DISTRICT COURT OF QUEENSLAND

1. [1]
   This is an application to set aside a judgment. On 4 December 2006 Griffin DCJ gave judgment that the defendant pay to the plaintiff $130,000 inclusive of the plaintiff’s standard costs of the action.  That judgment was given after the judge was provided with a document, signed by the plaintiff in person and counsel for the defendant, which recorded that the plaintiff and the defendant had agreed to settle the action on the basis reflected in the judgment^[1].  The plaintiff subsequently filed an application seeking to reopen the case, which I will treat as an application to set aside the judgment.

History of the proceeding

2. [2]
   The action has been on foot for a long time, having been commenced by a plaint filed on 15 August 1991, by which the plaintiff, who was then represented by solicitors, claimed $50,000 damages for personal injuries alleged to have been suffered on 24 November 1990 in a collision between a motor cycle being ridden by him and a utility driven by the defendant.^[2]  Although the entry of appearance and defence filed 4 September 1991 on behalf of the defendant denied negligence, for a long time liability has not been in issue and the only issue has been as to the quantum of the plaintiff’s damages.

3. [3]
   The plaintiff has at times been represented by different solicitors, but during most of the time since the commencement of the action has not had a solicitor on the record. There was a notice of change of solicitors filed in September 1992, and another in November 1993, although those solicitors filed a notice of ceasing to act on 31 May 1995.  In 1996, the plaintiff appearing in person sought leave to proceed which, however, was (on 29 March 1996) dismissed with an order that the plaintiff pay the defendant’s costs in any event.^[3]

4. [4]
   In 1996 the plaintiff applied to the Supreme Court to transfer the action to that court; on 20 May 1996 the application was adjourned, the plaintiff being ordered to pay the defendant’s costs of the adjournment but subject to the conclusion of the proceeding.^[4]  On 25 June 1998, on an application by the defendant a judge ordered the plaintiff to make disclosure and answer interrogatories by a particular date, and that the plaintiff pay the defendant’s costs of the application with “taxation stayed until the finalisation or discontinuance of the matter or further order”.

5. [5]
   On a further application on behalf of the defendant, on 27 July 1998, a different judge made a guillotine order dismissing the action unless the plaintiff had filed answers to interrogatories and an affidavit of documents by 10 August 1998.  Again, the plaintiff was ordered to pay the defendant’s costs of the application; presumably they have never been taxed, or assessed.  The plaintiff filed the answers and an affidavit of documents on 7 August 1998.

6. [6]
   On 14 September 2000, Holland and Holland Solicitors filed a notice of appointment announcing that they had begun to act on behalf of the plaintiff in the proceeding.  On 11 October 2000, they filed an amended statement of claim on behalf of the plaintiff, which added a claim for “psychotic illness”, repleaded the claim for damages, and claimed a total of $76,369 together with interest and costs.  The plaintiff was very critical of this firm of solicitors, and this pleading, claiming that it had been filed without his approval, and that the firm had subsequently terminated its retainer.^[5]  They filed a notice of withdrawal of solicitors on 15 January 2002.  It does not appear that the plaintiff has had any solicitor acting in relation to the matter since then.

7. [7]
   On 15 October 2003, the plaintiff’s application to transfer the matter to the Supreme Court, which had been adjourned in 1996, was brought back on again, but was adjourned again with costs reserved.  It came on again on 13 November 2003, when it was dismissed, with the plaintiff being ordered to pay the defendant’s costs, which included the reserved costs, of the application.  There was then a directions hearing in the District Court on 20 November 2003 when orders were made to exchange a list of documents, for the plaintiff to provide some further information which ought to have been included in the statement of loss and damage, and for the plaintiff to undergo a medical examination.  That examination occurred, and the doctor’s report became available in January 2004.^[6]  Nevertheless, nothing was done to carry the action forward until April 2006 when the plaintiff applied for leave to proceed.  That was granted by another judge on 26 April 2006; there were some further directions given at that stage.  Subsequently, a request for trial date was filed on 10 May 2006, and at a call over in September 2006 the action was set down for trial on 4 December 2006, for three days.^[7]

8. [8]
   On that day it came before another judge, who disqualified herself from hearing the application because, while preparing herself for the hearing, she had inadvertently seen reference in an affidavit on the file to the terms of a without prejudice offer which had been made.^[8]  She properly disclosed this when the matter was called on before her, and the plaintiff then asked her to disqualify herself, and she did so.

