may set aside or vary a judgment or order after judgment is entered if the judgment or order has been given or made in the absence of a party, whether or not the absent party had notice of the relevant hearing or of the application for the judgment or order. That orders have taken effect does not extinguish these powers: Goater v Commonwealth Bank of Australia, above.

In the absence of urgency or some other reason, a party with an interest in the matter in question has a right to be heard, failing which the judgment or order will be set aside.

1. 

Cameron Bankrupt v Cole Petitioning Creditor (1944) 68 CLR 571 per Rich J at 589:

It is a fundamental principle of natural justice, applicable to all courts whether superior or inferior, that a person against whom a claim or charge is made must be given a reasonable opportunity of appearing and presenting his case. If this principle be not observed, the person affected is entitled, ex debito justitiae, to have any determination which affects him set aside.

2. 

Taylor v Taylor (1979) 143 CLR 1 per Mason J at 16:

In my opinion the jurisdiction extends not only to the setting aside of judgments which have been obtained without service or notice to a party (Craig v Kanssen [[1943] KB 256 at 262]) but to the setting aside of a default or ex parte judgment obtained when the absence of the party is due to no fault on his part.

3. 

See also BP Australia Ltd v Brown (2003) 58 NSWLR 322 at [134], affirming the order made by Austin J in Brown v DML Resources Pty Ltd No 2 (2001) 52 NSWLR 685 at [39]–[65].

The rule is in terms which empower the court to set aside an ex parte judgment or order where a party with notice has failed to attend due to accident or mistake: Wentworth v Rogers (unrep, 28/8/97, NSWSC) Sperling J, pp 36–37; leave to appeal refused Wentworth v Rogers (unrep, 12/6/97, NSWCA).

Mere absence, of itself, is insufficient to justify setting aside an order. There must be some added factor that makes it unjust for the order to stand: Northey v Bega Valley Shire Council [2012] NSWCA 28.

Where proceedings are by necessity heard ex parte, a high degree of candour is required, including disclosure of facts adverse to the moving party. Breach of that obligation will almost invariably result in the determination being set aside: Garrard v Email Furniture Pty Ltd (1993) 32 NSWLR 662 per Mahoney AP and Clarke JA at 676–677.

Rule 36.16(2)(b) and other provisions of the UCPR do not apply where the court is exercising Federal jurisdiction and the Constitution or the relevant Commonwealth law “otherwise provides”. For example, in Grant Samuel Corporate Finance Pty Limited v Fletcher (2015) 89 ALJR 401 it was held that the rule could not enable time to be extended beyond the period provided by s 588FF of the Corporations Act 2001.

[2-6660] In the case of possession of land, absence of a person ordered to be joined

Rule 36.16(2)(c) provides that, in the case of proceedings for the possession of land, the court may set aside or vary a judgment or order after the judgment or order has been entered if the judgment or order has been given or made in the absence of a person whom the court has ordered to be added as a defendant, whether or not the absent person had notice of the relevant hearing or of the application for the judgment or order.

[2-6670] Interlocutory order

Rule 36.16(3) provides that, without limiting subrules 36.16(1) and (2), the court may set aside or vary any order except so far as it determines a claim for relief or a question arising on a claim for relief or determines part of a claim for relief.

Orders relating to practice and procedure will be freely reviewed in the light of changing circumstances but not otherwise: DPP (Cth) v Geraghty [2000] NSWSC 228; Hillston v Bar-Mordecai [2002] NSWSC 477.

[2-6680] The slip rule

The court may, on application or of its own motion, correct a clerical mistake or an error arising from an accidental slip in a judgment, order or certificate: r 36.17. A “party” in this rule means any person who has an interest in the proceedings and is not limited to persons formally joined as parties to the proceedings: JP Morgan Chase Bank, National Association v Fletcher (2014) 85 NSWLR 644 at [100]–[147], [149], [162]–[164].

By reason of the overriding objective in s 56 of the CPA (to facilitate the just, quick and cheap resolution of the real issues in the proceedings), words such as “error” and “correct” in the slip rule should not be given a narrow interpretation: Newmont Yandal Operations Pty Ltd v The J Aron Corp & The Goldman Sachs Group, Inc (2007) 70 NSWLR 411 at [116]. Some earlier authorities should now be treated with caution: Newmont Yandal, above, at [117].

Commonplace applications of the rule include correcting an arithmetical mistake in the calculation of interest or a wrong figure or date in an order.

The rule extends to matters overlooked, such as specifying a date for compliance with an order (Re Walsh (1983) 83 ATC 4147), or adding an amount for interest to the judgment (L Shaddock and Associates Pty Ltd v Parramatta City Council (No 2) (1982) 151 CLR 590), or where the judge has misunderstood the evidence (Hall v Harris (1900) 25 VLR 455 at 457); or counsel’s submissions: Yore Contractors Pty Ltd v Holcon Pty Ltd (unrep, 17/7/89, NSWSC).

The rule also extends to a correction made in order to carry into effect the actual intention of the judge and/or to ensure that the order does not have a consequence which the judge intended to avoid adjudicating upon: Newmont Yandal, above, at [114], [116], [185], [194].

The rule does not extend to correcting a deliberate decision (Expo Aluminium (NSW) Pty Ltd v Pateman Pty Ltd (No 2) (unrep, 29/4/91, NSWCA)) or to making further orders on a point not in issue at the hearing: Lauer v Briggs (No 2) (1928) 28 SR (NSW) 389; D’Angola v Rio Pioneer Gravel Co Pty Ltd [1977] 2 NSWLR 227.

