Glavan v Abigroup Contractors & Ors

1. [1]

   By notice of motion filed on 11th June 2011, the third defendant (Allianz Australia Insurance Limited) applies for an order setting aside a consent judgment in favour of the first defendant (Abigroup Contractors Pty Ltd) against the plaintiff, entered on 1st June 2005. The notice of motion has been filed within the time limited by Rule 36.16(3A) Uniform Civil Procedure Rules 2005 (NSW).

2. [2]

   Allianz also moves on behalf of its insured, the second defendant (ZWF Pty Ltd), and is supported in its application by the third cross-claimant, the plaintiff’s employer (Brighton Australia Pty Ltd). The plaintiff, Mr Glavan, has adopted an essentially neutral stance but is slightly supportive of Allianz’s position. The motion is opposed by Abigroup.

Refusal of Abigroup’s application to adjourn the motion

1. [3]

   I record that when the motion was called on for hearing Abigroup applied for it to be adjourned for hearing by the trial judge appointed to decide the principal proceedings, the hearing of which is to commence on 6th July 2015. The adjournment was opposed by the parties propounding and supporting the motion.

2. [4]

   Part of the legal effect of the consent judgment in favour of Abigroup, if it stands, is that it is not a “tort-feasor who is, or would if sued have been, liable in respect of” the damage suffered by the plaintiff for the purpose of s 5(1)(c) Law Reform (Miscellaneous Provisions) Act 1946 (NSW): see James Hardie & Co Pty Ltd v Seltsam Pty Ltd [1998] HCA 78; 196 CLR 53. Given ZWF, Allianz, and Brighton claim statutory contribution from Abigroup, it seemed to me inappropriate to leave the question of the success, or otherwise, of Allianz’s motion hanging in the balance until final determination of the proceedings. Even if the trial judge decided to determine the motion separately and in advance of the questions of liability and quantum in the principal proceedings, that course would necessarily expend some of the time available for the hearing which has been fixed for four days only. For these reasons I refused the adjournment.

3. [5]

   The adjournment application was also advanced on the ground of the unavailability of trial counsel due to a conflicting professional commitment. I declined to adjourn the matter to suit counsel’s convenience. Although the motion involves a point of principle, it is hardly complex and other experienced counsel in the field ought to have been able to master the limited materials in short order. But I did stand the matter in the list for two hours while I attended to other matters in the duty list, to enable the solicitor appearing for Abigroup to attempt to secure other representation. When the matter resumed at about 12:15 pm the solicitor indicated that he was content to continue to appear on the hearing of the motion.

The power invoked

1. [6]

   Rule 36.16(2)(b) is in the following terms:

2. [7]

   In part, rule 36.16(2)(b) reflects the common law position that a party affected by a judgment in respect of which he or she has not been given fair opportunity to be heard may have it set aside ex debito justitiae: Cameron v Cole [1944] HCA 5; 68 CLR 571. But as its terms make clear it extends to absence for any reason.

Factual findings

1. [8]

   From the affidavit of Angela Winkler, the solicitor with the daily conduct of the matter under the supervision of the responsible partner, I am satisfied that the first notice that Allianz received of the agreement between the plaintiff and Abigroup for judgment in favour of the latter was by letter delivered by email on 28th May 2015. So far as material, the letter stated as follows:

2. [9]

   I infer that ignorant of this development, the solicitors for Allianz delivered a letter by email on 2nd June 2015 to each of their counterparts acting for Mr Glavan and Abigroup, pointing out their understanding of the effect of James Hardie v Seltsam, stating that they were opposed to “the entry of judgment”, and stating that they wished “to be heard on (any) application” to enter judgment giving effect to Mr Glavan and Abigroup’s agreement. It was not until 10th June 2015 that Allianz’s solicitors received confirmation from Mr Glavan’s solicitors that the consent judgment had been filed on 28th May 2015. A search of JusticeLink on 10th June 2015 should that the judgment was entered on 1st June 2015, rather than 9th June 2015 as stated in [11] of Ms Winkler’s affidavit. Upon learning this, the solicitors for Allianz moved with appropriate celerity, filing the Notice of Motion to set aside the judgment on 11th June 2015.

3. [10]

   So far as it may be relevant I am of the view that Allianz’s solicitors acted with appropriate diligence and in so far as I have a discretion, which for reasons I will explain I doubt, I am not persuaded that the evidence establishes any “delay”, which may tell against exercising it favourably to Allianz.

