HIS HONOUR: Introduction
1 This is my judgment on an urgent application by the plaintiff to vary some consent orders. The hearing was concluded on Wednesday 27 March 2002, and judgment was reserved. Unfortunately the judgment has been delayed for a week, to the inconvenience of the Court as well as the defendants, because the plaintiff made a further written submission without leave on the day after the hearing ended, and it was then necessary to give the defendants time to reply.
2 The plaintiff ("H & G") and the second defendant ("Barbary") are the shareholders in the first defendant ("Pilot"), each holding two shares. Mr David Hansen is a director and principal shareholder of H & G (evidently as trustee for a family trust). The third defendant, Mr Raymond Whitten, is a director and shareholder of Barbary. Pilot has been, in effect, a joint venture vehicle for the Hansen and Whitten interests for the purpose of developing a property at 2-6 Walker Street and 44-46 Melrose Parade Clovelly ("the Clovelly property"), which upon completion will provide 28 residential apartments. Broadly speaking, Mr Hansen has brought to the joint venture his experience as a property developer, and he has found the site for development. Mr Whitten has brought to the joint venture his experience as a commercial solicitor and in property development, and finance through Barbary.
3 Title to the Clovelly property is vested in Pilot, subject to a first mortgage in favour of GIO Australia Ltd and a second mortgage in favour of Barbary. The GIO loan is supported by guarantees, including guarantees by Barbary and Mr Whitten. Barbary also has a charge over the assets and undertaking of Pilot. As at 1 March 2002 the amount required to pay out the GIO loan was $7,749,326.77. The loan was made under a commercial equity facility in which, in effect, GIO is the financier for the building development, which is near completion but continuing, and so further advances may have been made since the beginning of March, or may in future be made, and additionally interest is accruing. As at 21 March 2002 the amount required to discharge all liabilities to Barbary was $5,992,768.05. Interest is accruing on that amount.
4 The development of the site has not been easy. Apart from difficulties with the builders (RMA Design and Construction, a business operated by two entities associated with Mr Mahmoun Rahme and his father Mr George Rahme), and negotiations with the Council, there has been litigation with an adjoining landowner and with purchasers. The purchaser litigation, in this Court, has arisen because Pilot sold 15 of the 28 residential units off the plan, and later purported to terminate the contracts for sale. It purported to rely on a clause in the contracts of sale which entitled either party to terminate in the event of non-completion of the development and registration of the strata plan within two years. Nine of the purchasers have brought proceedings to challenge the validity of the termination of the contracts. It appears that the present value of the residential units is higher than the contract prices, perhaps (according to some evidence) by as much as $1 million or more.
5 Unfortunately, there has been a deep and apparently bitter falling out between the Hansen interests and the Whitten interests. Their dispute led to H & G taking the present proceeding, after Mr Hansen was purportedly removed as a director of Pilot. H & G sought relief of various kinds, but its principal claim to relief was an order that Barbary or Mr Whitten or both of them purchase H & G's shares for a price established by valuation. The defendants filed cross claims against H & G and Mr Hansen. One of their principal claims is that Mr Hansen or H & G received a secret commission from Mr Rahme.
6 Up to the time of the hearing, the parties disagreed about the true value of Pilot, having regard to the extent of its borrowings and the difficulties encountered by the development. Essentially the Hansen interests saw great potential in the development and contended therefore that H & G's shares had substantial value. They relied on a valuation prepared by Hancock & Associates, which valued each of the four issued shares at over $1.5 million. On the other hand, the Whitten interests, relying on a valuation by O'Brien Palmer dated 19 October 2001, asserted that after taking into account borrowings and the various difficulties encountered by the development, the value of each share in Pilot was $178,289. In the course of an interlocutory hearing on 21 November 2001, counsel for the defendants informed the Court that Barbary and Mr Whitten asserted that by that time, Pilot had become worthless.
