Melhem v Katter

BRERETON JA: In 2011, the applicant Robert George Melhem commenced proceedings in the District Court of New South Wales against the respondents Joseph Katter and Susan Vera Katter, to recover a loan and interest which together were said to amount to in excess of $1 million by the time that the proceedings came on for hearing before Gibson DCJ on 7 August 2012.

Partway through the first day of the hearing, the proceedings were settled and the parties, by their respective solicitors, executed handwritten terms of settlement in the following terms: [1]

The primary judge observed that there was an inconsistency between paragraph [1], which provided for an immediate judgment for the plaintiff for $400,000, and paragraph [4], which reserved leave to the plaintiff to enter judgment for $1 million if the first judgment was not satisfied by 1 April 2013 or certain other conditions were not satisfied. As a result, the document was amended so that orders were ultimately entered on 7 August 2012 as follows: [2]

The sum of $400,000 was not paid and the condition concerning a put and call option was not, as ultimately determined, satisfied, with the result being that on 23 July 2013, pursuant to an application made on behalf of the present applicant, judgment was entered in the District Court, purportedly pursuant to paragraph [4] of the earlier orders, for $1 million.

An application to set aside that judgment in the District Court was dismissed by Gibson DCJ on 18 October 2013. [3] However, the respondents then brought judicial review proceedings in this Court, in which they sought a writ of prohibition prohibiting the taking of any step to enforce or otherwise give effect to the judgment made on 23 July 2013, and a declaration that the judgment was entered into without power, without notice and therefore in breach of the rules of natural justice, and beyond the scope of ss 44 and 51 of the District Court Act 1973 (NSW). [4] In those proceedings, this Court held that because the $1 million judgment of 23 July 2013 was inconsistent with the final judgment entered on 7 August 2012, it was void and liable to be quashed, and made the following orders: [5]

Thus it will be seen that those orders quashed the orders given on 22 July 2013 in the District Court, being the $1 million judgment, and prohibited that Court from taking any further steps “on the basis that the orders given on 22 July 2013 in those proceedings are valid.”

On 21 July 2020, the applicant filed motions in the District Court for examination orders against each of the respondents. Conformably with Uniform Civil Procedure Rules 2005 (NSW) (“UCPR”), r 38.2(3), which provides that unless the Court otherwise orders, an application for an order for examination may be dealt with in the absence of the parties and need not be served on the person bound by the judgment or order, those motions were not served and examination orders were subsequently made.

On 29 September 2020, the respondents filed a motion in the District Court seeking a stay of the proceedings and an order restraining the registrar from conducting examinations as provided for in the examination orders of 22 July 2020. The proceedings came before Gibb DCJ on 5 November 2020. In a document which appears to be the only record of her Honour’s reasons for judgment of that day, her Honour noted the orders of this Court in the 2015 CA Judgment and observed that the jurisdiction of the District Court was exhausted in 2012, 2013, or at the latest 2015 (referring to the 2015 CA Judgment), that various orders for examination had been filed in the years since “the court was functus officio”, and that “[t]he plaintiff [was] informed that should he wish to pursue this matter he must take appropriate steps and file [a] fresh summons or fresh proceedings invigorating appropriate jurisdiction.” Her Honour made orders dismissing all motions and examination orders made in the proceedings in 2020, including those to which I have referred, setting aside the examination orders of 22 July 2020, and ordering “that this file be closed as the Court’s jurisdiction has long been exhausted and these proceedings are at an end.”

The applicant filed a Notice of Intention to Appeal on 1 December 2020 and a Notice of Appeal within time on 3 February 2021. It having become apparent that it was at least arguable that leave to appeal might be required, the applicant filed a Summons Seeking Leave to Appeal on 8 April 2021, which, if leave be required, would be out of time. By an amendment, leave for which was sought at the hearing, the applicant seeks to add a claim for such an extension of time.

It has also emerged that the applicant is serving a sentence for what is not disputed to be a “serious indictable offence” within the meaning applicable to Felons (Civil Proceedings) Act 1981 (NSW) (“Felons Act”), s 4, [6] such that the applicant may require leave under that Act to commence an appeal. Whether s 4 of the Felons Act applies to an appeal in this Court is, however, not a concluded question. In Mr D v Ms P, [7] Bell P observed that a number of decisions have proceeded on the basis that the bringing of an appeal amounts to the “institution” of “civil proceedings”, referring to Chen v Zhang, [8] Ford v Simes, [9] and Clark v State of New South Wales, [10] but his Honour left the question open as it did not require resolution. [11] Perhaps more relevantly, his Honour observed that the requirement of s 5 of that Act that the Court not grant leave unless satisfied that the proceedings are not an abuse of process and that there is a prima facie ground for the proceedings, set a low hurdle for an application for leave. As his Honour said, “[i]t follows that the ‘prima facie’ requirement in s 5 of the Felons Act represents a relatively low threshold to be satisfied on an application for leave pursuant to s 4 of that Act.” [12]

The proceedings before us are set down for a concurrent hearing of the application for leave and any appeal, if leave be granted or if leave not be required. In those circumstances, the Court will form a view of the merits of the grounds of appeal, and if the appeal is meritorious then there is no reason for refusing leave under the Felons Act.

