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  • {solid} Appeal Determined (QCA)

Alford v Ebbage

 

[2002] QCA 194

Reported at [2003] 1 Qd R 343

 

SUPREME COURT OF QUEENSLAND

 

PARTIES:

FILE NO/S:

Court of Appeal

PROCEEDING:

General Civil Appeal

ORIGINATING COURT:

DELIVERED ON:

6 June 2002

DELIVERED AT:

Brisbane

HEARING DATE:

2 April 2002

JUDGES:

Williams JA and Fryberg and Wilson JJ

Separate reasons for judgment of each member of the Court; Fryberg and Wilson JJ concurring as to the orders made, Williams JA dissenting.

ORDER:

1.  Appeal allowed with costs
2.  The order of the primary judge to be set aside and the matter remitted to the primary judge.

CATCHWORDS:

APPEAL AND NEW TRIAL – INTERFERENCE WITH DISCRETION OF COURT BELOW – IN GENERAL – GENERAL PRINCIPLES – FUNCTIONS OF APPELLATE COURT – SUBSTANTIVE RIGHT OR MATTER OF PROCEDURE – MATTERS OF PROCEDURE – INTERLOCUTORY ORDERS – appeal from an order of primary judge refusing to permit an amendment to a statement of claim in a pending action where there was a prior agreement by the parties evidenced by an undertaking given to the court to preclude the appellants from making such an amendment – whether the agreement constituted a compromise of the action – whether Court has power to release the appellants from the undertaking – Fylas Pty Ltd v Vynal Pty Ltd and Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc discussed

SUCCESSION – EXECUTORS AND ADMINISTRATORS – PROCEEDINGS AGAINST EXECUTORS AND ADMINISTRATORS – whether a claim of devastavit against the defendant/respondent is beyond the scope of an undertaking not to make any claim against the defendant/respondent in his personal capacity for monetary compensation or costs - consideration of the term “in relation to”

Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc (1981) 148 CLR 170

Ballantyne v Phillott (1961) 105 CLR 379

Callisher v Bischofsheim (1870) LR 5QB 449

Chanel Ltd v F. W. Woolworth & Co Ltd [1981] 1 WLR 485, considered

Cutler v Wandsworth Stadium Ltd [1945] 1 All ER 103, considered

Fylas Pty Ltd v Vynal Pty Ltd [1992] 2 Qd R 593

Hutchinson v Nominal Defendant [1972] 1 NSWLR 443, considered

McDermott v Black (1940) 63 CLR 161

Miles v New Zealand Alford Estate Company (1886) 32 Ch D 266

National Benzole Co Ltd v Gooch [1961] 1 WLR 1489

O’Grady v Northern Queensland Co Ltd (1990) 169 CLR 356

P M T Partners Pty Ltd v Australian National Parks & Wildlife Service (1995) 184 CLR 301

R v Ross-Jones; Ex parte Beaumont (1979) 141 CLR 504

R v Ross-Jones; Ex parte Green (1984) 156 CLR 185

West Devon Great Consols Mine (1888) 38 Ch D 51

Woods v Sheriff of Queensland (1895) 6 QLJ 163, considered

COUNSEL:

DA Savage SC for the appellants

DJS Jackson QC for the respondent

SOLICITORS:

J F Connors & Associates for the appellants

Minter Ellison for the respondent

[1] WILLIAMS JA:  This is an appeal from a decision of a judge of the Trial Division refusing to permit an amendment of the statement of claim in a pending action, sought by the appellant-plaintiffs, on the ground that an agreement between the relevant parties, evidenced by an undertaking given to the court, precluded the appellants from making such an amendment.

[2] In order to understand how the issue for determination by this court arises it is necessary to say something of the history of the litigation. 

[3] The proceeding was commenced by a claim filed 27 April 2000.  As then constituted there were two plaintiffs (Anthony James Alford and Dario Pty Ltd) and three defendants (The Estate of The Late Paul Gerrard Ebbage (deceased), HPM Investments Pty Ltd, and Raymond Joseph Ebbage).  By the accompanying Statement of Claim the plaintiffs claimed the following relief:

 

“(1)That the administration of the estate of the testator be conducted under the direction of the court and that all necessary and proper declarations be made, inquiries had, accounts taken and directions given.

 

(2)An order that the second and third defendants be restrained from operating any bank account into which monies due to the testator’s estate have been, or will be paid, and from disposing of any monies held to the testator’s estate or the Ebbco Trust which are in his, or its possession, other than by paying the same to the credit of the estate or trust bank account and/or receiving due to the estate and trust and from further dealing in any manner whatsoever other than reflected herein with the assets of the estate or the trust. 

 

(3)A declaration that one half of the shares in AET registered in the names of the testator, and the trustee of the Ebbco Trust, were and are held on trust for the First Plaintiff and/or the Second Plaintiff;

 

(4)A declaration that one half of any beneficial interest which the testator (or companies associated with him including OX2 IP, OX2 ED and MMG) had or has in shares in AENG was and is held on trust for the First Plaintiff and/or the Second Plaintiff;

 

(5)An order that an account be taken of:

 

(a)any and all profits and other benefits derived by the testator (or companies associated with him) and/or the Ebbco Trust from the shareholding in AET or any other benefits derived therefrom;

(b)any and all profits and other benefits derived by the testator (or any entity associated with him) arising from the dealings between AET and OX2 IP and OX2ED; and OX2 ED and AENG;

(c)all monies received and disbursed by the testator, or any person on his behalf (including the third defendant), in respect of the technology and the assets and property comprised in the testator’s estate and of the dealings and transactions of the testator and the trustees of the Ebbco Trust;

(d)any and all profits and other benefits derived directly, or indirectly, by the testator (or companies associated with him) as a consequence of his beneficial or any interest in the shares in AENG;

 

(6)An order that an inquiry be held as to whether any, and if so, what property and/or monies forming part of the testator’s estate and the assets of the Ebbco Trust have been applied by the testator to his own benefit or otherwise than for the benefit of the first and second plaintiffs.

