Judgment
1By its amended notice of motion filed 25 November 2011, the plaintiff seeks orders to give effect to the orders made by the court on 6 May 2011 for the performance of the settlement agreement between the parties. It is yet another step in these proceedings the origin of which is a dispute for payment for building work carried out by the plaintiff at the defendant's dental surgery. The background is described in Blazevic Holdings Pty Ltd v Grave [2011] NSWSC 287; and Grave v Blazevic Holdings Pty Ltd [2010] NSWCA 324. The remaining major issue is whether the building contract was between the plaintiff and the defendant, or between the plaintiff and the defendant's service company Gradenco Pty Ltd (the company) of which the directors are the plaintiff and his wife.
2For the reasons given in the judgment of 14 April 2011 I upheld the plaintiff's application under Civil Procedure Act 2005 s 73 (the Act) for a declaration that the proceedings between the parties had been settled, and for consequential relief. On 6 May 2011 the declaration and orders (the original orders) in the following terms were made and entered:
"The Court declares that:
the parties reach a settlement agreement as set out in the deed of release set out in Annexure A to this order (the deed of release).
The Court orders that:
the defendant to execute the deed to [sic] release.
the defendant procure Gradenco Pty Limited ACN 002 588 285 to execute the deed of release and exchange it with the plaintiff's counterpart copy of the deed of release with the exchange deemed to have occurred on 21 December 2010.
the defendant to procure that Gradenco Pty Limited ACN 002 588 285 pay to the plaintiff, or as it directs, the amount of $25,000 within 14 days.
upon execution of the deed of release, the deed of release be specifically performed and carried into effect.
the defendant pay the plaintiff's costs of and incidental to the motion dated 10 March 2011.
the parties have liberty to apply on 3 days' notice."
3The company executed the deed on 12 May 2011, but has not paid the amount of $25,000 to the plaintiff as envisaged under order 4.
4No proceedings have been commenced under Pt 40, r 40.6 against the defendant for enforcement of the order that he procure the company to make the payment of $25,000 within fourteen days, or for the recovery of damages for alleged breach of cl 2.1 and cl 2.2 of the deed.
5On the present application the plaintiff sought the following orders:
"2 An order that the defendant pay the plaintiff the amount of $25,000.
An order joining Gradenco Pty Limited ACN 002 588 285 as a defendant to these proceedings.
A declaration that Gradenco Pty Limited ACN 002 588 285 and the plaintiff reached the settlement agreement as set out in the deed of release.
An order that Gradenco Pty Limited ACN 002 588 285 execute the deed of release and exchange it with the plaintiff's counterpart copy of the deed of release.
In the alternative to 2 the defendant and Gradenco Pty Limited ACN 002 588 285 jointly and severally pay the plaintiff the amount of $25,000.
An order that the defendant and Gradenco Pty Limited pay interest in accordance with section 100 of the Civil Procedure Act 2005.
Costs on an indemnity basis.
Such other orders as this honourable court sees fit."
6The relief claimed in prayers 3 to 7 inclusive was in the alternative to the claim in prayer 2. Because relief was sought against the company it was granted leave to appear at the hearing of this application. As the deed has been executed by the company, it appears that the claim in prayer 5 is unnecessary.
7For the purposes of this application the relevant terms of the deed are:
"RECITALS
...
L Grave is defending the Supreme Court proceedings inter alia on the basis that Blazevic carried out the Fit Out Works at the Premises pursuant to an agreement with Gradenco and not Grave.
M The parties have agreed to finalise all matters between them on the terms set forth below.
"OPERATIVE PROVISIONS
...
Terms of Settlement
2.1 Gradenco shall pay and Grave shall procure that Gradenco shall pay to Blazevic, or as it directs, the First Payment within 30 days of the parties executing and exchanging this Deed.
2.2 Gradenco shall pay and Grave shall procure that Gradenco shall pay to Blazevic, or as it directs, the Second Payment within 60 days of the parties executing and exchanging this Deed.
...