7 Whatever may have been view that the Whitten interests had as to the value of Pilot in November 2001, it appears that both sides see a substantial actual or potential value in the company now. The development is nearing completion. Although the ultimate profit out of the development will depend upon the resolution of the purchaser litigation, it seems that a profit of some millions of dollars is a real possibility. The battle before me now is essentially a battle for access to that profit.
Interlocutory arrangements
8 On 29 August 2001 H & G applied to Young CJ in Eq as Duty Judge for interlocutory relief. Short Minutes of Order were handed up by consent and without admissions, and his Honour made orders accordingly. The orders provided for the defendants to give H & G and their accountants reasonable access to the books and records of Pilot, and restricted the defendants from issuing a statutory demand or seeking to wind up H & G, and prevented Pilot from paying legal fees to Mr Whitten's legal firm without the written consent of Mr Hansen, pending the hearing. The orders included the following:
"2. The Court notes the following additional undertakings:
a. Upon the Plaintiff, by its Counsel giving to the Court the usual undertaking as to damages and undertaking not to unreasonably withhold consent in relation to the following matters, the Defendants, without admissions, undertake to the Court as follows:
i. Without prejudice to the existing security arrangements, that the 1st Defendant will not enter into any contracts or arrangements or amend or terminate existing contracts or arrangements or grant any rights or interests in the assets of the 1st Defendant, without the prior written consent of David Hansen; and
ii. That the 1st Defendant will not make any payments to any party in a sum exceeding $5,000 without the prior consent of David Hansen;
until the hearing and determination of these proceedings."
The hearing of the oppression proceeding
9 The case was set down for a six-day hearing beginning on 30 November 2001. In opening, counsel for H & G relied on written submissions, which included the following paragraph:
"7. While the Plaintiff maintains that its 2 shares in the 1st Defendant are worth more than $3 million and denies the 2nd and 3rd Defendants' assertion that they are either worthless or only worth $356,578, the Plaintiff makes the following open offer to purchase the 2nd Defendant's shares:
(a) payment to the 2nd Defendant of $356,578 within 45 days in consideration of the transfer of the 2nd Defendant's 2 shares to the Plaintiff;
(b) repayment to the 2nd Defendant of its advances to the 1st Defendant within 45 days (together with any accrued interest) in consideration of the 2nd Defendant discharging its securities over the 1st Defendant;
(c) discharge of the GIO mortgage over the Clovelly development and release of the 2nd and 3rd Defendants' guarantees within 45 days;
(d) payment into a controlled moneys account of an amount of $50,000 within 45 days to secure any valid claim for legal fees the 3rd Defendant may have against the 1st Defendant after assessment of the 3rd Defendant's legal costs.
If Whitten and his company were serious in their assertions, the above offer would be accepted. If it is not accepted, the obvious conclusion can be drawn."
10 After the hearing on the first day had proceeded for a little while, counsel for the defendants informed me that he wished to take detailed instructions from his clients as to whether they would accept H & G's offer. I allowed time for the matter to be considered and later in the day, counsel for the defendants informed me that his clients had instructed him to accept H & G's offer contained in paragraph 7 of the submission. It was made clear in court that the two shares referred to in paragraph 7(a) were Barbary's shares in Pilot, and the legal fees referred to in paragraph 7(d) did not include the costs of the present proceeding.
11 As to the arrangements governing the 45 day period from the time of making orders to the time of settlement, counsel for the defendants said (Transcript, 30 November 2001, page 24):
"There is an interlocutory regime in place with respect to the orderly conduct of the 1st Defendant's affairs. It is agreed between the parties, as I understand, that that regime will continue until the transfer of those shares within the 45 day period. We would apprehend that the proceedings would then stand over to a convenient day, 46 or so days from now, which is probably the first week of term next year, so that orders can be made on that occasion for the proceeding and, by that, I mean the originating process and also the cross claims, to be dismissed."
