MARSHALL FLOWERS In Person [2023] SASCA 12

On Appeal from SUPREME COURT OF SOUTH AUSTRALIA (FULL COURT (LOVELL, PEEK AND STANLEY JJ)) [2021] SASCFC 3 Appellant: MARSHALL FLOWERS In Person Respondent: GREG FINLAYSON Hearing Date/s: 10/02/2023 File No/s: CIV-22-13985 B SUPREME COURT OF SOUTH AUSTRALIA (Court of Appeal: Civil) DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment. The onus remains on any person using material in the judgment to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court in which it was generated. FLOWERS v FINLAYSON (No 2) [2023] SASCA 12 Judgment of the Court of Appeal (ex tempore) (The Honourable President Livesey, the Honourable Justice Doyle and the Honourable Justice Nicholson) 10 February 2023 APPEAL AND NEW TRIAL - PROCEDURE - SOUTH AUSTRALIA - POWERS OF COURT - REOPENING APPEAL The applicant filed an originating application seeking, among others, orders that the Supreme Court reopen and set aside the judgment of the Full Court in Flowers v Finlayson [2021] SASCFC 3. The application was predicated on the proposition that the decision of the Full Court was procured by fraud. The applicant relied on a decision of the Full Court, as well as the subsequent decision of the High Court, in Clone v Players (2018) 264 CLR 165. The Court held (dismissing the originating application): 1. The applicant has not demonstrated that the decision of the Full Court was procured by fraud and it does not appear that the applicant can ever demonstrate that the Full Court’s decision was procured by fraud. 2. The application is properly to be regarded as an abuse of process. Uniform Civil Rules 2020 (SA) rr 85.1, 143.2, 186.1; Supreme Court Act 1935 (SA) s 50, referred to. Autodesk Inc v Dyason (No 2) (1993) 176 CLR 300; Clone Pty Ltd v Players Pty Ltd (In Liquidation) (Receivers Appointed) [2012] SASC 12; Clone Pty Ltd v Players Pty Ltd (In liquidation) (Receivers Appointed) (2016) 127 SASR 1; Clone Pty Ltd v Players Pty Ltd (In Liquidation) (Receivers & Managers Appointed) (2018) 264 CLR 165; Commonwealth Bank of Australia v Forshaw (1990) 55 SASR 247 (FC) (1990) 55 SASR 247 (FC); Commonwealth Bank of Australia v Quade (1991) 178 CLR 134; Flowers v Finlayson [2021] SASCFC 3; Forrest v ASIC (2012) 247 CLR 486; McAdam v Robertson (1999) 73 SASR 360; Mohtar v Mohtar (1988) 146 LSJS 377; Players Pty Ltd (In Liquidation) (Receivers Appointed) v Clone Pty Ltd (2013) 115 SASR 547; Players Pty Ltd (In Liquidation) (Receivers Appointed) v Clone Pty Ltd [2015] SASC 133, considered. -- 1 of 10 -- -- 2 of 10 -- FLOWERS v FINLAYSON (No 2) [2023] SASCA 12 Court of Appeal – Civil: Livesey P, Doyle JA and Nicholson AJA THE COURT (ex tempore): Introduction 1 Some time ago the respondent represented the applicant in the Family Court. The applicant has since been seriously critical of the respondent’s conduct of his retainer. He prosecuted him before the Legal Practitioner’s Disciplinary Tribunal. The Tribunal’s dismissal of the applicant’s charges against the respondent was appealed to the Full Court, whose decision dismissing that appeal was delivered over two years ago on 3 February 2021.1 2 By an originating application filed on 15 December 2022, supported by an affidavit sworn on 10 November 2022, the applicant now seeks orders that the Supreme Court reopen and set aside the judgment of the Full Court and a range of other orders. Effectively, the applicant wants to start again. 3 The application has been referred to the Court of Appeal because the applicant seeks to set aside a decision of the Full Court. The application depends on the proposition that the decision of the Full Court was procured by fraud. The applicant relies on a decision of the Full Court, as well as the subsequent decision of the High Court, in Clone v Players.2 4 For the reasons that follow, whilst the applicant may disagree with the Full Court’s judgment, he has not demonstrated that it was procured by fraud. As it does not appear that the applicant can ever demonstrate that the Full Court’s decision was procured by fraud it is appropriate to dismiss the application. The jurisdiction of this Court 5 The applicant has in this case confused the power that the Court of Appeal may exercise when revisiting a decision made by the Full Court or the Court of Appeal in a particular matter, with the power that the Supreme Court, exercising the jurisdiction formerly exercised by the Court of Chancery under s 17(2)(a)(i) of the Supreme Court Act 1935 (SA), may exercise when it is asked to rescind a judgment on the ground that it was procured by fraud. 