9. [9]
   Fortunately, arrangements were able to be made for the trial to come on on the same day before another judge, Judge Griffin.  The plaintiff then, as he had foreshadowed, applied for an adjournment.^[9]  The plaintiff had not been at the call over, having found out about it only the day after it was held, but as soon as he found out he made contact with the defendant’s solicitor and said he was seeking an adjournment of the trial.  When the matter came on, he made that application, which was opposed on behalf of the defendant.  It is apparent from the transcript of what followed that the real situation was simply that the plaintiff had not prepared the matter for trial.  He had not arranged witnesses; he spoke about a dozen witnesses that he wanted to call who were said to be not available,^[10] but it appeared as a result of some further questioning by his Honour that the plaintiff had simply not taken any steps to make the witnesses available.

10. [10]
    Counsel for the defendant then said that he was seeking instructions to consent to judgment in terms of the claim that was then before the court, in the amended statement of claim filed in October 2000. There was some discussion about this, and about the possibility of the claim being further amended, and eventually his Honour adjourned the court for a while to enable the defendant to get those instructions, and for the parties to discuss the matter to see if they could resolve it.

The negotiations

11. [11]
    According to the plaintiff, they began to negotiate immediately in the waiting area of the court.^[11]  He said that a number of figures were offered and rejected, then “we agreed on a figure which I understood I would be walking out with ‘in my pocket’.^[12]  We also agreed that I did not have to pay or receive any legal costs.”^[13]  He said that he was then provided with a typed document and asked to sign on p 3.  He took the document and started reading from p 1; after a while he queried the meaning of a legal term, and a particular paragraph, was not satisfied with the explanation and said he would not sign the document.  At that point, he intended to seek again to have the trial adjourned, and the parties went back into the courtroom.

12. [12]
    He said there was no communication then until the judge entered. He said that at that moment counsel for the defendant said, “It is better we put this before the judge,” quickly drafted “a handwritten letter and read it to me while it was in his hand.”^[14]  He said he was asked to sign it, which he did.  Counsel for the defendant signed it and presented it to the judge.  The judge asked him if it was his signature and he replied that it was.  There was a similar question to counsel for the defendant “and the case was finished”.

13. [13]
    He said that he had said to counsel for the defendant that “we needed to agree on the final details.” He also said that he regarded the action of writing the letter which the plaintiff had not read and “was pushed to sign as misleading and deceptive”. He said that what was discussed regarding payment of solicitor’s costs in relation to Holland and Holland was not honoured, and legal costs ordered against him and discussed during the time of out of court settlement were not granted.

14. [14]
    In the course of oral evidence, he said (p 17) that during negotiations he asked counsel for the defendant about the costs that were ordered against him, and was told “You don’t owe us anything.”  He also asked specifically about whether the defendant would interfere in his dispute with Holland and Holland, and was told that they would not get involved in that:  p 17.

15. [15]
    The then counsel for the defendant^[15] swore an affidavit, on which he was cross‑examined.  He said that after the adjournment by Judge Griffin, his solicitor made a telephone call to obtain instructions to consent to judgment for the amount claimed, and he informed the plaintiff of this^[16] and there were then some negotiations in which offers were exchanged and rejected.  The instructions were obtained and this was passed on to the plaintiff, together with the further offer.  This led to a further counter‑offer from the plaintiff, and some discussion about the amount of the plaintiff’s costs.  There was a further offer which was of a sum “plus standard costs”, which elicited a counter‑offer, said to be inclusive of costs and to cover everything.  That was rejected, and after some further negotiations, the plaintiff informed him that he was prepared to accept the sum of $130,000 inclusive of costs.  He obtained through his solicitor instructions to accept that offer, and informed the plaintiff that his offer had been accepted.  He said that the plaintiff had not said at any time that he understood that he would be walking out with that amount in his own pocket.  There had previously been discussions about costs, and earlier offers on behalf of the defendant had been for an amount plus standard costs in settlement of the claim.^[17]