 

(7)An order for the taking of all necessary accounts and inquiries as to the testator’s dealings with shares in AET, AENG, OX2IP, OX2ED and MMG or any other corporation which upon inquiry establishes that the testator wrongfully derived a benefit therefrom arising from the breaches of fiduciary duty owed to the first and second plaintiffs and pleaded herein.

 

(8)Such orders, including such payments as may be required, as to this Honourable Court shall seem just and appropriate upon the taking of such accounts;

 

(9)Further, or alternatively, damages for breach of fiduciary obligation;

 

(10) Interest pursuant to the Supreme Court Act 1995;

 

(11)Costs.”

[4] That Statement of Claim alleged that Paul Gerrard Ebbage died on 2 December 1998 and that Raymond Joseph Ebbage was granted probate on 23 July 1999 of the last will and testament of Paul Gerrard Ebbage dated 19 February 1998.  It also alleged facts which prima facie would support the claims made. 

[5] Thereafter the legal representatives of the plaintiffs in the action so constituted realised that a claim against “The Estate of Paul Gerrard Ebbage (deceased)” was misconceived.  In consequence they made a decision in about September 2000 to endeavour to reconstitute the proceeding; by the proposed reconstitution they wished to add five plaintiffs, seven defendants, and additional heads of relief, including a monetary claim for approximately $1,000,000.  The draft Amended Statement of Claim forwarded to the solicitors for the respondent, RJ Ebbage, for their consideration extended to 43 pages, whereas the earlier edition only covered eight pages.  It can thus be seen that what was proposed in September 2000 radically altered the proceeding, though the actual relief claimed remained substantially the same. 

[6] The draft Amended Statement of Claim, which for convenience I will call the Amended Statement of Claim, relevantly deleted “The Estate of the Late Paul Gerrard Ebbage (deceased)” and “Raymond Joseph Ebbage” as defendants and named in lieu as first defendant:  “Raymond Joseph Ebbage for himself and as executor of the Estate of Paul Gerrard Ebbage deceased”. 

[7] The Amended Statement of Claim made the following claims of particular significance for present purposes:

 

(i)that the probate granted to Ebbage be revoked and granted to the plaintiff Alford;

(ii)that enquiries be held and accounts taken in relation to the interest Ebbage held in the Joint Venture;

(iii)a declaration that one half of any beneficial interest which Ebbage had in certain companies or shares was held on trust for the second plaintiff;

(iv)alternatively, a declaration that the whole of any beneficial interest which Ebbage had in certain companies or shares was held on trust for the third plaintiff;

(v)an account be taken of profits and the benefits derived by Ebbage from certain shareholding and dealings;

(vi)an enquiry as to whether any part of the Ebbage estate has been applied by the defendant Ebbage to his own benefit;

(vii)an enquiry as to whether Ebbage derived a benefit from breach of fiduciary duty with respect to certain share dealings;

(viii)orders for payments as may be required consequent upon the accounts and enquiries;

(ix)compensation for breach of fiduciary obligation by Ebbage;

(x)payment to the plaintiffs by Ebbage of a total of $476,714.47;

(xi)interest at rate of 10% per annum and indemnity costs. 

[8] The solicitors for RJ Ebbage contended in correspondence (particularly the letter of 27 September 2000) that the Amended Statement of Claim did not allege any facts which would give rise to a personal liability in RJ Ebbage as distinct from his liability as executor of the Estate.  That is acknowledged to be so in the appellants’ written outline of argument before this court.

[9] By application filed 1 September 2000 the plaintiffs in the action as originally constituted sought orders which would have had the effect of restructuring the proceeding by adding the plaintiffs and defendants as noted above, and by granting leave to file and serve the Amended Statement of Claim.  When that application came on for hearing on 3 October 2000 before Byrne J the judge was informed that an agreement had been reached between the parties and that a draft order would be submitted.  However, it appears that thereafter there was dispute as to what had been agreed between counsel.  That precipitated a flurry of correspondence:  plaintiffs’ solicitors to defendants’ solicitors of 4 October 2000, reply from defendants’ solicitors of even date, further letter from plaintiffs’ solicitors of that date, further response from defendants’ solicitors of that date enclosing proposed draft order, and finally letter of 5 October from plaintiffs’ solicitors accepting terms of the agreement and of the draft order. 

[10] The order so agreed upon was then submitted to Byrne J and became his order bearing date 3 October 2000.  The order commenced with an undertaking which is critical for present purposes; it is in these terms:

 

“Upon the undertaking of the plaintiffs and all those parties set out in paragraph 1 of these orders not to make any claim against Raymond Joseph Ebbage (the proposed first defendant) in his personal capacity for monetary compensation or costs in relation to the matters referred to in the amended Statement of Claim which is referred to in paragraph 4 of these orders”.