3 Releases
3.1 Upon payment to and receipt by Blazevic, or as it directs, of the First Payment and Second Payment:
(a) Blazevic and Mr Blazevic shall:
(i) Accept the First and Second Payments in full and final satisfaction of all Claims against Grave or Gradenco;
(ii) Make no further Claims against Grave or Gradenco; and
(iii) Release each of Grave and Gradenco from all Claims.
(b) Grave and Gradenco shall:
(i) Make no further Claims against Blazevic and Mr Blazevic; and
(ii) Release Blazevic and Mr Blazevic from all Claims.
3.2 Nothing in this clause shall prevent the enforcement of the terms of this Deed or the obligations arising under it."
8The plaintiff's primary claim was for an order that the defendant pay it the amount of $25,000 which, if paid, would give effect to the original orders for specific performance. The application was made under s 73 of the Act, alternatively pursuant to the liberty to apply, alternatively pursuant to a reservation of further consideration of the proceedings.
9The plaintiff submitted that, although final orders had been made, application may be made to deal with matters arising in the course of working out the orders by making specific provision for their implementation or to take account of a subsequent change of circumstances which, in this case, was the non-payment by the company. The plaintiff's position was that its application was consistent with the requirements of s 56 of the Act to further the overriding purpose by facilitating the just, quick and cheap resolution of the disputed issues, and avoided the necessity of commencing fresh proceedings against the defendant for the recovery of damages for breach of the deed, or for enforcement of the orders.
10Section 73 provides:
"73 Power of court to determine questions about compromises and settlements
(1) In any proceedings, the court:
(a) has and may exercise jurisdiction to determine any question in dispute between the parties to the proceedings as to whether, and on what terms, the proceedings have been compromised or settled between them, and
(b) may make such orders as it considers appropriate to give effect to any such determination.
(2) This section does not limit the jurisdiction that the court may otherwise have in relation to the determination of any such question."
11In Phillips v Walsh (1990) 20 NSWLR 206 pp 209, 210, McLelland J said:
"The question whether any particular application can properly be made in existing proceedings is a matter to be determined according to general law principles as modified by any relevant statutory provision. One such principle of the general law is that when proceedings have been disposed of by a final order which has been entered, the proceedings are at an end and cannot be revived: see generally Bailey v Marinoff (1971) 125 CLR 529; Gamser v Nominal Defendant (1977) 136 CLR 145; and FAI General Insurance Co Ltd v Southern Cross Exploration NL (1988) 165 CLR 268. There are a number of exceptions and qualifications to this principle but none that has any relevance to the present application, unless it be that subsequent to a final order application may be made for the purpose of dealing with a matter involved in, or arising in the course of, working out that order; for example, by making more specific provision for its implementation or by modifying its operation to take account of some subsequent change of circumstance or by enforcing it. This exception or qualification does not, however, extend to an application made for the purpose of giving substantive relief not sought in the statement of claim or which is substantially different to that given by the final order: see generally Haviland v McLeary (1894) 15 LR (NSW) (Eq) 22; 10 WN (NSW) 146; Poisson & Woods v Robertson & Turvey (1902) 86 LT 302; 50 WR 260; 46 Sol Jo 196; Dowdle v Hillier (1949) 66 WN (NSW) 155; Re Porteous [1949] VLR 383; [1950] ALR 89; Cristel v Cristel [1951] 2 KB 725 and Re Scott (1964) 82 WN (Pt 1) (NSW) 313; [1964-5] NSWR 1636.
...
It is sufficient for present purposes to say that, although there is some arguable support for the proposition (although it is far from clear) that the Court might on motion in the present proceedings enforce a particular term of the agreement between the parties noted in the order of 16 June 1989 which came within the ambit of the proceedings as originally constituted, it would not be proper to do so where substantial matters are involved beyond the ambit of the proceedings as originally constituted, or where, in the interests of justice, disposition of the matter on summary application is inappropriate."