In the Supreme Court at least, the inherent jurisdiction of the court extends to correcting a duly entered judgment where the orders do not truly represent what the court intended: Newmont Yandal at [74], [79], [83], [185], [194].

The court has power to make an order for restitution of an overpayment made in consequence of the error corrected under the rule: Prestige Residential Marketing Pty Ltd v Depune Pty Ltd (No 2) [2008] NSWCA 341 at [9].

The judge who made the orders is not disqualified from correcting them under the slip rule and should not recuse himself or herself: Newmont Yandal, per Spigelman CJ at [181] and Handley JA at [195], [196].

For an example of refusal to make an order on the ground of delay, see Georgouras v Bombardier Investments (No 2) Pty Ltd [2013] NSWSC 1549.

The court is not always obliged to give notice to the parties before exercising its powers of its own motion under UCPR r 36.17 to correct a mistake/error: see Marlinspike Debt Acquisitions Pty Ltd v The Undone Pty Ltd [2018] NSWSC 4 at [32]. Consideration must be given to whether procedural fairness requires notice to be given to the parties: Marlinspike Debt Acquisitions Pty Ltd v The Undone Pty Ltd at [33]-[42].

[2-6690] Varying a judgment or order against a person under an unregistered business name

A judgment or order against a person under a business name may be varied to make it a judgment or order in the person’s own name: r 36.18.

[2-6700] Denial of procedural fairness

An appeal in criminal proceedings may be re-opened, notwithstanding that judgment on appeal has been entered, if there has been a denial of procedural fairness, for example, where it is found that the appeal has not been determined on the relevant evidence: R v Burrell (2007) 175 A Crim R 21 at [41]. The rationale is that, in such a case, there has been no hearing on the merits and, accordingly, the matter has not been finally determined: Burrell at [22] and [41].

In relation to civil proceedings the same principle applies: DJL v The Central Authority, above, per Callinan J, at [189]; Miltonbrook Pty Ltd v Westbury Holdings Kiama Pty Ltd (2008) 71 NSWLR 262 at [85]–[87]. But with the qualification that different considerations may arise in civil proceedings, as where questions of status or the rights of third parties are involved: R v Lapa (No 2) (1995) 80 A Crim R 398 at 403, cited in Burrell at [25].

[2-6710] Fraud

That the judgment was obtained by fraud is a further exception to the general rule: DJL, per Callinan J at [189]. However, in this instance, the judgment should be impeached in independent proceedings: DJL, n 258 at p 291.

[2-6720] Liberty to apply

The principles as to the usual scope of liberty to apply were stated in Abigroup v Abignano (1992) 112 ALR 497 at 509 as follows (per Lockhart, Morling and Gummow JJ):

The reservation of liberty to all parties to apply to a court is a provision directed essentially to questions of machinery which may arise from the implementation of a court’s orders. They include cases where a court may need to supervise the enforcement of orders after they have been made.

Their Honours went on to cite with approval the following passage in Ritchie’s at [36.16.65]:

Liberty to apply in relation to a final order, is limited to matters concerning the implementation of the earlier order: Dowdle v Hillier (1949) 66 WN (NSW) 155; Cristel v Cristel [1951] 2 KB 725 at 730; Re Porteous [1949] VLR 383. It does not extend to the substantive amendment of the judgment or orders in respect of which the liberty to apply was granted (Wentworth v Woollahra Municipal Council (CA (NSW), 31 March 1983, unreported).

[2-6730] Self-executing orders

A self-executing order consists of an order that a party take a specified step in the proceedings by a certain date and that, failing compliance, a specified final order (such as for the entry of judgment or that the proceedings stand dismissed) will come into effect.

Earlier authorities held that the courts had no power to circumvent such an order once it came into effect, for example, Whistler v Hancock (1878) 3 QBD 83; Bailey v Marinoff (1971) 125 CLR 529. These authorities should now be disregarded. The court has power to extend the time for compliance with a self-executing order notwithstanding that the time for compliance has passed and the order has come into effect: FAI General Insurance Co Ltd v Southern Cross Exploration NL (1988) 165 CLR 268.

[2-6735] Consent orders

The Supreme Court may in the exercise of its inherent jurisdiction set aside consent orders if the underlying agreement upon which they were based is void or voidable: The Owners Strata Plan No 57164 v Yau [2017] NSWCA 341 at [72], [76], [80], [195] and [226]. Such relief is discretionary even if some basis for setting aside the order has been established: The Owners Strata Plan No 57164 v Yau, above, at [81]–[83], [195], [226].

[2-6740] Setting aside or varying a judgment or order ostensibly implementing a compromise or settlement

Section 73 of the CPA provides that the court may resolve any dispute as to whether and on what terms proceedings have been compromised or settled, and may make such orders as it considers appropriate to give effect to such a determination.

A consequential order giving effect to such a determination could include an order setting aside or varying the order or judgment ostensibly implementing a compromise or settlement.

For examples of the application of s 73, see Yule v Smith [2012] NSWCA 191 and Mills v Futhem Pty Ltd (2011) 81 NSWLR 538 at [42]–[43].

Legislation

  • CPA ss 56, 63, 73

Rules

  • UCPR rr 36.15(1), (2), 36.16(1), (2), (3), (3A), (3B), (3C), 36.17, 36.18