[11] It then went on to order that an additional five parties be added as plaintiffs, that “Raymond Joseph Ebbage, for himself and as executor of the Estate of Paul Gerrard Ebbage (deceased), be substituted, as First Defendant, for the First and Third Defendants”, and that two further parties be joined as defendants.  It then provided that the plaintiffs have leave to file and serve the Amended Statement of Claim as it appeared in an exhibit.  (It was in fact filed 6 October 2000).  Paragraph 5 then provided:

 

“That, after service of any Notice of Intention to Defend, in his personal capacity, by the First Defendant including, as his Defence, his undertaking in his personal capacity to be bound by and abide the orders of the Court in this action the First Defendant be excused from taking any other part in the action in his personal capacity.”

[12] Thereafter there followed certain directions for the future conduct of the proceeding and orders for costs which are not relevant for present purposes.

[13] By order dated 25 May 2001 the plaintiffs were given leave to deliver a Further Amended Statement of Claim.  That document was filed on 31 May 2001.  Apart from noting that three more defendants were added to the proceeding, the amendments made at that time are not relevant for present purposes.

[14] Then on 14 August 2001 the plaintiffs filed an application seeking, inter alia, the following order:

 

“That the Plaintiffs be released from the undertakings given to the Court on 3 October 2001 in favour of Raymond Joseph Ebbage for himself and in his capacity as executor of The Estate of The Late Paul Gerrard Ebbage (deceased).”

[15] Thereafter the matter was reviewed by Atkinson J, who had the responsibility of case management with respect to the proceeding.  Associated with the application to be released from the undertaking, the plaintiffs made an application for leave to amend again the Statement of Claim.  Atkinson J directed that the proposed Statement of Claim be exhibited to an affidavit to be filed by 22 October 2001.  That resulted in an affidavit by the solicitor for the plaintiffs, JF Connors, being filed on that date and Exhibit JFC3 thereto is the proposed Statement of Claim in question.  The respondent-defendant objected to leave being given to file and serve that Statement of Claim on the ground that the proposed amendments breached the undertaking.  That is then the issue which was the subject of the hearing before Atkinson J on 26 October 2001. 

[16] Relevantly the plaintiffs proposed to make the following additional claim against Ebbage personally: 

 

“(pp) As against the executor personally, damages arising from his failure to properly administer the estate of the late Paul Gerrard Ebbage and damages for conversion of shares in Advance Engine Technologies Inc to which the plaintiffs claim an immediate entitlement.”

[17] The particulars pleaded in the proposed Statement of Claim allege that the quantum of the damages for conversion would be $40,000,000.

[18] The contention of the respondent-defendant is that the conversion claim (if such a claim could be made in law with respect to shares, a matter which was not conceded) it was but another way of seeking relief with respect to the conduct originally pleaded as giving rise to a claim for damages for breach of fiduciary duty.  Further, the contention of the respondent-defendant is that the matters alleged to constitute a failure to properly administer the Estate, the claim for a devastavit, is necessarily dependant upon the plaintiffs succeeding on matters alleged in the Statement of Claim referred to in the order of Byrne J.

[19] Atkinson J concluded that the amendments in question breached the undertaking.  Relevantly she said:

 

“The claim against the executor personally arising from his alleged failure to properly administer the Estate could also be characterised as a claim for breach of fiduciary duty.  This relief was amongst that sought in the amended statement of claim filed on 6 October 2000.  It is a claim against Raymond Ebbage in his personal capacity for monetary compensation in respect of a matter referred to in the amended statement of claim.  It is therefore within the scope of the undertaking. 

 

As for the claim for conversion, that too is a matter referred to in the amended statement of claim where the plaintiffs seek a declaration that some or all of the shares held in AET are held in trust for one of the plaintiffs.  The claim in conversion is effectively just another legal characterisation of a claim that had already been made in the amended statement of claim.”

[20] Her Honour then went on to consider whether or not the appellant-plaintiffs should be released from their undertaking.  That involved a detailed consideration of Adam P Brown Male Fashions Pty Ltd v Phillip Morris Inc (1981) 148 CLR 170 and Fylas Pty Ltd v Vynal Pty Ltd [1992] 2 Qd R 593.  Ultimately her Honour concluded that this was a case of the type referred to in Fylas and that the court had no power to release a party from such an undertaking unless it was given by mistake or obtained by fraud.  It followed that the application to make the amendments in question was refused. 

[21] Essentially two issues are raised by the appeal.  Firstly, whether the proposed amendments are caught by the agreement and undertaking, and secondly, whether the court had power given the facts before it to release the appellant-plaintiffs from the undertaking.  The first question necessarily involves determining what was agreed between the parties on 5 October 2000. 

[22] If the court had power in the circumstances to release then other issues would arise.  Firstly, there would be the question whether the claim in conversion was one recognised by law.  Secondly, there would be the issue whether discretionary considerations might nevertheless result in the court declining to release the plaintiffs from the undertaking.  Those issues were not determined at first instance and material relevant to their resolution was not before this court.  It would therefore follow that if this court concluded that the proposed amendments were caught by the undertaking but the court could release the appellants therefrom, the matter would have to be remitted to the Trial Division for further consideration.