12With respect to the scope of s 73 Hodgson JA in Lesdor Properties Pty Ltd v Cordon Investments Pty Ltd [2009] NSWCA 345 said:
"10 It seems clear that section does enable the Court to determine questions in dispute in relation to compromises and settlements, and to make orders to give effect to such determinations. However, it does not appear that that requires the Court to do so in the proceedings in which the settlement or compromise occurred, where the Court considers that separate substantive proceedings would be appropriate in accordance with principles discussed in Phillips v Walsh (1990) 20 NSWLR 206.
11 The orders that might be made under s 73 would probably extend to the making of more specific orders to give effect to the orders actually made in settling the dispute (see Ritchie's Uniform Civil Procedure NSW: Uniform Civil Procedure Rules r 36.16.65), and would probably also extend to the interpretation of the orders made in giving effect to the settlement (see Ritchie's r 36.16.80)."
13In Fylas Pty Ltd v Vynal Pty Ltd [1992] 2 Qd R 593 McPherson SPJ considered what is involved in "working out" an order, at 598:
"... a judgment or order that expressly reserves to parties a leave or liberty to apply can be varied on an application pursuant to such leave only so far as may be necessary for the purpose of working out the actual terms of the order so as to make it more efficacious in matters of detail. What is meant in this context by "working out" the terms of an order is considered in some of the cases on the point. In Cristel v Cristel [1951] 2 K.B. 727, 728, Somervell LJ said it "involves matters on which it may be necessary to obtain the decision of the court. Prima facie, certainly, it does not entitle people to come and ask that the order itself shall be varied". A simple judgment for a money sum requires no "working out" in any sense, so that liberty to apply is quite inappropriate in such a case. On the other hand, there are many orders, particularly on the equity side, as to which the process of carrying the primary judgment into effect may require supervision, with the consequence that further or supplementary orders or directions may be needed to enable it to achieve its purpose. An example commonly encountered in practice is specific performance, where, because the consent or approval of some person or instrumentality may be needed to authorise a preliminary step, the judgment sometimes takes the form only of a declaration that the contract be specifically performed, together with subsidiary orders compelling particular acts to be done. See Egan v Ross (1928) 29 SR (NSW) 382, 388; Hasham v Zenab [1960] AC 316; Brown v Heffer (1967) 116 CLR 344, 350. The primary order may then need to be supplemented by further orders from time to time before the stage is reached at which the defendant can finally be ordered to perform specifically what he contracted to do in the way of transfer or payment as the case may be: Brown v Heffer (1967) 116 CLR 344, 350.
In Penrice v Williams (1883) 23 Ch D 353, 356-357, Chitty J spoke of an order that is "clearly not of a final character, and also when there is necessarily something to be done irrespective of what appears on the face of the order". His Lordship was there explaining that in some cases an order may by its very nature need to be supplemented to give full effect to it, in which event liberty to apply is implied and need not be expressly reserved. See also Fritz v Hobson (1880) 14 Ch D 542, 561; Cristel v Cristel [1951] 2 KB 725, 731. A decree of specific performance in the limited form previously described nevertheless is a "final" order for the purpose of appeal and otherwise, and so, at least as to issues litigated, cannot be discharged or varied under liberty to apply, notwithstanding that further decisions and orders may yet have to be made in working out its consequences. What cannot be done under the guise of "working out" an order is to vary it."
14The original orders were made under s 73(1)(b) to give effect to the determination of the question under s 73(1)(a) that the proceedings had been settled in accordance with the deed. Under cl 2.1 and cl 2.2 of the deed the obligation to make the payment to the plaintiff is upon the company not the defendant. The defendant's obligation is to procure the company to make the payments. Order 4 of the original orders gives effect to these provisions. The original orders are specific and unambiguous. They require no further decision, order, or direction to be made for their working out or implementation.
15Furthermore, it is self-evident that the order now sought for the defendant to make the payment is substantially different to order 4, and would impose a liability which is not to be found in the deed. In my opinion it cannot be said that an order of this kind is one appropriate for the working out or implementation of any of the original orders in accordance with the principles in Phillips . In other words, it is not an order which would fall within the exceptions to the principle of finality applicable to proceedings which have been disposed of by a final order which has been entered ( Bailey v Marinoff (1971) 125 CLR 529).