1 Flowers v Finlayson [2021] SASCFC 3 (Lovell J, with whom Peek and Stanley JJ agreed). 2 Players Pty Ltd (In Liquidation) (Receivers Appointed) v Clone Pty Ltd (2013) 115 SASR 547, [56]-[72] (Gray, Blue and Stanley JJ) (Players v Clone); Clone Pty Ltd v Players Pty Ltd (In Liquidation) (Receivers & Managers Appointed) (2018) 264 CLR 165 (Clone v Players). -- 3 of 10 -- [2023] SASCA 12 The Court 2 6 In that latter kind of case the application will usually be heard by a single Judge in a separate proceeding.3 However, given the confusion as to the power sought to be invoked, and as the decision which it is alleged was procured by fraud was made by the Full Court, it is appropriate for the Court of Appeal to consider the application, at least initially, before determining how it should proceed. 7 Where the judgment of the Full Court or the Court of Appeal has not yet been perfected and entered, the Full Court in McAdam v Robertson concluded that it may re-open the decision where the appeal court has misapprehended “in a significant respect” the facts of the case or the law applicable to those facts.4 Of necessity an application of that kind must be made very soon after the appeal court has published its decision. In that case Doyle CJ drew on the following observations of Mason CJ in Autodesk Inc v Dyason:5 … the public interest in the finality of litigation will not preclude the exceptional step of reviewing or rehearing an issue when a court has good reason to consider that, in its earlier judgment, it has proceeded on a misapprehension as to the facts or the law. As this Court is a final court of appeal, there is no reason for it to confine the exercise of its jurisdiction in a way that would inhibit its capacity to rectify what it perceives to be an apparent error arising from some miscarriage in its judgment. ... What must emerge, in order to enliven the exercise of the jurisdiction, is that the Court has apparently proceeded according to some misapprehension of the facts or the relevant law and that this misapprehension cannot be attributed solely to the neglect or default of the party seeking the rehearing... 8 Doyle CJ warned that the “power is to be exercised with great caution” given “the strong public interest in the finality of litigation”.6 The power described by Doyle CJ does not subsist after judgment has been perfected. It cannot be relied on in this case. 9 That power may be contrasted with the power on which the applicant relies in this case, which was considered in Clone v Players. As the Full Court decision relied on by the applicant in his affidavit shows, the judgment in that case had been “perfected”: the proceeding had been finalised and the final orders sealed.7 10 In the context of an appeal from an interlocutory application, the Full Court in Players v Clone considered the analysis undertaken by the primary judge of the jurisdiction of the Supreme Court. The primary judge had deprecated the notion that there was a jurisdiction in equity as well as one based on the exercise of the inherent and rules-based powers of the Supreme Court. The primary judge 3 Clone Pty Ltd v Players Pty Ltd (In Liquidation) (Receivers & Managers Appointed) (2018) 264 CLR 165, [61]. 4 McAdam v Robertson (1999) 73 SASR 360, 367 (Doyle CJ, with whom Bleby and Martin JJ agreed) (McAdam v Robertson); see also Duke Group Limited (in liq) v Pilmer and Ors (No.5) (2003) 87 SASR 325, [22]-[47] (Doyle CJ and Duggan J). 5 Autodesk Inc v Dyason (No 2) (1993) 176 CLR 300, 302 (Mason CJ). In that case Mason CJ was in dissent but these remarks were subsequently cited with approval by the High Court in Elliot v R (2007) 234 CLR 38, [32]. 6 McAdam v Robertson (1999) 73 SASR 360, 367 (Doyle CJ, with whom Martin and Bleby JJ agreed). 