[23] The first questions for this court to consider are whether or not there was an agreement between the parties, and if so what were the terms and effect thereof. 

[24] At first instance it seems to have been agreed that there was an antecedent agreement which resulted in the order of Byrne J containing the undertaking.  Senior Counsel for the appellants before Atkinson J is recorded as saying:  “I think there is common ground that the undertaking arose from an agreement.”  Counsel for the respondent in this court frequently used the expression a “real contract”, and that was not seriously disputed by the appellants.   

[25] In order to determine the terms and effect of the agreement it is necessary to refer in more detail to the correspondence which passed between the solicitors on 4-5 October 2000.  In the first of those letters from the solicitors for the appellants a reference was made to “the arrangements which have been agreed between Counsel on our respective parties’ behalf.”  Relevantly that letter went on to confirm what had been agreed by stating:

 

“We also confirm that Mr Ebbage’s agreeing to being joined in his personal capacity is on the basis that:

(a)in his personal capacity he will submit to the Court’s determination of the matter without taking active part in the proceedings (as reflected in the Court’s directions); and

(b)our client will not make a claim against Mr Ebbage in his personal capacity for monetary compensation in relation to the matters referred to in the proposed Amended Statement of Claim”.

[26] A draft order was annexed to that letter.  The solicitors for the respondent contended that that draft did “not reflect the agreement reached”.   It appears that that statement was based on the assertion that it was a term of the agreement that it should be reflected in a “formal undertaking” which “should form part of the formal orders”.  That brought the response from the solicitor for the appellants that:  “It was never the intent that any formal undertaking from our client should form part of the formal orders.”  To that the solicitor for the respondent replied by saying that on that basis there had been “no concluded agreement” and that the parties would be best served “by attempting now to concluded an agreement.”  With that last letter the respondent’s solicitor enclosed a draft order which was asserted to reflect the full terms of the agreement reached between counsel.  Materially that draft order was in the same terms as that which formally became the order of Byrne J.  The solicitor for the appellant responded by saying:  “We are prepared to accept the terms of the draft order forwarded . . . .”

[27] It seems beyond dispute that there was either an agreement reached between counsel or between the solicitors by that correspondence to the effect that the plaintiffs would not make a claim against Raymond Joseph Ebbage in his personal capacity for monetary compensation or costs in relation to the matters referred to in the Amended Statement of Claim delivered pursuant to the order of Byrne J.  That agreement preceded the formal undertaking given to the court as recorded in the order of the court.  It is clear that it was a term of that antecedent agreement that the agreement also be recorded in the form of an undertaking as part of the court order.

[28] What then is the proper construction of that agreement?  Mr Jackson QC for the respondent contends that it constituted a compromise of the appellants’ claims against the defendant to the extent of the appellants agreeing not to sue (make any claim against) Raymond Joseph Ebbage in his personal capacity for monetary compensation or costs in relation to matters referred to in the relevant Statement of Claim in consideration for the respondent consenting to the significant amendments sought by the appellants and agreeing to be bound by and abide in his personal capacity the orders of the court in the action.

[29] That construction is not accepted by the appellants.  Essentially the submission on that side is that the agreement was no more than an agreement to give an interlocutory undertaking not to make a personal claim in respect of the matters set out in the Statement of Claim in question.  The submission went further and asserted that the undertaking did not prevent the appellants from making claims against the respondent personally which could have been made at the time that Statement of Claim was filed based on allegations of fact contained therein but had not been made thereby. 

[30] Before Atkinson J it is clear that the issue was raised whether or not the agreement constituted a compromise.  There was an exchange between her Honour and Senior Counsel for the appellants on that very matter.  Both before her Honour, and again in this court, counsel for the appellants contended that even if the agreement was characterised as a compromise nevertheless in the circumstances (the terms of the agreement being incorporated into an undertaking given to the court) the court could release the appellants from the undertaking.

[31] Any disputed cause of action and any asserted right disputed by an opposing party can be the subject of a compromise.  So much is clear since Callisher v Bischofsheim (1870) LR 5 QB 449; especially per Cockburn CJ at 452.  The decision in Miles v New Zealand Alford Estate Company (1886) 32 Ch D 266 is also instructive.  Bowen LJ at 291 noted that it is not necessary to use “language of any particular form, or writing of any particular character” in order to establish a forbearance.  After saying that:  “Of course forbearance of a non-existing claim would not be forbearance at all.”,  he went on:

 

“It seems to me that if an intending litigant bona fide forbears a right to litigate a question of law or fact which is not vexatious or frivolous to litigate, he does give up something of value.  It is a mistake to suppose it is not an advantage, which a suitor is capable of appreciating, to be able to litigate his claim, even if he turns out to be wrong.  It seems to me it is equally a mistake to suppose that it is not sometimes a disadvantage to a man to have to defend an action even if in the end he succeeds in his defence; and I think therefore that the reality of the claim which is given up must be measured, not by the state of the law as it is ultimately discovered to be, but by the state of the knowledge of the person who at the time has to judge and make the concession.”

