In the matter of Prismex Technologies Pty Limited; Colin Lindsay Taggert v John Matyear

Judgment (Ex Tempore) 1HIS HONOUR: In proceedings 2006/258477, which I shall call the original proceedings, the Plaintiffs John Matyear and Metage Pty Limited, sued eight defendants, including the First Defendant Prismex Technologies Pty Limited, the Second Defendant Mendela Pty Limited, the Third Defendant John Ashall, and the Fifth Defendant Colin Lindsay Taggert, for the winding up of Prismex on grounds of oppression and on the just and equitable ground and, alternatively, for the compulsory acquisition of the Plaintiffs' shares for oppression. Allegations were also made against directors of Prismex of breach of their duties owed in that capacity to Prismex and that, as a result of those breaches, the Sixth Defendant X-Position Pty Limited held its business upon constructive trust for Prismex. The Plaintiffs had obtained leave, pursuant to (Cth) Corporations Act 2001, s 237, to bring such proceedings on behalf of Prismex against the other Defendants. An expert accountant made a report valuing the shareholding in Prismex on various hypotheses and assumptions, the highest of which was $1,000,011; on that basis, Metage's 169th/458th shareholding was worth not more than $373,055. 2At a mediation conducted on 13 October 2010, the parties reached a compromise which was recorded in terms of settlement signed by the solicitor for the Plaintiffs and the solicitor for the Second, Fifth and Sixth Defendants that day and which provided as follows: By consent the court orders that: 1. Verdict and judgment in favour of the Plaintiffs as against the Second, Fifth and Sixth Defendants in the sum of $700,000 inclusive of costs. 1A. Proceedings otherwise dismissed between these parties including cross claims. 2. The Second Plaintiff to transfer to the Second Defendant its shares in Prismex Technologies P/L (the First Defendant) for the sum of $1 upon the first instalment payment described in paragraph 4 below being made. 3. (a) Each party to pay their own costs of the proceedings, and (b) Discharge any existing costs orders. The Court notes the following agreement between the parties: 4. The Plaintiffs agree to accept as full and final settlement of the judgment debt described in Order 1 above (providing all payments are made by the dates indicated, time being of the essence) the following instalment payments: (i) $200,000 within 30 days from today, (ii) a further $105,000 within 6 months from today, (iii) a further $165,000 within 12 months from today. 5. Upon the Second Plaintiff transferring its shares to the Second Defendant in accordance with Order 2 herein, the First Plaintiff will immediately resign as a director of the First Defendant. 3On 15 October, the solicitors for the Plaintiffs wrote to the Court enclosing the handwritten terms of settlement in the following terms: John Matyear and Metage Pty Limited v Prismex Technologies Pty Limited and ors - NSW Supreme Court Equity Division proceedings 2006/258477 (Proceedings) We act for the Plaintiffs in the Proceedings and inform you that we attended mediation before Mr Tony Fitzgerald QC on 13 October 2010. As a result of that mediation the Plaintiffs were able to secure a settlement with the Second, Fifth and Sixth Defendants in respect of both the substantive proceedings and the cross claims in so far as they relate to the Plaintiffs in their capacities as cross Defendants. We enclose handwritten Terms of Settlement (Terms) which are to be formalised into orders of the court. The settlement which is embodied in the Terms deals with all substantive matters between the major litigants in the Proceedings. Notwithstanding the Terms, there are claims against the Third, Fourth, Seventh and Eighth Defendants. In the Proceedings, the Plaintiffs were seeking relief by way of a derivative of claim brought on behalf of the First Defendant, an action for oppression and also the winding up of the First Defendant. The Third Defendant was the subject of allegations of wrong doing by the Plaintiffs but he was also a party by virtue of his shareholding in the First Defendant. No allegation of wrongdoing was raised against the Fourth Defendant and she was joined to the Proceedings by virtue of her shareholding in the First Defendant. Both have filed a defence in the proceedings. The Seventh and Eighth Defendants were joined to the Proceedings as shareholders of the First Defendant and no allegation of wrongdoing was maintained against the seventh and eighth defendants. Neither the Seventh nor the Eighth Defendant have filed a notice of appearance in the proceedings and have at no time taken an active role since being joined in July 2008. We are currently in communications with the Third and Fourth Defendants to the Proceedings with a view to disposing of them without a final hearing and in respect of the Seventh and Eighth Defendants we will be seeking to discontinue the Proceedings against them as there has been no appearances filed. This letter is to inform you that the likelihood of the proceedings being heard on 25 October 2010 either for the five days allocated, or at all, is very unlikely at this stage. We will keep the court informed of developments but considered it responsible to send this letter notifying the court of the current position. 