12 The interlocutory regime referred to was the regime established by the orders of Young CJ in Eq on 29 August 2001.
13 After some discussion about whether I had the power to make orders by consent under s 233 of the Corporations Act, I made the following notations and orders:
"(1) The Court notes the agreement of the parties that failure to make some such agreement as is proposed by the offer in paragraph 7 of the plaintiff's outline of submissions dated 30 November 2001 would be contrary to the interests of the members of the 1st Defendant as a whole (without admission by the 2nd and 3rd defendants with respect to any allegations made by the plaintiff in the proceedings that they have engaged in conduct falling within section 232 of the Corporations Act).
(2) Order by consent that the plaintiff purchase the 2nd Defendant's shares in the 1st Defendant upon the terms of the said paragraph 7.
(3) I stand the matter over to 10 am on Tuesday 4 December 2001 for the purpose of hearing submissions on the question of costs."
14 Those orders have been entered.
15 On 4 December 2001 counsel for H & G made an application for leave to file and move on an interlocutory process that he had prepared and transmitted to my chambers late on the previous evening. The draft interlocutory process sought detailed orders to govern the arrangements for the development project and the relationship between the parties pending settlement. Some 35 orders were sought, dealing with access to documents and information, reconstitution of the board of directors of Pilot, arrangements for interim management of the project, and various orders with respect to costs and matters of procedure. Counsel for the defendants submitted that the draft interlocutory process was fundamentally misconceived because the Court had already made orders, on 30 November, for the purpose of settling the matter subject only to the question of costs. Counsel for H & G then informed me that he wished to withdraw the draft interlocutory process except insofar as it dealt with costs. He made a statement of his client's position which was recorded in the transcript.
16 I then heard argument as to costs, and decided that no order for costs should be made, except to the extent that the hearing on that day related to the foreshadowed and withdrawn interlocutory process, as to which I ordered H & G to pay the defendants' costs. I stood the oppression proceedings over to 1 February 2002, anticipating that by that time settlement would have occurred.
The interlocutory applications by the plaintiff and the defendants after failure of the settlement
17 When the matter returned to me, I was informed that settlement had not taken place, but that Mr Hansen was negotiating arrangements with third parties that would permit the settlement to go ahead. H & G filed an interlocutory application said to be made under s 233 of the Corporations Act and Part 44 rule 5 of the Supreme Court Rules. In its amended form the application seeks the following relief:
"1. An Order staying the operation of Order 2 made on 30 November 2001 up to and including 22 April [2002] or such further or other period as this Honourable Court deems fit.
1A. Additionally or alternatively, an Order that the Orders made on 30 November 2001 be varied to the effect that the Plaintiff be removed as the purchaser of the 2nd Defendant's shares in the 1st Defendant and be replaced with Bridge Street Developments Pty Ltd."
18 The present judgment deals with this application. The defendants have vigorously opposed it. Their position is that, since H & G has not purchased Barbary's shares in Pilot, and has not complied with the other terms of my orders, within the 45 day time period allowed by the orders, the settlement has failed and the case should proceed to hearing. To support their position, they have filed their own interlocutory application, seeking orders that the consent orders made on 30 November 2001, and my order with respect to costs made on 4 December 2001, be set aside. Although some submissions were directed towards the defendants' interlocutory application, I have heard only the application by H & G, and the parties have acknowledged that further submissions will be needed (though presumably not any additional evidence) if H & G's application fails and I proceed to consider the defendants' application.
19 As I understand the position of H & G, it would prefer to have the orders varied so as to substitute Bridge Street Developments for itself as purchaser of Barbary's two shares in Pilot; but if the Court decides that it cannot or should not make such an order, H & G would be content with an order granting an extension of time for completion of the transaction envisaged by my orders of 30 November 2001.