Issues and applicable principles

1. [11]

   The issue for decision involves striking a balance between the competing rights of the main protagonists. For its part, Abigroup is entitled to make a separate agreement for compromise with the plaintiff in terms which both will be held to; it is not entitled to enter into an agreement with the plaintiff that injures the interests, or rights, of Allianz at least, without giving Allianz a fair opportunity to be heard in opposition at least to the injurious effect of the compromise agreement: James Hardie v Seltsam at 62 [17]; John Alexander’s Clubs Pty Ltd & Anor v White City Tennis Club Limited; Walker Corporation Pty Ltd v White City Tennis Club Limited and Ors [2010] HCA 19; 241 CLR 1 at 48 [137].

2. [12]

   As the decision in James Hardie v Seltsam makes clear, the injurious effect of the agreement between Abigroup and Mr Glavan for judgment in favour of the former occurs when the consent judgment is perfected by entry in the record of the Court, referred to as JusticeLink. As a unanimous High Court made clear in Amaca Pty Ltd v State of New South Wales [2003] HCA 44; 199 ALR 596 (at 600 [17]), the effect of James Hardie v Seltsam is as follows:

3. [13]

   These passages made clear that it is the entry of judgment absolving Abigroup from liability which has the effect of depriving Allianz (and others) of the ability to assert that Abigroup is a tortfeasor who “is or would if sued have been liable” to Mr Glavan: see also Oceanic Crest Shipping Co v Pilbara Harbour Services Pty Ltd (1986) 160 CLR 626 at 670 by Brennan J (as the Chief Justice then was).

4. [14]

   That entry of the consent judgment on the record, as opposed to the plaintiff and Abigroup signing and filing the minute of consent judgment, is the crucial circumstance absolving Abigroup from liability for statutory contribution is made clear by the passage in the judgment of Gaudron and Gummow JJ in James Hardie v Seltsam at 69 [41]:

5. [15]

   The plurality judgment in Burrell v The Queen [2008] HCA 34; 238 CLR 218 is concerned with “the powers of a superior court of record to reopen a proceeding and reconsider the orders that have been made” (at 222 – 3 [13], footnotes omitted). Their Honours identified three salient principles governing that question: first, the primacy of the text of governing statutes, and the express or implied powers conferred thereby; secondly, the important public interest in “finality of litigation” (223 [15]), which is reflected “in the restrictions upon re-opening of final orders after they have been formally recorded” (223 [15]) (emphasis added); and thirdly, the principle of finality “serves as the sharpest spur” to “all participants in the judicial process, judges, parties and lawyers alike, to get it right the first time”.

Argument

1. [16]

   The arguments in the case at hand focused on the second principle. Allianz argued that its application to set aside the final judgment fell within the scope of the “few, narrowly defined, circumstances” recognised in the case law (see Burrell at 223 [15]). Abigroup argued that the finality principle was fundamentally in the public interest. In its submission, it is not unjust to let the judgment in its favour “stand”: Vacuum Oil Co Pty Ltd v Stockdale (1942) 42 SR (NSW) 239 at 243 – 4. It also referred to University of Wollongong v Metwally (No 2) [1985] HCA 28; 59 ALJR 481 at 482 – 3 where a unanimous High Court suggested that the few narrowly defined circumstances in which a perfected order may be set aside included mistake, fraud, or “a case in which by some accident an order had been made against a party who is not heard”.

2. [17]

   Allianz emphasised that it is implicit in each of the judgments of the majority in James Hardie v Seltsam that other parties to the litigation had a right to be heard about whether a consent judgment to which they were not parties should be entered: 62-3, [17]-[18]; 69, [41]; and 99, [133]. This is confirmed by the later Amaca v NSW decision at 600 [17].

Consideration

1. [18]

   I think it important to refer to two other passages from Burrell. At 224 [18] the Court said:

2. [19]

   In the present case, of course, there is no doubt that the consent judgment had been perfected by entry. However, the distinction between pronouncing and entering orders was averted to in argument mainly in the context of what orders should be made if Allianz’s application was successful.

3. [20]

   It is logical to deal with whether the judgment should be set aside and then with the question of whether any further should be made.

4. [21]

   For my part, I am of the view that Allianz’s application falls into one of the few, narrowly defined circumstances conceded by Abigroup. In my judgment this is “a case in which by some accident an order has been made against a party who is not heard”. In my judgment the juxtaposition between the letter of 28th May 2015, and the filing of the consent judgment that very day did not give Allianz a fair opportunity to be heard in opposition to the entry of the judgment. I accept the judgments in James Hardie v Seltsam require a party in the position of Allianz to be pro-active in opposing the entry of judgment: 69 at [41]. There the affected parties were present in court when application was made for entry of the “injurious” judgement. Importantly, as Gaudron and Gummow JJ said at 62 [17]:

5. [22]

   Indeed, Gaudron and Gummow JJ were of the view that James Hardie “should have been joined as a respondent” on the motion brought “for entry of consent judgment”: 63, footnote (38); Thomson Australian Holdings Pty Ltd v Trade Practices Commission (1981) 148 CLR 150 at 155.