16In any event, as a matter of discretion, the application in these proceedings is not a proper means of seeking a remedy for non-performance of the original orders or of the deed. In my opinion claims for damages or for enforcement would be beyond the scope of the present proceedings, and are claims for which separate substantive proceedings would be appropriate. In my opinion the invocation of the court's powers under s 73 is misconceived, and the application on this ground must be refused.
17Alternatively, the plaintiff contended that it was entitled to obtain the order in exercise of its liberty to apply granted in the original orders.
18The principles as to the effect and scope of liberty to apply were collected by Brereton J in Georges & Anor v Peter Wieland & Ors [2010] NSWSC 1378. He said:
"23 "Liberty to apply" does not authorise the grant of different relief against different parties ... such liberty does not extend to an application made for the purpose of obtaining substantive relief that is substantially different from that given by the original order [ Morrow v Tucker (No 2) [2006] NSWSC 1358; Abigroup Ltd v Abignano [1992] FCA 567; (1992) 39 FCR 74, 88; Australian Hardboards Ltd v Hudson Investment Group Ltd [2007] NSWCA 104; (2007) 70 NSWLR 201, [35], [51] (Campbell JA); Muriti v Prendergast [2005] NSWSC 281, [158]; Phillips v Walsh (1990) 20 NSWLR 206, 209-10].
...
31 In Australian Hardboards v Hudson , Campbell JA (with whom Tobias JA agreed; Young CJ in Eq dissenting) reviewed the above authorities and then observed (at [69]) that a reservation of liberty to apply by a 21st century judge of the New South Wales Supreme Court had to be understood in the context of the court's practice and procedure and in particular (NSW) Civil Procedure Act 2005, s 56. Acknowledging (at [72]) that where the orders reserved further consideration, matters not disposed of by the orders made thus far could be dealt with on a later occasion, his Honour added (at [74]) that neither liberty to apply nor reservation of further consideration could be used to obtain an order that was outside the scope of those sought in the initiating process [ Haviland v McLeary (1894) 15 LR (NSW) Eq 22; (1894) 10 WN (NSW) 146]. Noting that both parties to a contract had rights under a decree for specific performance [ JAG Investment Pty Ltd v Strati [1981] 2 NSWLR 600, (603-604)], his Honour said (at [77]) that there was no reason in principle why issues decided pursuant to a reservation of liberty to apply and/or a reservation of further consideration were restricted to questions that the party that had obtained the order in question wished to raise; in other words, the other party could also raise such issues for consideration."
19In Australian Hardboards Ltd v Hudson Investment Group Ltd [2007] NSWCA 104; (2007) 70 NSWLR 201 Campbell JA said:
"56 Rather, what can be done under a reservation of liberty to apply depends on what needs to be done, in the particular case, to work out the particular orders that have been made. If an order is one the working out of which of its nature involves deciding complex questions, or questions that were not specifically raised at the time that the order was made, those questions can be raised and decided in the original suit pursuant to liberty to apply."
20Consideration of these principles requires refusal of the plaintiff's application under "liberty to apply" for the reasons earlier given with respect to s 73. The insurmountable obstacle confronting the plaintiff is that the order sought is not one appropriate for the working out of the original orders, and is substantially different to them.
21Finally, the plaintiff contended that there had been reserved the opportunity for further consideration of the proceedings which entitled it to apply for, and enabled the court to make, the order against the defendant for payment. The principles relevant to the possibility of "further consideration" were also reviewed by Brereton J in Georges . He explained (par 21) that reservation of further consideration, like liberty to apply, was a recognised qualification and exception to the principle of finality as stated in Bailey (p 530).
22In this case, although liberty to apply was ordered, there was no express reservation for further consideration. That leaves open the possibility of further consideration only if it was implicitly reserved ( Georges par 23).