20 H & G's interlocutory process seeks to achieve an extension of the settlement time by an order staying the operation of Order 2 made on 30 November 2001 up to a stated date. On 1 February 2002, when the interlocutory application was initially filed, H & G argued that the 45 day time limit had not expired. At that stage an order staying the operation of my earlier Order 2 may have been appropriate. However, by the time the application came to be heard, the 45 day time period had expired on any view. The submissions of the parties proceeded on the basis that an extension of the settlement time would involve variation of my earlier order, rather than an order staying the operation of the earlier order.
Principles governing variation of orders after entry
21 Order 2 made by me on 30 November 2001 required H & G to purchase Barbary's shares in Pilot upon the terms of paragraph 7 of H & G's written submission. It was made on the basis that the parties had consented to it, and also on the basis that I had authority to make the order under ss 232 and 233 of the Corporations Act.
22 Paragraph 1 of my orders was intended to note a matter of a kind referred to in s 232 of the Corporations Act, sufficient to give me jurisdiction under s 233 to make an order under that provision. Paragraph 1 does not in its terms purport to give the Court jurisdiction to vary Order 2. It seems to me that any jurisdiction under s 233 that arose by virtue of Paragraph 1 was spent by the making of Order 2. In those circumstances, s 233 would not be available as a source of power to vary Order 2 now, unless I were to make a finding under s 232 and thereby give the Court a fresh jurisdictional basis to make orders under s 233.
23 H & G did not seek orders under ss 232 and 233 in its interlocutory application, and did not submit that the evidence on the interlocutory application was sufficient to warrant my making such an order. In my view the evidence on the application does not permit any such order to be made. Therefore H & G's application to vary Order 2 is to be assessed simply as an application to vary consent orders, uncomplicated by any special jurisdiction under the Corporations Act.
24 The Court's power to vary or set aside an order after entry is dealt with in Part 40 rule 9 of the Supreme Court Rules, which is as follows:
"40.9. (1) The Court may set aside or vary a judgment where notice of motion for the setting aside or variation is filed before entry of the judgment.
cf. R.S.C. (Rev.) 1965, O. 13, r. 9; O. 19, r. 9; O. 35, r. 2 (1).
(2) The Court may set aside or vary a judgment:
(a) where the judgment has been entered pursuant to (which relates to default judgment); or
(b) where the judgment has been entered after judgment has been given in the absence of a party, whether or not the absent party had notice of trial or of any motion for the judgment;
(c) where the judgment has been entered in proceedings for possession of land after judgment has been given in the absence of a person and the Court decides to make an order that the person be added as a defendant.
(3) The Court may, on terms, set aside or vary an order:
(a) where the order has been made in the absence of a party, whether or not the absent party is in default of appearance or otherwise in default, and whether or not the absent party had notice of motion for the order; or
(b) where notice of motion for the setting aside or variation is filed before entry of the order.
(4) In addition to its powers under subrules (1), (2) and (3), the Court may, on terms, set aside or vary any order (whether or not part of a judgment) except so far as the order determines any claim for relief or determines any question (whether of fact or law or both) arising on any claim for relief and excepting an order for dismissal of proceedings or for dismissal of proceedings so far as concerns the whole or any part of any claim for relief.
(5) Nothing in this rule affects any other power of the Court to set aside or vary a judgment or order."
25 The leading authority on the Court's power to set aside a judgment or order after it has been entered is the High Court's decision in Harvey v Phillips (1956) 95 CLR 235. That was a case in which the appellant sought to have a consent judgment set aside on the basis that her action had been settled by her counsel without her knowledge or authority. The High Court dismissed the appeal on the ground that counsel had signed the terms of settlement on the appellant's express authority. However, the Court took the opportunity to make a general statement as to the circumstances in which consent orders may be set aside.
26 After identifying some special cases, none of which is relevant here, the Court considered (at 242-243) reported cases where counsel settled proceedings contrary to a restriction on his authority. In such cases the Court "will not feel bound to enforce a compromise made by him contrary to the restriction, even though the lack of actual authority is not known to the other party" (quoting from the judgment of Lord Atkin in Sheonandan Prasad Singh v Abdul Fateh Mohammed Reza (1935) 62 Ind App 196, at 199-200).