[32] There is even precedent for a compromise of that type being recorded in an undertaking.  In West Devon Great Consols Mine (1888) 38 Ch D 51 some contributories appeared to oppose the admission of certain claims in a winding-up.  The court decided that the claims must be admitted.  Counsel for those contributories then gave an undertaking not to appeal, and the order admitting the claims contained the following:  “And the above-named opposing contributories undertaking by their said counsel not to appeal or to raise any objection in the winding-up as to bearing their respective shares of the said claims, it is ordered that the taxed costs of all parties of and incidental to the hearing of the said claims be paid out of the assets of the said company.”  Before the order was passed and entered, those contributories applied to have that undertaking omitted on the grounds that counsel could not give a consent not to appeal and could not give a consent after a decision on the merits.  It was also contended that the consent was given by mistake.  On the hearing of the appeal it was noted that the undertaking was announced to the court after the decision on the claims but before any order had been made with respect to costs; upon the undertaking being given the contributories were allowed their costs.  Cotton LJ clearly stated at 55 that there had been a compromise and the undertaking was prima facie binding.  He then considered whether or not there was any error or mistake such as would enable the court to set aside the agreement and came to the conclusion there was not.

[33] An analogous question arose for consideration before the High Court in McDermott v Black (1940) 63 CLR 161.  That case involved a contract for the sale of shares.  Before completion the purchaser alleged that he had been induced to enter into the contract by misrepresentations made by the vendor.  Thereafter, in a letter, he withdrew all allegations imputing anything improper to the vendor conditionally upon the vendor granting him an extension of time to complete the contract.  That was done, but subsequently the purchaser sued the vendor for damages for deceit.  The High Court held that the withdrawal of the allegations amounted to a promise not to sue in respect of the representations or to a release of any cause of action in respect of them and constituted a complete defence to the action.  At 187 Dixon J said:

 

“A release, though not under seal, if given for consideration, was enforced by injunction, and so, too, was an agreement by simple contract not to sue.  Accordingly they now constitute good equitable defences to legal demands.  . . . There is no reason to doubt that in the same way equity would give effect to a simple contract not to set up or rely on specific allegations of fact as part of a common-law cause of action or for that matter as a plea, or part of a plea, answering a cause of action.  Before the Judicature Act the mode of relief was by injunction restraining the party from pleading the facts in his declaration or plea as the case might be and the foundation of the injunction was the promise of the party, negative in character, given for consideration.”

[34] Later in his judgment he recognised that relief would not be granted “if the agreement were unfairly obtained or oppressive” (188). 

[35] The principle in that case was recognised by the court in Ballantyne v Phillott (1961) 105 CLR 379, but there the court held there was no agreement because there was no consideration for the promise which was expressed in these terms:

 

“That any action or proceeding in any court heretofore commenced by the said FPP against the said RB will be discontinued and that such action or proceeding shall not again be commenced by or on behalf of the said FPP against the RB and the said FPP waives all and any rights or claims whatsoever which he has or may have against the said RB by virtue of such action or proceeding or otherwise howsoever.  That the said RB has no right or claim against the said FPP in respect or arising out of any such action or proceeding or otherwise howsoever.”  (387)

[36] The dissenting judgment of Dixon CJ makes it clear that the language used in that passage would have been sufficient to constitute a compromise or release if there had been consideration. 

[37] Finally, reference should be made to National Benzole Co Ltd v Gooch [1961] 1 WLR 1489.  That case involved an agreement for good consideration between the parties that an appeal be dismissed and struck out of the list.  Sellers LJ at 1490-1 made it clear that because there was an agreement, the court could not set it aside in the absence of “recognised grounds” for setting aside a contract.  Upjohn LJ at 1493 said: “A compromise, like any other agreement, can only be set aside on certain grounds which are familiar to all.”  He expressly stated that “repenting of a bargain” was not sufficient.  Diplock LJ reasoned to similar effect. 

[38] Here there was no submission made either to the learned judge at first instance or this court to the effect that there was no consideration for the agreement.  To the contrary the outline of argument for the appellant asserted that the recorded undertaking by the appellants “was given in exchange for undertakings by Mr Raymond Ebbage concerning his delivery of a defence undertaking to be bound by and abide the orders of the court in the action.  In consequence an order giving leave to join Mr Raymond Ebbage and leave to amend the Statement of Claim against him was made ‘by consent’ of the parties.”

[39] Much was made in argument in this court of a statement found in the reasons for judgment of Atkinson J.  Relevantly she said:

 

“It was essentially a promise by the plaintiffs not to enlarge their case by making a money claim against Mr Ebbage personally in respect of any subject matter or legal claim which was contained in the amended statement of claim.”

[40] It was contended that the use of the words “not to enlarge their case” constituted a finding that this was an interlocutory agreement and not an agreement to compromise or release claims.  The words in question are in my view ambiguous and could be read as supporting either of the competing views.  In the circumstances those words in the judgment appealed from do not, in my view, assist the appellants. 

[41] I have therefore come to the conclusion that there was an agreement reached prior to the formal order of Byrne J the terms of which constituted a compromise of the appellants’ claims against the respondent or a release of certain of the appellants’ claims against the respondent and that such agreement was then recorded in the form of an undertaking in the order.  I am satisfied that, subject to the proper construction of the agreement, there was a compromise or release which would afford a defence to any action brought with respect to a claim compromised or released unless the compromise (agreement) could be set aside. 

[42] I turn now to the issue of construction which remains alive on the basis that there is a compromise or release of claims. 