7 Players Pty Ltd (In Liquidation) (Receivers Appointed) v Clone Pty Ltd (2013) 115 SASR 547, [56] (Gray, Blue and Stanley JJ). -- 4 of 10 -- [2023] SASCA 12 The Court 3 effectively held that certain rules of court were beyond the rule-making power to the extent that they purported to permit setting aside a perfected judgment.8 11 The Full Court disagreed with the primary judge and upheld earlier rulings made about the potential breadth of the rules-based jurisdiction which could be relied on in aid of the inherent jurisdiction of the Court to control its processes.9 However, it was not necessary for the Full Court to come to a concluded view at that stage because the question for decision only concerned the refusal by the primary judge to permit the disclosure and use of documents that had been produced for inspection in relation to a taxation of costs. That aspect of the primary judge’s decision was overturned. 12 The matter continued to trial before a different judge.10 The trial judge set aside various orders that had been obtained in an exercise of the court’s equitable jurisdiction. This decision was upheld by a majority of the Full Court,11 but the decision of the Full Court was overturned by the High Court.12 13 The present version of the rule which was considered in that case is r 186.1 of the Uniform Civil Rules 2020 (SA): 13 186.1—Power to set aside or vary judgment (1) The Court may at any time correct an error in a judgment. (2) The Court may, if satisfied that the interests of justice so require— (a) vary a judgment; (b) set aside a judgment and reopen a proceeding; or (c) set aside a default judgment by consent. 14 Whilst the applicant referred to r 186.1 he has not addressed it in any way. Indeed, whether the rules-based power can be relied on to set aside a perfected judgment does not arise for decision in this case because the applicant has based 8 Clone Pty Ltd v Players Pty Ltd (In Liquidation) (Receivers Appointed) [2012] SASC 12, [75] (Kourakis CJ); Players Pty Ltd (In Liquidation) (Receivers Appointed) v Clone Pty Ltd (2013) 115 SASR 547, [60] (Gray, Blue and Stanley JJ). 9 Players Pty Ltd (In Liquidation) (Receivers Appointed) v Clone Pty Ltd (2013) 115 SASR 547, [69] (Gray, Blue and Stanley JJ). 10 Players Pty Ltd (In Liquidation) (Receivers Appointed) v Clone Pty Ltd [2015] SASC 133 (Hargrave AJ) 11 Clone Pty Ltd v Players Pty Ltd (In Liquidation) (Receivers Appointed) (2016) 127 SASR 1 (Blue, Stanley JJ and Debelle AJ). 12 Clone Pty Ltd v Players Pty Ltd (In Liquidation) (Receivers & Managers Appointed) (2018) 264 CLR 165. 13 Mohtar v Mohtar (1988) 146 LSJS 377 (von Doussa J); Commonwealth Bank of Australia v Forshaw (1990) 55 SASR 247 (FC); Clone Pty Ltd v Players Pty Ltd (In Liquidation) (Receivers & Managers Appointed) (2018) 264 CLR 165. These were rulings based on rule 84.12 of the Supreme Court Rules 1987 (SA) and rule 242 of the Supreme Court Civil Rules 2006 (SA). -- 5 of 10 -- [2023] SASCA 12 The Court 4 his application squarely on fraud and, by his application, he relies on the decision of the High Court in Clone v Players.14 15 By the time Clone v Players reached the High Court, the case was only concerned with the equitable jurisdiction to set aside a perfected judgment on the ground of fraud. As in this case, the rules-based jurisdiction was not pressed. 16 As for the jurisdiction in equity, and the breadth of the concept of fraud recognised by it, the question for the High Court in Clone v Players was whether fraud extended to professional misconduct by the lawyers representing the successful party at the initial trial. That wide view of fraud was said to have been supported by an earlier decision of the High Court, Commonwealth Bank of Australia v Quade.15 As the High Court explained, however, Commonwealth Bank of Australia v Quade was only concerned with the circumstances in which “an appellate court is justified in setting aside a verdict merely on the grounds of fresh evidence”,16 relying on a statutory power to receive further evidence.17 Drawing on the historical antecedents of the bill of review and the original bill in equity, the High Court explained:18 The distinction between each of the equitable bills is today broadly reflected in the distinction between (i) the power of an appellate court to set aside a lower court judgment and order a new trial, and (ii) the power of a court, by an original action, to set aside a judgment (often its own) based upon fraud. 