Breen v Lambert & Anor [1992] QCA 144

In the meantime Mr Breen has died and the present proceedings are being conducted by his widow and administratrix Mrs Breen. They result from an application made by the defendants under O.45, r.1 for an order that execution of the judgment given by Byrne J be stayed "until further order". The summons claiming that relief sought as an alternative that the order made on 11 September 1990 for a stay pending appeal be varied by dispensing with the condition that money be paid into court. However, this alternative lost its relevance once the appeal itself was struck out.

The application made under O.45, r.1 came before Thomas J, who on 16 August 1991 delivered judgment dismissing it. In his lengthy and careful reasons his Honour traced the history of the action and explained the basis of the application that was made. Essentially it comes down to this. Although the memorandum ex.7 spoke of Breen's agreement to transfer "his" shares, Byrne J found that the agreement of which specific performance was ordered was that Breen would transfer title to all the shares in the company Hayville, which included the shares owned by Whittaker. The defendants claim that since the trial they have discovered that not all the shares were owned by Breen and Whittaker. Two were owned by a Ms Ledwidge, who was the friend and associate of Whittaker. They say that the reason why they were not aware of this before the trial was that discovery of documents made by Breen as plaintiff in the action was incomplete. If full and proper discovery had been made, and they had been armed with the knowledge they now have, they would, so the argument runs, have been entitled to a judgment or decision in their favour in the action before Byrne J, or at any rate to a different judgment or order. In those circumstances it is said that a stay of execution of the judgment should now be granted under O.45, r.1.

It was this application that was refused by Thomas J and it is against that decision that the present appeal is brought.

The documents that it is said were not, but ought to have been, discovered were identified as some eight items comprising ex.10 before Thomas J. They include correspondence to or from Breen's original solicitors Messrs Short Punch & Greatorix at a stage when Breen and Whittaker were arranging to acquire a "shelf" company for the purpose of their restaurant venture. It may be assumed that, had the defendants or their legal advisers been in possession of those documents and studied them, they might have learned that at one time Whittaker's friend Ms Ledwidge was intended to acquire a share or shares in the company. The original arrangement was that there should be five issued shares. One was to have been issued to each of Mr and Mrs Breen and one to them jointly. Of the other two, Mrs Ledwidge was to receive one in her own right and one as trustee for the Whittaker family trust.

The original intention was abandoned in favour of a different share structure pursuant to which the only shares were held by Breen and Whittaker. On appeal much time and energy was devoted to attempting to demonstrate that in fact or in law the shareholdings that resulted accurately reflect the original arrangement and not that later fixed upon. This involved a digression into the actions of a Mr and Mrs van Sleve, who held the first meeting of the company Hayville and its directors. They are the principals of another company Inco which carries on business as a manufacturer or, it may be, a retailer of ready-made companies. It was to them that the instructions in the correspondence contained in ex.10 were transmitted concerning the original and subsequently varied company share structure.

Questions were raised by the respondent on appeal about the extent to which Mr and Mrs van Sleve had authority to pass resolutions giving effect to the original or the varied arrangement with respect to the share structure of the company. It is not necessary to resolve these questions. For present purposes it may be assumed that, apart from the Breens, Ms Ledwidge became the only shareholder in the company. It does not follow that the defendants' application before Thomas J should have succeeded.

To make good their claim for relief under O.45, r.1 the defendants had to show that "after the giving of judgment . . . facts were discovered which, if discovered in time, would have entitled" them to a judgment in their favour. Paragraph 12 of the plaintiff's statement of claim in the action contained the conventional and formal allegation that the plaintiff "was at all material times and is ready, willing and able to complete the agreement". The defendants did not specifically deny this allegation, but they said in their defence that they did not admit it. As it happens they had repudiated the agreement before the time for its completion arrived. Disregarding this, what they were bound to show if they were to succeed on the application before Thomas J was that proof that Ms Ledwidge was a shareholder would have led to a different result in the action determined by Byrne J. His Honour found the agreement to have been that Breen would transfer all the shares in the company. The fact that one or more of them were held by Ms Ledwidge would have made no difference if Breen remained able to ensure that all shares were transferred at the time at which settlement was due.

Ms Ledwidge gave evidence at the hearing before Thomas J. His Honour found that, if the defendants had been prepared to complete the contract on the due date (7 December 1988), Ms Ledwidge would, had she been a shareholder, have done whatever was necessary to enable the contract to be completed. There were compelling reasons for reaching this conclusion. Her involvement in the original arrangement was slight. She was simply told that she would become a shareholder and she agreed to it. The idea did not come from her but from Whittaker and Breen. She did not pay for the shares. In late 1988 both she and Whittaker were anxious to assist Breen out of the business. They themselves were to remain in it. Whittaker was to continue as general manager of the company for five years subject to a trade restraint in the event of early termination by him of his employment.

Her attitude to transferring the shares is summarised in the answer to the following question in cross-examination:

" If Mr Breen had said 'Look, there may be a problem with the shareholding in the company, will you transfer?' ".

Her answer was, "I would happily have done it". His Honour accepted what she said. He did not consider her attitude was altered by her evidence in re-examination that she knew she was a guarantor of the company's lease of the restaurant premises. She was asked what she would have wanted done with the guarantee in return for the transfer of shares, to which she replied "My name taken off it, naturally". It was submitted on appeal that this meant that she would not have agreed to transfer the shares without being discharged from the guarantee. But that is not what she said, nor was it what she was asked. As it was, when the lease in question was re-negotiated very soon afterwards, the lessor was content with guarantees from Mr and Mrs Breen only. The agreement for a new lease was made in January 1989. His Honour was plainly justified in finding that there was no reason to suppose that any difficulty would have been encountered earlier in obtaining the release of Ms Ledwidge from her guarantee had it been necessary to do so.

The ultimate finding on this point made by Thomas J was that it was improbable that Ms Ledwidge would have insisted on having her name removed from the guarantee; and that, whether or not she was released from the guarantee, she would have co-operated in the transfer of any share owned by her.

There is no reason to hold that on this question the conclusion of the learned judge was incorrect. The reasons he gave for it are unassailable, and he had the advantage, which we do not share, of seeing the witness. In view of that conclusion, the plaintiff Breen would still have succeeded in the action before Byrne J. He could have been shown that he was able, as well as ready and willing, to transfer to the defendants all the shares in Hayville Pty Ltd. Thomas J was therefore correct in holding that they had failed to establish that, even if Ms Ledwidge was a shareholder and they had known of this at the trial, they would have been entitled to judgment in their favour, or to a different judgment from that given by Byrne J in the action.