Citation: Perpetual Trustees Victoria Limited v Richard Kingsley Sheehan and Anor [2003] NSWSC 651
Court: Supreme Court of New South Wales, Common Law Division
Date: 23 July 2003
Judge(s): Shaw J
Background
A mortgage trustee obtained consent orders against two defendants for possession of residential property at Baulkham Hills. The orders were made by Simpson J on 10 June 2003 following a signed terms of settlement executed by both defendants personally and the plaintiff's solicitor. Critically, those orders had not yet been formally entered at the time of this application.
The defendants moved by notice of motion to set aside the consent orders and the underlying settlement. The first defendant, a disability pensioner who was wheelchair-bound, alleged he had been heavily medicated with morphine and other drugs at the time of signing and was effectively operating "in a fog," incapable of rational decision-making. The second defendant, his wife, argued she had been unrepresented and lacked legal advice when she signed the settlement.
The plaintiff did not oppose the court's power to revisit the orders in principle, but argued the appropriate course was to dismiss the notice of motion and require the defendants to commence fresh proceedings rather than pursue the challenge in the original matter.
Legal Issues
- Whether the Supreme Court had power to set aside consent orders that had not yet been formally entered.
- Whether the challenge should proceed by way of notice of motion in the original proceedings or by the commencement of separate substantive proceedings.
- Whether the authority in Spies v Commonwealth Bank of Australia (which required fraud challenges to consent orders to be brought by fresh action) applied to the defendants' grounds of incapacity and lack of legal advice.
- How the defendants' grounds should be particularised before the matter proceeded further.
Decision
Shaw J confirmed that the court retained clear power to set aside or vary the consent orders because they had not been formally entered. Part 40 r 9(1) of the Supreme Court Rules 1970 expressly provides for this, and the High Court in Smith v New South Wales Bar Association (1992) 176 CLR 256 confirmed the long-standing common law position that a court may review, correct, or alter its judgment at any time before the order is perfected. That power is discretionary and must be exercised with regard to the public interest in the finality of litigation.
The plaintiff relied on Spies v Commonwealth Bank of Australia (1991) 24 NSWLR 691 to argue the notice of motion should be dismissed and fresh proceedings commenced. Shaw J distinguished Spies on two grounds. First, Spies arose after judgment had already been formally entered, making Part 40 r 9 inapplicable in that case. Second, Spies was concerned specifically with fraud as the basis for setting aside a consent order, and the court there held that a fraud-based challenge requires a fresh action rather than a notice of motion.
In the present case, the defendants did not allege fraud. Their grounds rested on incapacity arising from illness and heavy medication, and on the absence of legal representation. Shaw J held that Spies was therefore distinguishable, and that no procedural injustice would result from the challenge proceeding in the original proceedings by way of notice of motion.
Shaw J accepted the plaintiff's alternative submission that the defendants should be required to file points of claim particularising the material facts on which they relied, with the plaintiff then having an opportunity to file a defence before the matter returned before the list judge.
Orders Made
- The defendants were to file points of claim by 28 July 2003, setting out the material facts supporting their application to set aside the judgment.
- The plaintiff was to file and serve a defence to those points of claim by 4 August 2003.
- The matter was to be listed before the list judge in the call-up list on 8 August 2003.
- Costs of the notice of motion were reserved.
Key Takeaways
- Under Part 40 r 9(1) of the Supreme Court Rules 1970, a court may set aside or vary a judgment at any time before the order has been formally entered, consistent with the High Court's confirmation in Smith v New South Wales Bar Association that this power exists at common law until perfection of the order.
- The Spies principle, requiring fraud-based challenges to consent orders to be brought by fresh action rather than notice of motion, does not extend to challenges grounded in incapacity or lack of legal representation. Shaw J drew a clear distinction between the two categories.
- Where consent orders have not been entered, a capacity-based challenge may proceed in the original proceedings, provided the challenging party adequately particularises the material facts relied upon.
- The discretionary power to set aside unentered orders must still be exercised with regard to the public interest in the finality of litigation, even where no written reasons accompanied the original consent orders.
- A plaintiff's concession that fresh proceedings could be commenced was treated as a relevant consideration supporting the court's conclusion that allowing the challenge to continue in the existing proceedings was the more efficient and practical course.
Legislation and Cases Referenced
Legislation:
- Supreme Court Rules 1970 (NSW), Part 40 r 9(1)
- Supreme Court Act 1970 (NSW), s 95 (noted as incorrectly cited in the consent orders as s 94)
Cases:
- Smith v New South Wales Bar Association (1992) 176 CLR 256 (High Court)
- Spies v Commonwealth Bank of Australia (1991) 24 NSWLR 691 (NSW Court of Appeal)