[43] The Statement of Claim filed and delivered pursuant to the order of Byrne J sought relief against the respondent personally but did not plead sufficient facts to enable the appellants to succeed on those claims.  Details of all relevant transactions were pleaded, but there was nothing pleaded to found liability in the respondent personally with respect to those transactions.  Before Atkinson J (and again in this court) the appellants contended that they now knew of additional facts (some, if not most, of which existed prior to the delivery of the earlier Statement of Claim but were not then known to the appellants) which provide the missing link thereby giving the appellants a viable claim against the respondent personally.  The submission on behalf of the appellants is that the terms of the agreement recorded in the undertaking do not extend to such “new” matters.  It is said they are not “matters referred to in the Amended Statement of Claim” referred to in the order of Byrne J.

[44] Against that it is submitted on behalf of the respondent that the words in the undertaking “in relation to the matters referred to in the Amended Statement of Claim” are words of wide import and in consequence the compromise or release extends to any cause of action giving rise to personal liability in the respondent arising out of the transactions pleaded in the Statement of Claim in question.

[45] The expression “in relation to” is of wide import, and has been the subject of judicial consideration in many cases.  Importantly, all the authorities indicate that the expression must be read in context and generally in the light of what the parties were intending to achieve by its use.  The expression is to be found in the definition of “matrimonial cause” in the Family Law Act 1975.  The meaning there has been considered by the High Court in R v Ross-Jones; Ex parte Beaumont (1979) 141 CLR 504 and R v Ross-Jones; Ex parte Green (1984) 156 CLR 185.  In that context it has been held that there must be a “connexion or association” between the two matters which must be “appropriate” to the proceeding.  Again in that context those authorities indicate that the connexion should be direct rather than indirect.  The expression is also found in s 80 of the Mining Act 1968 (Queensland).  The meaning there was considered by the High Court in O’Grady v Northern Queensland Co Ltd [1990] 169 CLR 356.  Dawson J at 367 observed that the words “read out of context, are wide enough to cover every conceivable connexion.”  However, he went on to say that what was required in that case was the establishment of a “relevant relationship, having regard to the scope of the Act.”  Something more than a co-incidental connexion was required;  there had to be a relevant relationship.  Much the same was said by Toohey and Gaudron JJ in that case at 374.  The words are again found in s 48 of the Commercial Arbitration Act 1985 (NT).  That section was considered by the High Court in P M T Partners Pty Ltd v Australian National Parks & Wildlife Service (1995) 184 CLR 301 especially at 313.  There it was said that the relationship required by the use of those words “must be ascertained by reference to the nature and purpose of the provision in question and the context in which it appears.”

[46] The present problem must be resolved bearing in mind such observations.  It is clear that the compromise or release could not extend to a claim against the respondent personally arising out of a transaction not pleaded in the relevant statement of claim.  That could either be because the transaction in question occurred subsequently to the agreement to release being made or because, though the transaction occurred before that date, it was not a matter referred to in the relevant statement of claim.  It is clear that the release is not a blanket one, releasing the respondent personally from all possible claims which might result in personal liability for matters associated with his administration of the estate in question.  Given some submissions made in the course of argument it is also appropriate to record that the agreement in question would not prevent other persons interested in the estate from bringing proceedings which might result in personal liability of the respondent being established. 

[47] The question becomes whether or not the additional claims which the appellant sought to raise were caught by the agreement having regard to the use of the phrase “in relation to”.  Atkinson J concluded that they were and I cannot see any error on her part in so concluding.

[48] The share transactions the subject of the proposed claim in conversion were all matters pleaded in the relevant statement of claim.  The appellants’ claim to those shares was also pleaded in the relevant statement of claim.  In my view the proposed conversion claim comes within the ambit of the agreement and undertaking and it prima facie prohibits the appellants from suing with respect thereto. 

[49] I am further of the view that the claim for a devastavit is directly concerned with matters already pleaded in the relevant statement of claim.  That statement of claim pleaded that the executor did not recognise the appellants’ claims to the shares and various monetary claims against the estate.  Critical to the claim in devastavit is the alleged refusal to recognise or acknowledge the appellants’ claims to the shares in question.  It follows that that claim is also within the ambit of the agreement and undertaking and prima facie it prohibits the appellants from suing with respect thereto.

[50] Once the issues are analysed in that way it follows that the situation here is vastly different to that considered by the High Court in Adam P Brown Male Fashions.  The court was there concerned with an undertaking which clearly was of an interlocutory nature;  it was expressly limited “until further order”.  This case is clearly within the principle referred to by McPherson SPJ in Fylas;  it is the agreement between the parties which must be struck down before the appellants can be released from the undertaking.

[51] In the present case no attempt was made to put forward evidence which would justify the court setting aside the agreement.  As already noted, the appellants conceded that there was consideration passing from the respondent for the promise of the appellants.  There is no suggestion that the contract could be vitiated by misrepresentation or mistake.  The material does not suggest any basis for any of the “recognised grounds” for setting aside a contract.

[52] The situation is therefore reached where it is established that the proposed amendments are in breach of the compromise arrived at by the agreement of the parties.  The appellants are in effect seeking to sue on causes of action the subject of a release given to the respondent.

[53] It follows that Atkinson J was correct in refusing to permit the amendments. 

[54] The appeal should be dismissed with costs.

[55] FRYBERG J:  I have had the benefit of reading the draft reasons for judgment of my colleagues.  I agree with them that the claims which the appellants seek to raise by amendment fall within the ambit of their undertaking.  I agree with the reasons which Williams JA has given for this conclusion.