4On 22 October 2010, the Plaintiffs' solicitors wrote to the Defendants' solicitors in the following terms: John Matyear and Metage Pty Limited v Prismex Technologies Pty Limited and ors - NSW Supreme Court Equity Division proceedings 2006/258477 I refer to the handwritten terms of settlement and enclose Form 43 converting the handwritten terms into formal orders. Could you please let us know whether you are content for these orders to be submitted to Justice Ward for making. In relation to the proceedings as a whole, you will note that the terms of settlement do not resolve the proceedings insofar as they concern Mr and Mrs Ashall, Poon Investments Pty Limited (Poon) and Ricky Daniels (Daniels). Given that neither Poon nor Daniels have filed a notice of appearance or defence in the proceedings we have little doubt the Court will allow the Plaintiffs to discontinue proceedings against them on the basis that each party pay their own costs. In terms of Mr and Mrs Ashall, each of them has filed a defence although allegations of wrongdoing are only made against Mr Ashall. Although we have strong advice that the claim against Mr Ashall is meritorious, we have received instructions from the Plaintiffs to discontinue the proceedings against Mr and Mrs Ashall on the basis that each party pay their own costs. We have been endeavouring to contact Mr and Mrs Ashall with respect to the proceedings but have not met with success to date. Given that you have previously represented Mr and Mrs Ashall, could you please seek instructions from them regarding the proposed discontinuance against them so that we may prepare a formal notice of discontinuance to be handed up at Court on Monday. We note that the same would apply in relation to your cross-claims insofar as they relate to parties who were not present at the mediation and who have not agreed to orders. If you have any questions please feel free to contact me. 5The "Form 43 converting the handwritten terms into formal orders" referred to in that letter was in the following form: THE COURT ORDERS THAT: 1. There be verdict and judgment in favour of the plaintiffs as against the second, fifth, and sixth defendants in the sum of $700,000 inclusive of costs. 2. The proceedings are otherwise dismissed as between the plaintiffs and first, second, fifth and sixth defendants including any cost claims involving these parties. 3. The second plaintiff is to transfer to the second defendant its shares in the first defendant, Prismex Technologies Pty Limited, for the sum of $1.00 upon the first instalment payment described in paragraph 5 below being made. 4. Each party to these orders: (a) is to pay their own costs of the proceedings; (b) and agrees to the discharge any existing cost orders made in the proceedings. THE COURT NOTES THE FOLLOWING AGREEMENT BETWEEN THE PLAINTIFFS AND THE FIRST: 5. The plaintiffs agree to accept as full and final settlement of the Judgment debt described in order 1 above (providing all payments are made by the dates indicated, time being of the essence): the following instalment payments; 5.1 $200,000 within 30 days from 13 October 2010; 5.2 A further $105,000 within six months from 13 October 2010; 5.3 A further $165,000 within twelve months from 13 October 2010. 6. Upon the second plaintiff transferring its shares to the second defendant in accordance with order 2 herein the first plaintiff will immediately resign as a director of the first defendant. 6Relevantly, it will be observed, that the chapeau proceeding paragraph 5 of the orders, which in the handwritten form had read "the Court notes the following agreement between the parties", had been converted into "the Court notes the following agreement between the plaintiffs and the first:". However, the surrounding material makes clear that whereas the First Defendant was the company the subject of the proceeding, and as such not an independent negotiating party, any such agreement must have been between the Plaintiffs and the Second, Fifth and Sixth Defendants. 7The proceedings were listed before Ward J on 25 October 2010. The record of proceedings of that date records the following: Give leave to file in Court a notice of discontinuance dated 22 October 2010 which I initial and date and place with the papers. I note that the notice of discontinuance is between the Third, Fourth, Seventh and Eighth Defendants and each of those parties and the Plaintiffs is to pay their own costs in the proceedings. I make orders in accordance with the order handed up to me by consent between the Plaintiff, the First, Second and Fifth, Sixth Defendants. 8Attached to the record of proceedings is the notice of discontinuance and the form of orders handed up that day. That form of order initialled by her Honour was the same as that which accompanied the letter of 22 October 2010, set out above; in particular, it contained the matter "the Court notes the following agreement between the Plaintiffs and the first:" preceding paragraph 5 of the orders. 9On 28 October 2010, a sealed minute of order issued from the registry in the following form: TERMS OF JUDGMENT/ORDER Note that the notice of discontinuance is between the third, fourth, seventh and eighth defendants and that each of those parties and the plaintiffs is to pay their own costs in the proceedings. The Court orders by consent between the plaintiff, the first, second, fifth and sixth defendants. 1. There be verdict and judgment in favour of the plaintiffs as against the second, fifth, and sixth defendants in the sum of $700,000 inclusive of costs. 2. The proceedings are otherwise dismissed as between the plaintiffs and first, second, fifth and sixth defendants including any cost claims involving these parties. 