17 Whilst the bill of review in equity did not survive the development of the right of appeal,19 the equitable power to set aside a judgment on the ground of fraud did survive.20 In the exercise of this “narrowly defined”21 exception, what was regarded as “fraud” did not encompass misconduct (and a number of the other grounds which had been relevant to the bill of review procedure):22 The general power to set aside a judgment on the ground of fraud required actual fraud. The “essence of the action [was] fraud”.23 The general ground of fraud was not diluted to allow, for instance, the judgment to be set aside for misconduct, accident, surprise, or 14 Clone Pty Ltd v Players Pty Ltd (In Liquidation) (Receivers & Managers Appointed) (2018) 264 CLR 165. 15 Commonwealth Bank of Australia v Quade (1991) 178 CLR 134, 141. 16 Commonwealth Bank of Australia v Quade (1991) 178 CLR 134, 139. 17 Clone Pty Ltd v Players Pty Ltd (In Liquidation) (Receivers & Managers Appointed) (2018) 264 CLR 165, [50]-[51]. 18 Clone Pty Ltd v Players Pty Ltd (In Liquidation) (Receivers & Managers Appointed) (2018) 264 CLR 165, [44]. 19 Clone Pty Ltd v Players Pty Ltd (In Liquidation) (Receivers & Managers Appointed) (2018) 264 CLR 165, [48], [56], which was “completed” by the Supreme Court of Judicature Act 1873 (36 & 37 Vict c 66) and, in South Australia, by the Supreme Court Act 1935 (SA), s 50. 20 Clone Pty Ltd v Players Pty Ltd (In Liquidation) (Receivers & Managers Appointed) (2018) 264 CLR 165, [52]-[53], [56]. 21 D'Orta-Ekenaike v Victoria Legal Aid (2005) 223 CLR 1, 17 [34] (Gleeson CJ, Gummow, Hayne and Heydon JJ). 22 Clone Pty Ltd v Players Pty Ltd (In Liquidation) (Receivers & Managers Appointed) (2018) 264 CLR 165, [55]. 23 Wentworth v Rogers (No 5) (1986) 6 NSWLR 534, 538. -- 6 of 10 -- [2023] SASCA 12 The Court 5 mistake. This point was made pellucidly in 1867 in Patch v Ward.24 In that case, as Lord Cairns LJ observed,25 the application was not brought on the basis of either category of the bill of review – either error of law or fresh evidence discovered since the decree. Rather, it was brought upon the basis that the decree was obtained by fraud. His Lordship explained that it was necessary that the fraud be "actual fraud ... the person chargeable with it ... acting in order to take an undue advantage of some other person for the purpose of actually and knowingly defrauding him".26 18 Apart from certain other, specific grounds,27 it was usually necessary for a party to “satisfy the Court that the decree was obtained by the positive and actual fraud and contrivance of the party obtaining it”.28 That required “a pleading, and proof, of actual fraud”.29 19 That power in a Court of Equity to review and rescind a judgment for fraud cannot be confused with the very broad powers available to the Court of Appeal as part of the appellate review which is conducted under statute,30 nor with the limited power recognised in McAdam v Robertson.31 20 The consequence is that if misconduct is discovered before an appeal is heard, it can be relied on in support of an application for a new trial. If misconduct is discovered only after the appeal has been heard and the orders perfected, it cannot support a new action to rescind the judgment unless fraud can be pleaded and proved:32 There is nothing absurd about this consequence. As Debelle AJ correctly observed in the Full Court, the submission ignores the interest of finality in litigation.33 As five members of this Court said in Burrell v The Queen,34 the interest of finality means that "[l]ater correction of error is not always possible. If it is possible, it is often difficult and time- consuming, and it is almost always costly." Even then, if the misconduct amounts to fraud, equity supplies a narrowly defined exception to the principle of finality that permits rescission of a perfected judgment by the original court even after the appeal process has been concluded. 