LSB September 2018_Web

CASE NOTE
the files related to the Planet Hotel. The
Commissioner produced an additional file
that contained a “fourth” copy of the lease
agreement. The fourth copy had a similar
line through the words “for” and “NIL”
in clause 11(i) of the lease agreement.
Therefore, any argument that the line was
made accidentally or mechanically seemed
less plausible.
A critical witness for Players at the trial
was one of its directors, Mr Griffin, a
solicitor and partner of a law firm. Mr
Griffin gave evidence that he struck
through the word “NIL” using a pen with
blue ink, the three directors initialled each
page of the lease agreement and each
of the highlighted changes and signed
as guarantors. However, no initials were
found by the changes relating to striking
out of the words “for” and “NIL”. This
was not accepted at trial, for amongst
other reasons, it was considered unlikely
that a commercial solicitor, such as Mr
Griffin, would have been satisfied with a
provision that provided for the relevant
liquor and gaming machine licences to be
transferred “for consideration”. If it was
accepted that these words were struck out,
the clause would have read as follows:
“The Lessee [Players] will upon expiration
or earlier determination of the Lease transfer
to the Lessor [Clone] any Liquor Licences or
gaming machine Licences held in respect of the
premises [words struck out] consideration.”
Mr McDermott’s evidence (although not
described in the HCA judgment) was also
rejected.
Clone was successful and not required
to pay reasonable consideration for the
transfer of the relevant liquor and gaming
machine licences. The SASCFC upheld
this decision.
THE “THIRD” COPY & THE APPLICATION
TO SET ASIDE JUDGMENT
Once the proceedings concluded,
Players learned that Clone was aware
of a third copy and a fourth copy was
produced to the court but not relied upon.
Consequently, Players sought to set aside
the judgment against it and sought an
order for a new trial. As stated earlier, the
presence of a line in two further copies
22 THE BULLETIN September 2018
of the lease agreement raised doubt as
to the possibility of this line being made
accidentally or mechanically.
Players pursued its two applications to
set aside judgment on the basis of Clone’s
malpractice. Namely, alleging:
• Clone breached its obligations to
discover the third copy of the lease
agreement;
• Clone not only misled Players but also
misled the court; and
• Clone breached its obligations of
discovery by failing to inform it of the
Commissioner’s production of the files
to the court.
It was held, by both the trial judge and
SASCFC that Clone had engaged in
malpractice and misconduct sufficient to
enliven the court’s discretionary power to
set aside its judgment. The effect of which
was an order for a new trial.
THE HIGH COURT APPEAL
Two issues were required to be
determined by the HCA, relating to
whether the power of a court extends to:
1. Malpractice or is it only limited to proof
of fraud; and
2. Where the unsuccessful party failed to
exercise reasonable diligence to discover
the fraud or misconduct during the
earlier proceedings.
The HCA considered the history of
setting aside judgments and how this
reflected upon the Supreme Court’s
present powers. 1
The Court of Chancery recognised two
ways in which decrees could be set aside.
First, the “bill of review” empowered
the court to reverse or alter a decree.
Second, the “original bill” was able to be
issued without leave, to rescind or annul
the decree on grounds of “fraud and
imposition”. 2
There are two distinct categories whereby
a bill of review could have been brought
in the Court of Chancery, the first being
concerned with substantial errors of law
and the second being brought by a party
discovering a new matter since the decree. 3
In relation to the second category it was
necessary that leave of the court was
sought before being filed, which required
the applicant to satisfy the court of two
matters 4 :
1. The failure to discover the material prior
to the decree was not due to a lack of
reasonable diligence by the applicant; and
2. The new matter is relevant to the extent
that it would have led to a different
outcome, if it was discovered prior to
the decree.
In 1935, the bill of review was removed
and replaced in South Australia. 5
Notwithstanding the enactment of a
formalised appeal process, appeals were
still able to be placed into categories
and brought both for errors of law
and fresh evidence. The HCA cited
Wollongong Corporation v Cowan (1955) 93
CLR 435, 444 where Dixon CJ held in
relation to appeals brought where fresh
evidence is discovered after a judgment,
that reasonable diligence to discover the
material prior to judgment and that fresh
evidence would have changed the result
were still required (similar to the bill of
review standard). 6
The HCA also cited Commonwealth Bank
of Australia v Quade (1991) 178 CLR 134
(Quade), a case where the successful
party failed to comply with an order for
discovery before judgment and an appeal
was brought on grounds in relation to
whether there had been an error of law
arising from an allegation of malpractice,
the allegation of malpractice being the
failure to comply with an order for
discovery. The HCA in Quade concluded
that it was not necessary to conclude that
the result would have been different for
matters “in relation to errors of law as well as
instances of surprise, malpractice, or fraud”. 7
The power to order a new trial depended
upon the appellate court’s assessment of
the interest of justice for doing so.
Importantly the HCA went on to
consider the importance of a court’s
power to set aside its own judgments.
It considered the categories where an
original bill by the Court of Chancery may
recognise and rescind or annul a decree on
the basis of fraud, as opposed to a bill of
review. In these circumstances the HCA
identified that actual positive fraud was
required to be pleaded and proved. 8 That
is, it cannot be constructive fraud because
it will not exhibit any such intention or
contrivance to deceive or mislead. The
original bill process has not been affected