3. The second plaintiff is to transfer to the second defendant its shares in the first defendant, Prismex Technologies Pty Limited, for the sum of $1.00 upon the first instalment payment described in paragraph 5 below being made. 4. Each party to these orders: (a) is to pay their own costs of the proceedings; (b) and agrees to the discharge any existing cost orders made in the proceedings. 5. The plaintiffs agree to accept as full and final settlement of the Judgment debt described in order 1 above (providing all payments are made by the dates indicated, time being of the essence): the following instalment payments; 5.1 $200,000 within 30 days from 13 October 2010; 5.2 A further $105,000 within six months from 13 October 2010; 5.3 A further $165,000 within twelve months from 13 October 2010. 6. Upon the second plaintiff transferring its shares to the second defendant in accordance with order 2 herein the first plaintiff will immediately resign as a director of the first defendant. 10It will be observed that there is no chapeau preceding paragraphs 5 and 6 in the formal sealed minute of the order. I infer, from the fact that the signature of the Court's chief clerk appears in typed form on the document, and from the overall form of the document and the Court's knowledge of its own procedures, that that minute of order was prepared in the registry. 11The Defendants had in their employ one Melissa Taggert, the daughter of Colin Taggert, who was employed by X-Position and who was responsible for accounts payable. On or about 15 October 2010, Mr Taggert informed his daughter that the second payment of $105,000 had to be made by 13 April 2011. Ms Taggert entered each of the payment dates into her Outlook calendar, but mistakenly entered the date for the second payment as being due on 20 April not 13 April 2011. 12The first instalment referred to in paragraph 5.1 was paid on 10 November 2010, three days early. 13On Monday 11 April, Ms Taggert told her father that the second instalment was due on 20 April. Mr Taggert responded that she should ensure it was made earlier to ensure that there were no problems. Ms Taggert was absent from her place of employment on 13 April to attend a funeral. She says that had she been at work that day she would have arranged the payment to have been made on 20 April 2011. She was not challenged in that (or any other) respect. In any event, on 14 April she arranged for the cheque to be drawn and, after her father had signed it, deposited it into the bank account that had been nominated by the Plaintiffs. Thus, the payment was made on 14 April 2011, one day after it was due on 13 April 2011. 14Very shortly after that payment was received, the Plaintiffs' solicitors indicated that it was out of time, and that the Plaintiffs reserved their rights in that respect. 15The third instalment of $165,000 was paid on 3 October 2011, ten days early. 16The Plaintiffs contend that, by reason of the second instalment not having been paid within six months from 13 October 2010, they are not obliged to accept the instalments as full and final settlement of the judgment debt, and they are entitled to the total sum of $700,000 referred to in paragraph 1 of the orders, after having given credit for the amount so far received. 17On 16 June 2011, the Defendants/Applicants commenced proceedings by writ and statement of claim in the Supreme Court of Victoria seeking relevantly a declaration that any purported termination by the Plaintiffs of the terms of settlement was void and ineffective, and that the terms of settlement remain extant, and a declaration that to the extent any of the terms of settlement required the Defendants to pay any sum to the Plaintiffs in respect of the balance of the amount of the judgment, then that term was void and unenforceable as a penalty. 18On 11 September 2012, by interlocutory process filed in the original proceedings in this Court, the Applicants claim the following relief: 1. An order pursuant to Rule 1.12 of the Uniform Civil Procedure Rules that the time for compliance with paragraph 5.2 of the Orders made 25 October 2010 ("Orders") be extended nunc pro tunc from 13 April 2011 to 14 April 2011. 2. Alternatively, declarations that: (a) as a matter of construction of the Orders, the second and third instalment payments (referred to in paragraph 5.2 and 5.3) were not required to be made before the Second Plaintiff delivered a duly executed form of share transfer in discharge of its obligation under paragraph 3 of the Orders; (b) in failing to comply with paragraph 3 of the Orders the Second Plaintiff was, as at 14 April 2011, in breach of that paragraph of the Orders; (c) the First Plaintiff, being a director of the Second Plaintiff, caused the Second Plaintiff to be as at 14 April 2011, in breach of paragraph 3 of the Orders. 3. An order that the Second Plaintiff comply with paragraph 3 of the Orders by delivering to the Second Defendant a duly executed form of transfer of the Second Plaintiff's share in the first Defendant within 7 days of the making of this order. 4. Costs. 5. Such further orders as this Honourable Court deems appropriate. 19The Victorian proceedings have been transferred, under the (Cth) Jurisdiction of Courts (Cross-Vesting) Act 1987, to this Court, to be heard with the original proceedings. 