16. [16]
    He said that the plaintiff had said that he did not intend paying any costs to Holland and Holland,^[18] and had made various statements critical of that firm.  He denied the allegation that he had been asked whether the defendant would become involved in the dispute with that firm, and had said that it would not become involved.  He also denied that he had said to the plaintiff that there were no costs owing to the defendant.  He said that he was aware at the time that there had been costs orders made in favour of the defendant earlier, and that if there had been a term of the settlement that those costs orders were waived by the defendant, that would have been included in the document he wrote out.

17. [17]
    He said that after the offer was accepted, he obtained from his solicitor a standard release and discharge form that the solicitor had brought, just in case. He said he explained the release form to the plaintiff and invited him to sign. One of the clauses in the document referred to refunds to the Health Insurance Commission and Centrelink, but he did not say that those refunds would be paid by the defendant in addition to the agreed settlement sum of $130,000. He said the plaintiff said he wished to go away and read the release at his leisure and that he had told the plaintiff that he could do that.^[19]  He suggested they simply inform the judge of the terms of settlement, to which the plaintiff agreed.

18. [18]
    He said that while in court waiting for the judge to arrive, he wrote out the terms of settlement in terms of the document which is now on the court file. He said that, before the judge came in, he showed the document to the plaintiff and read it to him, and informed him that he wished to have the terms of settlement handed up and placed on the court file.^[20]  He said that the plaintiff said he was agreeable to that occurring, and he (the barrister) signed the terms of settlement on behalf of the defendant as the judge entered the courtroom.^[21]  He then handed the terms of settlement to the plaintiff, and informed the judge that the matter had been settled and that the plaintiff was in the process of signing the terms of settlement.  His Honour later noted for the record that he had seen the plaintiff “with a pen in his hand doing something to this document which you handed to me.”^[22]

19. [19]
    Counsel said that after the plaintiff had signed the terms of settlement he handed the document up to his Honour, and the transcript reveals that judgment was then given by his Honour which reflected the terms of the settlement.  Counsel denied that the plaintiff had said he was not ready to finalise the case as they needed to agree on final details, or that there was any conversation in the terms alleged by the plaintiff about any claim for costs by Holland and Holland, or that he said that there were no amounts owed under any earlier orders for costs against the plaintiff:  pp 42-3.

Aftermath

20. [20]
    The following day the solicitor for the defendant wrote to the plaintiff to confirm that the matter was resolved in terms of the judgment, adding that there were a number of matters to be raised with respect to costs^[23].  He referred first to the claim from Holland and Holland of an equitable lien in respect of their costs, and said that an amount would have to be retained in their trust account to cover that claim.  He then mentioned that there were six occasions on which costs orders had been made against the plaintiff, and gave an estimate of $6,000 as the costs payable by the plaintiff pursuant to those orders.  He noted that they had not yet been assessed, and they might come to be assessed at a larger sum, and so they would hold $8,000 to cover those orders.  Finally, he referred to the Centrelink clearance and the statutory refund owed to Medicare, and enclosed a notice of judgment form addressed to Medicare for the plaintiff to sign.

21. [21]
    In response, by a letter dated 22 December 2006^[24], the plaintiff asserted that “the figure which I agreed to was money in my pocket without any deductions for any costs under any circumstances.”  He gave the defendant until 4 January to finalise payment, otherwise “I will terminate the out of court settlement and proceed with trial.”  On 16 January the defendant’s solicitors, after obtaining a Centrelink notice, delivered to the plaintiff’s address a cheque for $89,114.54, being the amount of the judgment less the Medicare advance payment of 10 per cent, a Centrelink refund of $12,555.20, the money retained in respect of the claim of Holland and Holland, and $6,000 in respect of the costs orders.^[25]  The plaintiff subsequently returned the cheque.^[26]  He complained about the way in which that cheque was delivered, which is irrelevant to the matters presently in issue.