24 (1867) LR 3 Ch App 203. 25 Patch v Ward (1867) LR 3 Ch App 203, 206. 26 Patch v Ward (1867) LR 3 Ch App 203, 207. 27 Clone Pty Ltd v Players Pty Ltd (In Liquidation) (Receivers & Managers Appointed) (2018) 264 CLR 165, [53]-[55]. 28 Clone Pty Ltd v Players Pty Ltd (In Liquidation) (Receivers & Managers Appointed) (2018) 264 CLR 165, [55], citing Patch v Ward (1867) LR 3 Ch App 203, 212-213 (Sir John Rolt LJ). 29 Clone Pty Ltd v Players Pty Ltd (In Liquidation) (Receivers & Managers Appointed) (2018) 264 CLR 165, [62]. 30 Supreme Court Act 1935 (SA), s 50. 31 Clone Pty Ltd v Players Pty Ltd (In Liquidation) (Receivers & Managers Appointed) (2018) 264 CLR 165, [57]-[60] following The Ampthill Peerage [1977] AC 547, but distinguishing Hip Foong Hong v H Neotia & Co [1918] AC 888 as a case involving an exercise of the power of an appellate court to order a new trial not one concerned with the equitable power of a court to rescind its own judgment for fraud. 32 Clone Pty Ltd v Players Pty Ltd (In Liquidation) (Receivers & Managers Appointed) (2018) 264 CLR 165, [69]. 33 Clone Pty Ltd v Players Pty Ltd (In liquidation) (Receivers Appointed) (2016) 127 SASR 1, 183 [715]. 34 (2008) 238 CLR 218, 223 [16]. -- 7 of 10 -- [2023] SASCA 12 The Court 6 21 As will be seen, a proper understanding of these principles provides an answer to the present application. The originating application in this case 22 The applicant has, as has been observed, commenced a new action seeking to set aside the judgment of the Full Court on the ground that it was procured by fraud, relying on the decision of the High Court in Clone v Players. The procedure invoked by the applicant, a new action, is the proper course to take where he alleges fraud and the judgment was entered and perfected two years ago:35 Even where the separate procedure of a motion for a new trial might be concurrently available,36 if fraud is alleged then a fresh action will generally be the appropriate application relying upon the power to set aside a perfected judgment of any court for fraud.37 Independent proceedings, even where the application is to set aside an appellate court's decision,38 can permit "the whole issue [to] be properly defined, fought out, and determined".39 23 The primary difficulty for the applicant is that though he criticises the judgment of the Full Court, and says that it was procured by fraud, he only relies on what he says was the respondent’s fraud in connection with the conduct of the applicant’s retainer in Family Court litigation some years ago. Today he has also relied on the respondent’s misrepresentations before the Tribunal. 24 On analysis, the applicant does not suggest that the decision of the Full Court was procured by fraud, simply that the Court reviewed what the applicant maintained was a case of fraud but wrongly rejected it. That is not the kind of fraud which could be said to have brought about, or procured, the decision made by the Full Court. Rather, it is somewhat similar to the kind of misapprehension which the Full Court addressed in McAdam v Robertson. 25 A further difficulty for the applicant is that he has neither particularised nor can he prove fraud in connection with the procurement of the decision of the Full Court. That is so even though the applicant goes so far as to suggest that the judgment was “obtained through fraud, perjury, and included a conscious awareness/conduct that pervert the course of justice as delivered by the Full Court … on 3 February 2021”. 35 Clone Pty Ltd v Players Pty Ltd (In Liquidation) (Receivers & Managers Appointed) (2018) 264 CLR 165, [32]. 36 McCann v Parsons (1954) 93 CLR 418, 426. 37 Flower v Lloyd (1877) 6 Ch D 297, 302; Jonesco v Beard [1930] AC 298, 300-301; McDonald v McDonald (1965) 113 CLR 529, 533, 535; Wentworth v Rogers (No 5) (1986) 6 NSWLR 534, 538; Spies v Commonwealth Bank of Australia (1991) 24 NSWLR 691, 699-700. See also Sheridan, "Fraud and Surprise in Legal Proceedings" (1955) 18 Modern Law Review 441, 444. 38 Seton, Forms of Judgments and Orders in the High Court of Justice and Court of Appeal, 6th ed (1901), vol 1, 859. 