20At the commencement of the hearing, the Plaintiffs obtained leave to file a further interlocutory process, returnable instanter, in which they seek the following relief: 1. An order pursuant to Part 36 Rule 17 of the Rules correcting the orders of the court entered on 25 October 2010 by making the orders set out in the document headed "Orders" annexed and marked "A". 2. The applicants' costs of this interlocutory application be the applicants' costs in the cause. 3. Such further or other orders. Annexure A - Judgment/Order Note that the notice of discontinuance is between the third, fourth, seventh and eighth defendants and that each of those parties and the plaintiffs is to pay their own costs in the proceedings. The Court orders by consent between the plaintiff, the first, second, fifth and sixth defendants: 1. There be verdict and judgment in favour of the plaintiffs as against the second, fifth and sixth defendants in the sum of $700,000 including of costs. 2. The proceedings are otherwise dismissed as between the plaintiffs and first, second, fifth and sixth defendants including any cross claims involving these parties. 3. The second plaintiff is to transfer to the second defendant its shares in the first defendant, Prismex Technologies Pty Limited, for the sum of $1.00 upon the first instalment payment described in paragraph 5 below being made. 4. Each party to these orders: (a) is to pay their own costs of the proceedings; (b) and agrees to the discharge of any existing cost orders made in the proceedings. The court notes the following agreement between the plaintiffs and the second, fifth and sixth defendants. 5. The plaintiffs agree to accept as full and final settlement of the judgment debt described in order 1 above (providing all payments are made by the dates indicated, time being of the essence), the following instalment payments: 5.1 $200,000 within 30 days from 14 October 2010; 5.2 A further $105,000 within six months from 13 October 2010; 5.3 A further $165,000 within twelve months from 13 October 2010. 6. Upon the second plaintiff transferring its shares to the second defendant in accordance with order 3 herein the first plaintiff will immediately resign as a director of the first defendant. 21Essentially, this would reinstate the chapeau before paragraph 5, and correct the reference in it to the relevant defendants. 22It is convenient and logical to deal first with the Plaintiffs' interlocutory process claiming relief under the "slip rule" in respect of the form of the order as entered in the registry on 28 October 2010. Essentially, the effect of the "correction" if made, would be to clarify that paragraphs 5 and 6 of the order recorded an agreement inter partes rather than orders of the court. That this was the intention of the parties is manifest from the form of the draft order that had been exchanged between the parties on 22 October and what was handed up to and initialled by her Honour on 25 October. It is confirmed by the forms of paragraphs 5 and 6, even in the formal order. The court could and would not have made an order obliging a Plaintiff to accept as full and final settlement of a judgment debt a lesser sum payable by instalments. Such a result could only have been reached as an agreement between the parties. 23In my view, it is manifest that an error was made in the engrossment of the order in the registry by the omission of the chapeau before paragraph 5, and an error had also been made by the solicitors in the preparation of the draft by omitting reference to the Second, Fifth and Sixth Defendants from the chapeau. Both of those are errors of a clerical nature which clearly fall within the scope of the slip rule. Subject to any question of discretion - which rarely affects the jurisdiction to correct a manifest error of that sort - the slip rule should be invoked to correct the error. 24As to discretion, it was argued that the parties had conducted themselves on the basis that paragraphs 5 and 6 were orders and not mere agreements. To my mind, the fact that generic references were made in correspondence to the document as containing orders, and likewise when they were proffered to Ward J, says absolutely nothing as to whether there was an intention that paragraphs 5 and 6 be treated as orders as distinct from an agreement. It is commonplace for parties to refer to a document containing any combination of notations, orders, declarations, and agreements as "the orders", and use of such a description in those circumstances is not inconsistent with some of the contents being intended to operate as an agreement rather than as an order. 25If the consent orders had been entered into on the basis that the agreements recorded in them were orders subject to the court's control, then that might be a basis for declining to make the correction sought. But it is implicit in the conclusion that it is indeed a mere correction, and that what was intended to be effected and what was handed to the court was something that noted an agreement in that respect; that that was not the parties' intention at all. 26Further, if there had been a subsequent change of position of a party to its detriment, on the basis that paragraphs 5 and 6 were orders amenable to the court's control and not an agreement inter partes, that might also have provided a discretionary basis for refusing to make a correction. But there is nothing to suggest that that was so. 27Accordingly, the formal order of the court made on 25 October and entered on 28 October 2010 should be corrected as sought in the Plaintiffs' interlocutory process. It follows that what is contained in paragraphs 5 and 6 of that document are not orders of the court, but an inter partes agreement which the court was merely asked to note, and the enforceability of which would have depended on subsequent proceedings to enforce the contract, rather than on any enforcement process issued under those paragraphs. 