27 The High Court continued:
"It is said that this power of the courts is to be exercised as a matter of discretion when in the circumstances of the case to allow the compromise to stand would involve injustice in view of the restriction on counsel's authority. See Halsbury's Laws of England, vol 3, 3rd ed,, p 51; 2nd ed, vol 2, pp 526, 527. But in the case of a compromise which is made within the actual as well as apparent authority of counsel the Court does not appear to possess a discretion to rescind it or set it aside. The question whether the compromise is to be set aside depends upon the existence of a ground which would suffice to render a simple contract void or voidable or to entitle the party to equitable relief against it, grounds for example such as illegality, misrepresentation, non-disclosure of a material fact where disclosure is required, duress, mistake, undue influence, abuse of confidence or like …".
28 In the present case there is no suggestion that counsel lacked actual authority to bind their clients to the terms of Order 2. Therefore, according to the High Court, the Court does not have any discretion to set Order 2 aside. The Court's power to vary a consent order presumably depends upon the same analysis - that is, that the order may be varied where there is a ground for varying the simple contract which underlies it, but not otherwise. Thus, a consent order may be varied where the underlying simple contract is amenable to rectification, just as a consent order can be set aside where the underlying contract is voidable on equitable grounds. In the present case, there is no suggestion that any ground exists under the doctrine of rectification or otherwise for varying the contract underlying Order 2, in the manner advocated by H & G or in any other manner. These considerations point to the conclusion that the Court has no power to make the variations that H & G seeks.
29 There is, however, one clear qualification to such a conclusion, and in addition, later cases have tended to soften the sharp edges of the Harvey v Phillips approach. The exception arises out of an express provision of the Supreme Court Rules. Part 2 rule 3 provides:
"3. (1) The Court may, on terms, by order, extend or abridge any time fixed by the rules or by any judgment or order.
(2) The Court may extend time under subrule (1) as well after as before the time expires whether or not an application for the extension is made before the time expires.
(3) The period within which a person is required by rules or by any order to serve, file or amend any pleading or other document may be extended by consent without any order for extension."
30 The rule was considered by the Court of Appeal of New South Wales in Paino v Hofbauer (1988) 13 NSWLR 193. McHugh JA, with whom the other members of the Court agreed, held that Part 2 rule 3 confers on the Court the power to extend a time fixed by a consent order, notwithstanding that the order has been entered (at 196). It is one of the powers to set aside or vary a judgment or order preserved by Part 40 rule 9 (5). He rejected a submission that Part 2 rule 3 does not enable the Court to vary a time contained in a condition, in contrast with a time fixed for performance of an obligation. After referring to the decision of the High Court in FAI General Insurance Co Ltd v Southern Cross Exploration NL (1988) 62 ALJR 216, he concluded (at 197):
"The principle inherent in the decision in Southern Cross Expiration is that the Court has power to extend or abridge any time mentioned in an order of the Court whether it is the subject of an obligation or not and whether or not the time has expired."
31 It follows from this decision that I have the power to vary Order 2 by extending the 45 day time period for purchase of the Pilot shares and performance of the terms with respect to other payments, even though the 45 day period has already expired.
32 However, rule 3 does not confer on me the power to vary the identity of the purchaser of the shares from H & G to Bridge Street Developments. The High Court's observations in Harvey v Phillips imply that I have no power to do so, absent any basis for varying the underlying contract on contractual or equitable grounds. However, the Court of Appeal in Paino v Hofbauer made some observations that may be relevant to this point.
33 In that case the parties agreed to terms of settlement, reflected in judgment being entered by the Court by consent. The judgment provided that the respondents pay the appellants $750,000. Order 5 said that execution on the judgment was stayed provided that the defendants paid $530,000 to the appellants by stated instalments on stated due dates. Order 6 said that provided payments were made within seven days of the due dates, interest would not run on the judgment. Order 7 said that compliance with payment obligations within seven days of the due dates would not constitute breach of the respondents' obligations, but otherwise time for the payment of each instalment of the judgment was of the essence.