23At the hearing of the proceedings under s 73, the plaintiff pressed only for a declaration that the parties had agreed on settlement. Following the making of the declaration the plaintiff prepared short minutes of the consequential orders necessary to give effect to the declaration which became the original orders of 6 May 2011. As already observed, the orders were made to reflect, and give effect to, the respective obligations of the parties under the deed. Analysis of the judgment of 14 April 2011 discloses no issue which was left reserved and undecided.
24Nevertheless, as I understood it, the plaintiff submitted that the basis for the implication of the reservation of further consideration was the control of the court of the working out of orders for specific performance, and the power to substitute different relief in the event of continued non-performance. The short answer to the submission is there is nothing in the deed which requires the defendant, in performance of his obligations, to make any payment to the plaintiff. It follows, in my opinion there is no basis for the implication of the reservation of further consideration.
25Accordingly, the application against the defendant on the ground of further consideration is refused.
26I turn now to the claims for orders against the company. As a preliminary step the plaintiff applied to join it as a defendant under r 6.24(1) which provides:
"(1) If the court considers that a person ought to have been joined as a party, or is a person whose joinder as a party is necessary to the determination of all matters in dispute in any proceedings, the court may order that the person be joined as a party."
27In the proceedings concerning the deed the plaintiff sought no relief other than that which resulted in the original orders against the defendant. No relief was claimed against the company, and no application for its joinder was made. Unsurprisingly, the company did not appear in the proceedings which were heard and decided without its participation.
28The basis for the application under r 6.24(1) was that, as a matter of substance and reality, the company through the defendant and his solicitor was party to the settlement negotiations which resulted in the deed. It was put, in effect, that the underlying purpose of the original orders was to obtain payment to the plaintiff of the agreed amount, a mechanism for achieving which was to join the company to enable the orders sought against it in the present proceedings to be made.
29In my opinion there is no basis upon which joinder could or should be ordered. The relevant proceedings were those disposed of by the declaration and original orders. It was not necessary for the determination of the matters in dispute in those proceedings for the company to be joined as a party. The proceedings were finalised on 6 May 2011, well before the filing of the notice of motion which instituted the present application. In refusing the application for joinder under the rule, it is sufficient to say that the application was made too late and at a time when it was not open to the court to make the order.
30Alternatively, the plaintiff claimed it was entitled to orders against the company, including for joinder, under s 73.
31In short, the plaintiff submitted that as it had not been paid by the company, orders that it be joined as a party and make the payment were appropriate to give effect to the determination that the proceedings had been settled and, hence, were within the court's power under s 73(1)(b). It was put that it was sufficient that the company was a party to the deed and thus involved in the settlement of the proceedings. It was also put that the orders would serve to implement the original orders in circumstances where the defendant was not obliged to make the payment, and had failed to procure the company to do so. As was put on the application under r 6.24(1) it was submitted that these orders would provide the mechanism to give effect to the settlement agreement under which the plaintiff was to be paid as the condition for the operation of the releases.
32In my opinion, s 73 affords the court no power to join the company as a party in the circumstances of this case, if only for the reasons given in refusing the application under r 6.24(1). With regard to the principles in Phillips and Lesdor the application with respect to the other orders must also be refused for the reasons given for the refusal of the application against the defendant (pars 14, 15, 16). On any view, the orders sought amount to claims for substantive relief substantially different to that given under the original orders. In these circumstances the principle of finality precludes the court from making them. It follows that the application under s 73 fails.
33The application under liberty to apply also fails, consistent with the refusal of the claim on this ground against the defendant. In addition, liberty to apply does not authorise the grant of different relief against different parties ( Georges par 23).
34I have already held that there was no reservation for further consideration. It follows that the application on this ground must be refused.
[2]
Conclusion
35I make the following orders:
(1)The amended notice of motion filed 25 November 2011 be dismissed.
(2)The plaintiff to pay the costs of the defendant and of Gradenco Pty Ltd.
[3]
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Decision last updated: 15 December 2011