6. [23]

   Allianz may have been a little slow off the mark in registering its objection to the course proposed by Allianz and Mr Glavan: perhaps its protest could have been raised before 2nd June 2015. But there was nothing about its conduct which could be described as dilatory. Moreover, there was nothing in Abigroup’s letter of 28th May 2015, and the use of the word shortly which would put Allianz on notice that the consent order would be filed forthwith and without further notice to Allianz. I accept that Abigroup did not intend to overreach, but the consequence of its pre-emptive conduct was that Allianz was denied any effective opportunity to object to the entry of judgment which occurred at the time the Registrar made the order in chambers on 1st June 2015.

7. [24]

   Given Allianz’s right to be heard, in my judgment this case falls into the established category where a party has been denied a fair opportunity to be heard. And in exercising the power to set aside the judgment under rule 36.16, the court has no discretion but must accede to the application of Allianz, who is entitled ex debito justitiae.

8. [25]

   Accordingly, I will make an order setting aside the consent judgment.

What further orders should be made?

1. [26]

   The effect of this decision is that as against those parties claiming statutory contribution, Abigroup is not absolved of liability. The question of whether it is a tort-feasor who is, or if sued would be, liable to Mr Glavan for the purpose of s 5(1)(c) of the 1946 Act will remain “live” for determination by the trial judge when deciding the case. This does not mean that Abigroup should be deprived of the legitimate advantage of its bargain with the plaintiff, that is to say, by dint of its agreement with Mr Glavan, it is entitled, as between them only, to judgment in its favour. Mr Glavan is not entitled to resile from his agreement simply because the judgment is liable to be set aside at the suit of the parties claiming statutory contribution. My orders should make that quite clear.

2. [27]

   Allianz argued that the judgment must be set aside for all purposes. It argued that there was no remaining vitality in the former distinction between pronouncing orders and entering them discussed in Burrell. But as Burrell makes clear “the formal recording” of a superior court’s order marks “the point at which that court’s power to reconsider the matter is at an end” (224 [20]).

3. [28]

   Moreover, the distinction continues to be recognised by the Uniform Civil Procedures Rules. Rule 36.1A provides, “[a] court may give judgment, or order that judgment be entered, in the terms of an agreement between parties in relation to proceedings between them.” (Emphasis added).

4. [29]

   Rule 36.4(1) provides:

5. [30]

   Rule 36.11, which deals with the mode of entry of judgment, is in the following terms:

6. [31]

   The unanimous judgment of the High Court of Australia in John Alexander’s Clubs at 52–3, [152] demonstrates that the distinction between pronouncement (or the making) and entry of orders as of continuing vitality under the modern rules of court. Their Honours said:

Recapitulation

1. [32]

   For these reasons Allianz is successful on the main issue and orders should be made setting aside the judgment injurious to its statutory rights, as a matter of right, not discretion. At the same time the court’s orders should make clear that as between themselves, Abigroup and Mr Glavan remain bound by their agreement that, when appropriate, Abigroup is entitled to the entry of judgment on the plaintiff’s claim against it. That will only be appropriate after Allianz and the other parties injuriously affected by the entry of that judgment have had a fair opportunity of vindicating their claim for statutory contribution.

2. [33]

   Before pronouncing orders, I will record that I think it appropriate that Allianz have its costs of the application whatever the result of its claim for statutory contribution. Judgment should not have been entered depriving it of the right to prosecute its claim for statutory contribution without first giving it a fair opportunity to be heard. As the only contradictor, Abigroup should bear those costs.

3. [34]

   My orders are:

   1. (1)

      Under Rule 36.16(2)(b) Uniform Civil Procedure Rules 2005 (NSW), the consent judgment for the first defendant against the plaintiff entered on 1st June 2015 is set aside;

   2. (2)

      The form of consent judgment signed by the solicitors for the plaintiff and the first defendant and filed on 28th May 2015 may lie in the Registry but is not to be given or entered under rule 36.1A Uniform Civil Procedure Rules until the determination of the issue of the liability of the first defendant to the plaintiff for the purposes of the claim of each other party for statutory contribution by the first defendant;

   3. (3)

      The first defendant is to pay the third defendant’s costs of and incidental to the notice of motion filed on 11th June 2015, in any event;

   4. (4)

      Each other party to bear his or its own costs of the application;

   5. (5)

      Confirm that the proceedings are fixed for hearing to commence on 6th July 2015.