The law and the issues

22. [22]
    An agreement to settle an action takes effect as a contract, and is binding as a contract subject to the ordinary rules about circumstances under which a contract can be set aside.^[27]  Where, however, the terms of the settlement are then embodied in a judgment, the contractual rights are subsumed in the judgment in the same way as, if there had been no settlement, the original cause of action would have been subsumed in the judgment of the court once it was pronounced.  Accordingly, the relevant consideration is whether the judgment can be set aside.  Here a judgment was given which reflected the written document which had just been signed by the plaintiff and which had been handed up to the judge.

23. [23]
    On his own evidence, at the time when the plaintiff was asked to sign the document it was something he understood was to be given to the judge, and he signed it after it had been read to him. He does not suggest that the reading of it was inaccurate, and he therefore knew what he was signing, and signed it, and so he is to be taken to accept its contents. He confirmed to the judge that it was his signature, and raised no objection to the judgment which was then given to reflect the terms of settlement set out in the document. In those circumstances, the judgment can only be set aside if the plaintiff can show fraud, that is that his signature on the terms of settlement document, and tacit consent to the judgment which was then given on the basis of it, were procured by the fraud of the defendant.^[28]

24. [24]
    The onus of showing fraud lies on the party challenging the judgment, here the plaintiff, and, as in all cases where there is such an allegation, fraud must be established by the strict proof which such a charge requires.^[29]  It is not sufficient for the plaintiff to show that he may have been under some misunderstanding as to the effect of the settlement agreement into which he entered, unless he can show that he was led into that misunderstanding by fraudulent conduct on the part of the defendant or the defendant’s agents.  For these purposes, fraudulent conduct on the part of the barrister or solicitor would be sufficient.

25. [25]
    In these circumstances, it is irrelevant for the plaintiff to show that he may have understood that the effect of the settlement was that he received $130,000 “in my pocket”. It is also irrelevant if the plaintiff misunderstood the effect of the agreement in relation to the question of who had to pay any refunds due to Medicare or Centrelink, or indeed any other body which had a statutory charge on damages recoverable in circumstances such as this.^[30]  It is possible for parties to settle a claim on the basis that the amounts of such statutory charges will be paid in addition to an amount payable to the other party under the settlement, but, in the ordinary case where the plaintiff’s claim is settled for a particular amount (whether or not inclusive of costs), the effect of the statutes giving rise to the charges is that amounts recoverable from the plaintiff by the bodies entitled to the statutory charges are to be paid by the defendant out of the settlement money.  That follows as a matter of law from the statutory provisions establishing those charges, and any misunderstanding as to that was simply a mistake of law on the part of the plaintiff.

26. [26]
    There was evidence that there had been some previous reference to refunds pursuant to statutory charges of this nature in earlier negotiations, and in particular in a formal offer of settlement which was made in writing and handed to the plaintiff personally by the solicitor for the defendant on 26 April 2006.^[31]  They were also referred to in the release and discharge document which the plaintiff had begun to read, but had ultimately not signed.  The solicitor for the defendant said he spoke to the plaintiff about them in court before Judge Griffin returned.^[32]  Nevertheless, the plaintiff does not allege that he was told by any of the defendant’s representatives that the effect of entering into the agreement in the terms of the written document signed by him would be that the defendant would in addition discharge any of those statutory charges, that is pay any refunds due to Medicare or Centrelink,^[33] and therefore he cannot make out fraud in relation to that matter.

27. [27]
    With regard to the question of costs payable under earlier orders, again on its face the agreement makes no reference to them and therefore the earlier orders stand and are enforceable subject to the ordinary requirements of the rules. Accordingly, for the plaintiff to succeed on this basis, it is necessary to show that his understanding to the contrary was induced by some fraudulent conduct on the part of the defendant. To this end he relies on the statement by counsel for the defendant, that there was nothing owing in relation to costs orders against the plaintiff. Whether that statement was made is disputed.