39 Hip Foong Hong v H Neotia & Co [1918] AC 888, 894. See also Daniell, The Practice of the High Court of Chancery, 5th ed (1871), vol 2, 1428. -- 8 of 10 -- [2023] SASCA 12 The Court 7 26 To allege fraud is a serious matter and it must be distinctly alleged and particularised, and clearly proved.40 Fraud relevant to the procurement of the Full Court’s decision has not been distinctly alleged or particularised and no evidence at all has been offered in support of it. For example, there is no suggestion that evidence was called before the Full Court. How the Full Court judgment could in those circumstances be obtained by perjury is difficult to understand and not explained. 27 The applicant’s affidavit contains a long recitation of the respondent’s representation of the applicant, the termination of the respondent’s retainer in the Family Court and the initial and varied costs agreements. It extends to the hearing before the Legal Practitioner’s Disciplinary Tribunal which considered the applicant’s charges of unprofessional conduct (or professional misconduct) against the respondent. Essential to those allegations were contentions that the respondent falsified his costs arrangements with the applicant in various ways. These are not new contentions, for they appear to have been the subject of litigation before the Tribunal and reviewed by the Full Court: “Sitting behind most, if not all of the charges, was the allegation that Mr Finlayson acted dishonestly”.41 28 The applicant’s affidavit evidence then critiques the process conducted before the Tribunal, and the decision of the Tribunal, essentially explaining why the Tribunal’s decision is wrong. No attempt has been made by the applicant to address the process leading to the decision-making made by the Full Court except in a brief passage at the outset of the affidavit. At paragraph 1 the applicant addresses the way in which the litigation got to the Full Court following the applicant’s Family Court proceedings. At sub-paragraphs 1.11 and 1.12 the applicant asserts: I contend that the judgment entered by the Full Court of the Supreme Court on 3 February 2021 was based upon 100% fraud and the facts, matters and circumstances set out in [the] affidavit to set aside are such that the justice of the case requires that this Court make orders… The public interest in justice being done outweighs any prejudice occasioned to the fraudulent conduct of Mr Finlayson. 29 Today, the applicant has made it clear that he relies on fraud between September 2014 and February 2018, not anything done during the hearings before the Full Court during 2019 and 2020. 30 The Full Court considered and rejected the grounds of appeal which were based on the applicant’s contentions that the Tribunal failed to find that the respondent had engaged in dishonest dealings, effectively fraud. That has nothing to do with the power considered by the High Court in Clone v Players, where the 40 Forrest v ASIC (2012) 247 CLR 486, [25]-[26] (French CJ, Gummow, Hayne and Kiefel JJ). 41 Flowers v Finlayson [2021] SASCFC 3, [19]-[21] (Lovell J, with whom Peek and Stanley JJ agreed). -- 9 of 10 -- [2023] SASCA 12 The Court 8 requisite fraud or dishonesty is concerned with the means by which the court’s judgment was procured. 31 In fact, on the materials offered, the applicant has simply cloaked disagreement with the Full Court’s decision-making with the mantle of fraud. The requirements for invoking the jurisdiction described by the High Court in Clone v Players cannot be satisfied merely by making criticisms of a judgment and then labelling those as “fraud”. 32 This confusion is fatal to the applicant’s case. On the materials offered by the applicant it is difficult to see how fraud in the relevant sense could ever be established. 33 In all of these circumstances, this application is properly to be regarded as an abuse of process which ought be dismissed.42 Conclusions 34 The originating application must be dismissed. 35 The parties should be heard as to costs and any other orders required. 42 Uniform Civil Rules 2020 (SA), rr 85.1, 143.2. -- 10 of 10 --