[56] Early in the argument at first instance, the judge raised with senior counsel for the appellants the possibility that she would need to consider whether the giving of the undertaking was a compromise or part of a compromise.  Counsel responded that it was common ground that the undertaking arose from an agreement and submitted that if there had been a compromise, that would be a matter which went to her Honour’s discretion.  He did not accept in any way that the agreement constituted a compromise.  There the matter rested.

[57] The respondent answered issues relating to the undertaking in written submissions prepared by senior counsel.  He accepted that the appellants’ undertaking was an interlocutory order, but argued that it was not about an interim state of affairs that might change.  He submitted that it was an undertaking as to how the case would proceed – a promise given not to enlarge the case in the manner sought by the application to amend the statement of claim.  He did not argue that the undertaking was in the nature of a permanent injunction or undertaking, nor that the agreement pursuant to which the undertaking was given operated as a partial accord and satisfaction to compromise the plaintiff’s rights referred to in it.  He argued that the case was “like” Fylas Pty Ltd v Vynal Pty Ltd[1] and not like Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc[2].

[58] In Fylas, McPherson SPJ (as he then was) said:

 

“The undertakings are not expressly limited in duration until trial; but there can in my view be little doubt that they were intended to be interlocutory only and not final, if only for the reason that the trial is yet to be had.

...

It may fairly be assumed and implied that the undertakings are intended to subsist only until trial or determination of the action.  Apart from that, it cannot be assumed or implied that they were intended to be limited only until further order of the Court.  The absence of any such express limitation of the duration of the undertakings means that the Court is without power to discharge or vary the undertakings except in circumstances in which, independently of the order of the Court, the undertakings, or the agreement that gave rise to them, would be discharged or varied without the consent of both parties ...”.[3]

 

He distinguished Philip Morris on the basis that in Fylas the undertakings were the outcome of a contract, a feature absent in Philip Morris.

[59] Her Honour accepted the respondent’s submission and followed the decision of McPherson SPJ.  She found, adapting the words of the respondent’s submission, that the undertaking “was essentially a promise by the plaintiffs not to enlarge their case by making a money claim against Mr Ebbage personally in respect of any subject matter or legal claim which was contained in the amended statement of claim” and held:

 

“This undertaking, however, falls within the type of case referred to in Fylas Pty Ltd.  It is not limited in its terms.  In my view, the court has no power to vary or determine such an undertaking unless it was given by mistake, obtained by fraud or the parties consent to its variation.  It is not necessary in the circumstances to consider whether the proposed amendment has no substantial basis in law, will cause delay or is otherwise an abuse of process of the court.”[4]

 

Thereupon, she refused the application for leave to amend.

[60] In the Court of Appeal, the respondent did not seek to uphold that order on the basis upon which her Honour made it.  On his behalf, Mr D J S Jackson QC argued that there was no power only in the sense that the proper exercise of the discretion allowed only one decision: the one which her Honour made.  He argued that to allow the amendment would be futile because, even if the appellants were relieved from the undertaking, the contractual promise would be pleaded by way of defence in the action.

[61] In my judgment, it is not correct to approach the dictum of McPherson SPJ quoted above in a literal sense.  In Philip Morris, the High Court held that a Court has power to relieve against an interlocutory undertaking.  There is no suggestion in the reasoning that the existence of this power is dependent upon or even affected by whether the undertaking was given pursuant to a contract.  The nature and terms of any such contract may well affect how the discretion to grant relief is exercised, but they cannot control the existence of the power.  Parties cannot deprive the Court of its jurisdiction by contract.

[62] It follows that the basis upon which her Honour decided the application was wrong in law, and that she ought to have proceeded to exercise her discretion.  She did not do so.  Ordinarily that would mean that this Court would determine the matter itself.  Unfortunately, it is not open to us to exercise the discretion on the merits, for the reasons referred to by Williams JA.[5]  The appellants submitted that the matter should be remitted to the judge below for determination.  Unless there is some basis upon which we could find, as a matter of law, that the respondent must succeed, that is the order we should make.

[63] Williams JA has found such a basis in the agreement made by the parties, which he characterises as a compromise of a right of action.  I regret that I do not think it right for us to adopt this approach.  It is not simply that the point was not argued by the respondent at first instance.  It is no easy matter to identify the documents and/or conversations constituting the agreement.  There was, as the matter was argued before her Honour, an acceptance that there was an agreement between the parties, but there was certainly no acceptance that the agreement constituted an accord and satisfaction, or a partial compromise.  Had this question been squarely raised, attention might have been focused more sharply on identifying the agreement and demonstrating how it had such an effect.  From this distance, abandonment of a cause of action (wholly or in part) is unusually generous consideration to furnish in return for an agreement to consent to various procedural steps of the type which ordinarily would be allowed in any event.[6]  Moreover, had the question been addressed, it might have been realised that such issues are not necessarily best determined on affidavits in the course of an application to amend.  Her Honour might have taken the view that the best course was to allow the amendment and at the same time to allow the respondent to amend his defence to plead the agreement.  On the other hand, she might have taken the view that the case had reached the stage where a change of this nature ought not to have been permitted, or ought to have been permitted only conditionally, particularly in a managed case.  Unfortunately, we are not a position to resolve such matters.  In my judgment, this is not a case where only one decision was open to her Honour.