28. [28]
    The third issue relates to a claim of an equitable lien on the proceeds of the action made by the solicitors Holland and Holland by a letter of 15 January 2002 to the solicitors for the defendant.^[34]  That firm was advised of the settlement in December last year, and indicated in response that proceedings were issued in the magistrates court in 2002, which were not then prosecuted, but that they now intended to seek leave of the court to proceed, and confirmed their claim of the lien.  The plaintiff disputes that the firm is entitled to recover anything, and that may well have to be resolved in the magistrates court, assuming that court can be persuaded to grant leave to proceed with the claim in the circumstances.  That is a matter for that court.

29. [29]
    In principle, such an equitable lien can exist^[35], and in those circumstances it is appropriate for the defendant to proceed with caution while such a claim remains outstanding.  It is unnecessary for me to determine anything about whether there is any substance to the claim of the lien by Holland and Holland.  It is open to the defendant to take interpleader proceedings in relation to the amount retained under the claim of the lien, or for the plaintiff to take action to recover that amount, which may well prompt an interpleader application on behalf of the defendant, or for the parties to wait for Holland and Holland to pursue the claim, but apart from that it is reasonable for the defendant to retain an amount sufficient to satisfy the lien claimed by Holland and Holland.

30. [30]
    For present purposes, what matters is whether there was some representation to the plaintiff prior to his entering into the settlement agreement to the effect that money would not be retained for this purpose. The plaintiff submits that there was a representation that the defendant or the defendant’s solicitors would not get involved in the dispute with Holland and Holland, which is arguably such a representation. Whether that representation was made is disputed.

Analysis

31. [31]
    The plaintiff’s evidence was not always consistent. At p 16 he said that costs were never mentioned at all, but at p 19 he conceded that when he made his offer of $130,000 inclusive of costs, what he had said was “inclusive of my legal costs”:  p 19.  Then at p 20 this was modified to “$130,000 and inclusive of my costs and I’m walking out with [it].”  In his affidavit he said he understood that he would be walking out with it “in my pocket” but in oral evidence this had become express.

32. [32]
    His account of what happened in the courtroom was that nothing was said until the judge returned (p 32) and that then as they were standing up for the judge to come in, he was shown the document which he subsequently signed, with the statement that “we had better put this before the judge”, and asked to sign it, he asked what it was and was told what it said.^[36]  He asked what inclusive meant and that was explained, and he was asked to sign it and he signed it:  p 25.  It is difficult to believe that all that happened after the judge returned to the courtroom without any of it finding its way onto the transcript, or without some comment from his Honour.

33. [33]
    Apart from that, the plaintiff’s account of how he came to sign the terms of settlement document is inherently implausible. He had (on his account) already refused to sign one document produced by the defendant’s lawyers, and was waiting for the judge to return in order to pursue his request for an adjournment. He did not regard the details as settled. Yet, when he is presented with the terms of settlement, hurriedly and without warning, he signed it without reading it, event though it did not reflect what he intended to do at that time. When asked why he did not say anything to the judge, he said that it was because he thought he was getting $130,000 (p 25).  That is really inconsistent with his evidence that he believed that there were matters still to be resolved, the detail of the settlement:  p 27.  He attempted to explain that he thought that there had been an agreement but the matter had not been settled, because the details had not been resolved:  p 29.  I found this evidence most unconvincing.  Indeed, I thought his evidence generally was unconvincing, and difficult to reconcile with his behaviour before the court on 4 December 2006, as recorded in the transcript.  On the other hand, the evidence of the barrister and solicitor for the defendant was straightforward and plausible, and was not shaken in cross‑examination.^[37]

34. [34]
    Overall, I am not persuaded by the evidence of the plaintiff that there was any relevant misrepresentation on the part of the barrister or the solicitor which induced him to enter into the settlement which was then reflected in the judgment. Where the evidence is in conflict, I accept the evidence of the defendant’s lawyers. I think the true position is that the plaintiff was prepared to take $130,000, but he had not appreciated that there would be so many deductions from that amount,^[38] and he decided to object to the settlement only when he came to realise that.  Overall, I am not persuaded that the plaintiff has shown that the judgment was induced by fraud.

35. [35]
    It follows that the plaintiff’s application to set aside the judgment is dismissed. The plaintiff must pay the defendant’s costs of and incidental to that application to be assessed.