34 The respondents were late in some of their payments, and they applied to the Court for variation of the orders to cater for the delay. The judge at first instance made orders for variation, after taking the view that the appellants had not been prejudiced substantially because any lost interest was only for a short time and would be minor. The Court of Appeal found that the Court had power to vary the orders by extending time under Part 2 rule 3, but that the exercise of discretion by the judge at first instance had miscarried. The judge had overlooked that the effect of the initial orders was that interest would run on the total amount of the judgment if any payments were late, and so the loss of interest produced by the orders for variation would be substantial. In the circumstances, the Court of Appeal proceeded to exercise the discretion afresh, and decided against variation of the initial orders.
35 McHugh JA referred to Harvey v Phillips, and General Credits Ltd v Ebsworth [1986] 2 Qd R 162, which applied it. He also referred to the English cases of Siebe Gorman & Co Ltd v Pneupac Ltd [1982] 1 WLR 185 and Huddersfield Banking Co Ltd v Henry Lister & Son Ltd [1895] 2 Ch 283, which are also regarded as authority for the proposition that if the underlying contract cannot be invalidated a consent order is good (see Lindley LJ in the latter case at 280).
36 McHugh JA pointed out (at 198) that in Harvey v Phillips the question was whether a consent order based on a compromise agreement could be set aside. He continued:
"The issue in the present case is different. The Court does have a discretion. Moreover, I am not prepared to adopt the English approach to consent orders based on contracts. The discretion conferred by Part 2, rule 3, is not to be equated with the extent of the Court's powers to vary or set aside contracts.
"Nevertheless, when a party asks that a consent order based on a contract should be set aside or varied and the underlying contract could not be set aside or varied, the case would need to be exceptional before the Court would exercise its discretion in favour of an applicant. Moreover, by itself the failure of the applicant to comply with the terms of a consent order based on the contract could rarely, if ever, be a sufficient ground to vary the order. This is particularly so when the parties have stipulated that time for the performance of the parties' obligations was to be of the essence of the agreement."
37 With respect, it is not clear to me whether, in this passage, his Honour intended to say that
· the Court has a discretion to make any sort of variation to consent orders based on an agreed settlement, but will only do so in an exceptional case (assuming that the underlying agreement cannot be set aside on contractual or equitable grounds), or
· the principle in Harvey v Phillips is ousted by Part 2 rule 3, which confers a discretion on the Court to extend or abridge time, but the discretion under the rule should only exercised in an exceptional case.
38 The former construction appears to me to be inconsistent with Harvey v Phillips itself, as well as the English cases upon which, to a degree, Harvey v Phillips was based. In Singh v Secretary, Department of Family & Community Services [2001] FCA 1281 (21 September 2001) the Full Federal Court treated Harvey v Phillips as authority for the proposition that where judgment has been entered, the Court's power to set aside its orders depends upon the existence of a ground sufficient to render a simple contract void or voidable, or to entitle the party to equitable relief (at paragraph 10).
39 Nevertheless, in some later cases judges of this Court appear to have adopted the former construction of McHugh JA's observations: see New South Wales Crime Commission v Chik Chen [2001] NSWSC 331 (Howie J, 4 May 2001), especially at para 67, and other cases cited in that case. And, notwithstanding their observations on Harvey v Phillips, the Full Federal Court in Singh's case (a case where the orders had not been entered) saw Paino v Hofbauer as authority for the proposition that where a party asks for a consent order based on a contract to be set aside or varied when the underlying contract could not be set aside or varied, the case needs to be exceptional before the Court will exercise its discretion in favour of the applicant (at paragraph 13).