[64] The appeal should be allowed with costs.  The order of the primary judge should be set aside and the matter should be remitted to her.                                    

[65] WILSON J: I have read the reasons for judgment of Williams JA and Fryberg J.

[66] The history of this litigation is set out in the reasons of Williams JA. There was an agreement reached prior to the formal order of Byrne J, and that agreement was then recorded in the form of an undertaking in the order. I respectfully agree with His Honour that the claims which the appellants sought to raise by further amendment were caught by the agreement.

[67] The issue, then, is whether the Court has power to release the appellants from the undertaking, and if it does, whether it ought to do so.

[68] The undertaking was not expressed to be limited in duration. However, like the undertakings in Fylas Pty Ltd v Vynal Pty Ltd[7], it may fairly be assumed to have been intended to subsist only until trial or determination of the action.[8] The agreement, by contrast, was clearly not so limited.

[69] The undertaking being interlocutory in nature, the Court had inherent power to release the appellants from it. As the majority of the High Court said in Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc[9] -

 

"Considerable argument was directed to the question whether a court has power, otherwise than in the case of mistake operative at the time of giving it to release a party from an undertaking, at least in the absence of the consent of the other party.  But in our opinion a court undoubtedly has such a power.  Just as an interlocutory injunction continues “until further order”, so must an interlocutory order based on an undertaking.  A court must remain in control of its interlocutory orders.  A further order will be appropriate whenever, inter alia, new facts come into existence or are discovered which render its enforcement unjust: cf. Woods v Sheriff of Queensland[10]; Hutchinson v Nominal Defendant[11]; Chanel Ltd v F. W. Woolworth & Co Ltd[12]. Of course, the changed circumstances must be established by evidence: Cutler v Wandsworth Stadium Ltd.[13]

[70] In my view the principle so expressed in Adam P Brown applies even where an undertaking records an antecedent agreement, or an aspect of it, as happened in this case. Insofar as Fylas may be authority for the contrary view, I respectfully disagree. The question whether to release the appellants from their interlocutory undertaking required the exercise of a judicial discretion.

[71] In National Benzole Co Ltd v Gooch[14] the defendant agreed to abandon his appeal with no order as to costs. The plaintiffs consented. The formal court order was not drawn up. The defendant sought to restore the appeal. There was a contract between the parties, the consideration for which was that there should be no order as to costs. There were no grounds on which it could be alleged that the agreement was void or voidable. The Court of Appeal refused to allow the defendant to restore the appeal. In doing so, it acknowledged that it was a decision which turned on the exercise of its discretion.[15] However, the existence of the agreement was decisive in the exercise of the discretion. As Diplock LJ said[16] -

 

"While I agree with my Lords that this court has a full discretion as to what it will do until the final order is drawn up, I find it difficult to conceive of any case where it would be a judicial exercise of that discretion to allow a party to go on with an appeal after having entered into a binding contract for good consideration not to do so.  That is this case; and I agree that this application should be dismissed."

[72] In the present case the argument before the primary judge focused on whether the Court had power to release the appellants from their undertaking when there was an agreement between the parties. It did not move on to discussion of the factors relevant to the exercise of the judicial discretion, and considerations relevant to the exercise of the discretion (apart from the existence of the agreement) were not put before this Court.  In the absence of circumstances rendering the contract void, voidable or otherwise unenforceable, it seems all but inevitable that the discretion would be exercised against the appellants. However, I consider that the matter has to be remitted to the primary judge.

[73] The appeal should be allowed with costs.  The order of the primary judge should be set aside and the matter should be remitted to her.

Footnotes

[1] [1992] 2 Qd R 593.

[2] (1981) 148 CLR 170.

[3] [1992] 2 Qd R 593 at pp 596, 601.

[4] At para [17].

[5] Paragraph [22].

[6] Originally, the claim was brought against the respondent (prima facie, in his personal capacity) and against “The Estate of Paul Gerard Ebbage (deceased)”. The latter would seem to have represented an attempt to invoke r 71 of the Uniform Civil Procedure Rules, but was defective because a grant of representation had been made when the action was instituted. The various amendments made are described by Williams JA at paras [5]-[7].

[7] [1992] 2 Qd R 593.

[8] See Fylas at 596 and 601.

[9] (1981) 148 CLR 170 at 177-78.

[10] (1895) 6 QLJ 163 at 165.

[11] [1972] 1 NSWLR 443 at 447.

[12] [1981] 1 WLR 485 at 492.

[13] [1945] 1 All ER 103.

[14] [1961] 1 WLR 1489.

[15] Sellars LJ at 1491; Upjohn LJ at 1492; Diplock LJ at 1494.

[16] At 1494.

Close

Editorial Notes

  • Published Case Name:

    Alford & Ors v Ebbage & Ors

  • Shortened Case Name:

    Alford v Ebbage

  • Reported Citation:

    [2003] 1 Qd R 343

  • MNC:

    [2002] QCA 194

  • Court:

    QCA

  • Judge(s):

    Williams JA, Fryberg J, Wilson J

  • Date:

    06 Jun 2002

Litigation History

Event Citation or File Date Notes
Primary Judgment [2002] QSC 289 - -
Appeal Determined [2003] 1 Qd R 343 06 Jun 2002 -

Appeal Status

{solid} Appeal Determined (QCA)