The decision of Gibb DCJ is undeniably an interlocutory one, although it has a final effect on the applicant’s ability to enforce the judgment of 2012. Notwithstanding that final effect, a motion in connection with enforcement of a judgment and, in this case, the dismissal of that motion is plainly interlocutory in nature, just as the dismissal of proceedings on an application for summary dismissal has been held to be interlocutory. [13] Leave to appeal is therefore required. [14]

Nonetheless, on the question of leave to appeal it is highly relevant that the that the judgment, if it stands, would finally dispose of the applicant’s substantive rights and ability to enforce those rights. Again, as the Court will in any event consider the merits of the appeal on a concurrent hearing, the requirement for leave provides no reason for refusing leave if, in those circumstances, the appeal has merit.

Because leave is required, an extension of time to seek leave to appeal is required. In that respect, however, it is highly relevant that a Notice of Appeal was filed, albeit without leave, within time. One consequence of that is that the respondents have been on notice of the intention to appeal since 1 December 2020, when the Notice of Intention to Appeal was filed, no prejudice from the delay in seeking leave to appeal could arise, and none has been identified in the course of argument. . An extension of time for the Summons Seeking Leave to Appeal to the date on which it was filed should be granted.

That brings me to the substantive issues raised. The primary judge’s observation that the District Court was functus officio in 2012, 2013, or at the latest 2015 overlooks the fundamental distinction between adjudication and enforcement. An examination order is an aspect of enforcement, not of adjudication. This distinction was plainly recognised in the 2015 CA Judgment in these proceedings, where JC Campbell AJA said: [15]

As determined in the 2015 CA Judgment, the 7 August 2012 judgment for $400,000 finally determined the rights of the parties on the relevant cause of action. The 22 July 2013 judgment was a nullity and liable to be quashed, because it was inconsistent with that earlier judgment. Thus, this Court quashed the 22 July 2013 judgment and, in order (3), prohibited further proceedings “on the basis” of its validity. The order did not prohibit further proceedings on the basis that the 7 August 2012 judgment was valid.

For the respondents, it was argued that the prohibition order should be construed as being a total prohibition on further proceedings, and that the words “on the basis…” were a reason for the order. In my judgment, that construction is untenable. The phrase “on the basis…” is part of the order, not a reason for it, and it forms part of the description of the further proceedings which were prohibited. In other words, the District Court was prohibited from acting on the basis that the 22 July 2013 judgment was valid. It was not prohibited from acting on the basis that the 7 August 2012 judgment was valid, and indeed the entire judgment of the Court of Appeal proceeds on the basis that the 7 August 2012 judgment was indeed valid. [16] For those reasons, in my opinion, the judgment of the District Court in holding that it was functus officio and that the proceedings were totally at an end was plainly wrong.

Two other arguments were raised in written and oral submissions. It was submitted that the examination orders were liable to be set aside on the basis that they were made in denial of procedural fairness, no notice of the application for them having been given. No Notice of Contention sought to raise this as a ground upon which the judgment should be upheld. But in any event there was, as I have indicated, no requirement for any such notice. UCPR, r 38.2(3), explicitly so provides.

Secondly, there was a suggestion, at least in the written submissions, that the second respondent was not a party to the terms of settlement and was not bound by them. Again, no Notice of Contention raised this as a ground on which the judgment below should be upheld. There is no evidence, so far as the documents before this Court show, as to exactly how the terms of settlement were signed, but the 2015 CA Judgment records that they were signed by the solicitor for each of the parties and there is no reason to depart from that finding. [17] In any event, the judgment was plainly in its terms entered against both respondents “jointly and severally”, and remains on the record against both. In those circumstances, it is enforceable against both and both were liable to be examined on an examination order.

In my opinion, therefore, leave to appeal should be granted, the appeal allowed, the orders of the District Court set aside and the matter remitted to the District Court for further hearing. I propose the following orders:

McCALLUM JA: I agree with the orders proposed by Brereton JA for the reasons his Honour has given, and would make one short additional observation. The submission that the concluding words of order (3) of the Court of Appeal in Katter v Melhem (2015) 90 NSWLR 164; [2015] NSWCA 213 “on the basis that the orders given on 22 July 2013 in those proceedings are valid” were to be construed as the reason for that order rather than a qualification to the order did not make sense. The validity of the orders given on 22 July 2013 had been impugned by order (2) of the same decision. In my view, there is no way to read order (3) other than on the basis that those words presented a qualification to the prohibition on taking further steps in the proceedings.

GARLING J: I agree with the orders proposed by the presiding judge and with his reasons. I also agree with the additional remarks of McCallum JA.

BRERETON JA: Accordingly, the orders of the Court will be as I have proposed.