40 Moreover, in Paino v Hofbauer itself Clarke JA, while purporting to apply Harvey v Phillips and the English cases as authority for the proposition that consent orders embodying a compromise agreement between the parties should only be set aside if the underlying agreement might be invalidated, nevertheless said (201):
"I should not be taken as saying that the Court has no power to make an appropriate order in the absence of proof of a circumstance which might entitle a party to relief in respect of his failure strictly to comply with the terms of the contract which was reflected in a court order. I simply suggest that it would be a rare case in which it would be a judicial exercise of the discretion to grant an indulgence the effect of which is to vary an agreement between the parties …".
41 Therefore there is some authority for the view that the Court has a discretion to vary a consent order in ways going beyond extension of time, in an exceptional case, even though the facts of the case provide no ground for varying or setting aside the underlying contract. But in light of the restrictive language used in Harvey v Phillips, and in the absence of any more recent authoritative pronouncement by the High Court, the point must be regarded as doubtful. I therefore doubt whether I have power to vary Order 2 by substituting Bridge Street Developments for H & G as the purchaser of the Pilot shares.
42 However, it is not necessary for me to reach a final conclusion on the point in this case. Even if I had the power to make such an order, it would only be available in an exceptional case. This is not an exceptional case as far as the variation of the identity of the purchaser is concerned, for two reasons. First, H & G itself says, in submissions, that its claim to this variation is put in the alternative, and if the Court finds difficulty in varying the orders in this fashion, it is content to achieve a variation by extension of time. There is therefore no pressing reason for me to make an order for variation of the identity of the purchaser. Moreover, since it appears that H & G can give effect to the purchase transaction without variation of the identity of the purchaser, and no hardship has been suggested, there is no discretionary reason for me to make that variation order. I shall therefore not do so.
43 The remaining question is whether I should, in the exercise of my discretion, make an order extending the 45 day time period. Where parties agree upon the sale and purchase of property and the discharge of securities, and fix times for the performance of their contractual obligations, time is not normally of the essence unless it is expressly declared to be so, although it is open to the non-defaulting party to give a notice upon expiration of which a non-essential provision as to time of performance may be converted into an essential requirement. If, on 30 November 2001, the Court had simply noted a compromise agreement of the parties rather than making orders in terms agreed by the parties, time would probably not have been of the essence. If, correspondingly, time for performance of my orders is not of the essence, completion of the purchase could take place without my making an order for variation. The defendants have not given a notice to H & G purporting to make time of the essence, and if they did so now, it may well be that a reasonable period of notice would be sufficient to enable H & G to complete the transaction. Consequently H & G could proceed to completion without any need for curial intervention, while perhaps being liable for damages for breach the 45 day time stipulation.
44 Was the 45 day time period in my orders of 30 November 2001 an essential stipulation as to time? The question did not arise in Paino v Hofbauer, because in that case the parties expressly stipulated the extent to which time was to be of the essence. The circumstances that lead the parties to go beyond having the Court note their compromise agreement, and to prefer obtaining orders from the Court, suggest an intention that the terms of the Court's orders are to be treated as essential provisions of their compromise. I am therefore inclined to the view that the requirement for H & G to perform its obligations within 45 days was an essential time stipulation.
45 I take Paino v Hofbauer as authority for the proposition that where Part 2 rule 3 applies, so that the Court clearly has the power to vary its consent order, it should only do so in an "exceptional" or "rare" case. I must therefore consider whether the circumstances of the present case are sufficiently exceptional to warrant an order varying the time period as sought by H & G. I have decided that they are.
H & G's case for relief
46 H & G essentially relies on three matters, the cumulative effect of which (in its submission) should be to persuade me to exercise my discretion in its favour. It says that Mr Whitten's conduct spoilt its negotiations with Gowing Bros for financial accommodation to meet its obligations under the consent orders; that Mr Whitten's conduct was, in any case, in breach of undertakings given by the defendants to the Court for the maintenance of the interlocutory regime; and that the defendants made it difficult for H & G and its financiers to gain access to the site, consequently interfering with H & G's efforts to raise finance so as to perform its obligations under the consent orders.