28That conclusion is fatal to the applicants' application to extend time for compliance with paragraph 5.2 under UCPR r 1.12. Because paragraph 5 is not an order of the court, it is not amenable to variation or extension of time as if it were an order of the court. As Clarke JA observed in Paino v Hofbauer (1988) 13 NSWLR 193 (at 199): If the agreement had not been embodied in a court order, they could have obtained relief only if they made out a case for relief based on well recognized legal principles. 29In those circumstances, it is not open to extend time for compliance by resort to r 1.12. Even if it were, as the order is one that is founded on and encapsulates an inter partes contract which is not liable to be set aside or varied, then to justify such relief the applicants would have to establish, at the very least, that it was an exceptional case: see Paino v Hofbauer, (at 198F). 30The next basis upon which the applicants put their case was that paragraph 1 of the orders, in the context of paragraph 5, amounted to a penalty, and as such was void under the doctrine of penalties. The starting point for this submission was not only that paragraph 1 was intended to operate in terrorem to secure compliance with paragraph 5, but also that, having regard to the valuation evidence to which I have referred, the amount of the judgment in paragraph 1 exceeded the maximum amount which the Plaintiffs could have hoped to recover in the proceedings. 31In substance, the case was one which involved the acquisition by the Defendants of the Plaintiffs' interest in Prismex Technologies. Although the primary relief sought had been that Prismex be wound up, that could not sensibly have resulted in a higher return to the Plaintiffs than a compulsory acquisition order. The relief sought against the directors and X-Position was in effect an account of profits made by X-Position, and that was taken into account in Mr Farrar's valuation of the shareholdings in Prismex. Accordingly, the prospect of recovery from the ancillary claims does not realistically seem to be a basis upon which a greater recovery could have been anticipated. Some allowance, however, would have to be made for interest, and a substantial allowance for costs. Evidence was tendered which suggested that the costs of the Plaintiffs of the original proceedings on a solicitor and own client basis exceeded $300,000. Cross-examination of the Plaintiffs' solicitor demonstrated, however, clearly that a significant proportion of that involved attendances and work which could not have conceivably been recoverable on a party/party basis. Accordingly, costs and interest, while they go some significant way to explaining the difference between $373,000 and $700,000, do not fully explain it. But it is not a matter that the Plaintiffs have to explain. Parties settle proceedings upon terms and for amounts that take into account many factors other than their provable rights and liabilities in the proceedings. 32As Pembroke J explained in Attwells v Marsden [2011] NSWSC 38: Where a creditor agrees to accept part payment of a debt as full discharge if certain conditions are met, but stipulates that if the conditions are not met the full amount will be payable, there is no penalty. 33The fundamental question is whether the consent judgment for $700,000 constitutes a present debt. If it does, the doctrine of penalties has no application where the agreement provides for a party to recover the full amount of a present debt, if the other party fails to pay some agreed lesser amount within a specified time. As in Attwells v Marsden, so in the present case, there is no basis for construing paragraph 1 of the orders as anything other than the creation of an immediate and enforceable present debt. It records the agreement between the parties that necessarily preceded the consent order and which was comprised in the terms of settlement. Somewhat strikingly, the consent orders did not even contain a provision for a stay of execution of that judgment, although it might be thought that in the light of paragraph 5, had an application subsequently been made for a stay, it might well have been considered implicit that the Plaintiffs would not execute while the conditions in paragraph 5 were satisfied or while it remained open to satisfy them. But as in my view paragraph 1 plainly creates an immediately enforceable present debt, there is no scope for the application of the doctrine of penalties. As Mr Ashhurst submitted, such a conclusion could only be reached if it were concluded that the judgment in paragraph 1 was effectively a sham, and it is impossible to reach that conclusion. 34Another argument raised by the Defendants was that the Plaintiffs were not entitled to enforce the judgment or insist on compliance with paragraph 5.2, because they were in default of performance under paragraph 3 of the order. 35There are multiple answers to this. First, I do not accept that the Plaintiffs were in default under paragraph 3. They had by 13 April - the evidence suggests on 11 April - submitted a duly executed and witnessed transfer. It is true that the witness had signed in the place for signature by the transferee, but there was nothing to prevent the transferee from placing a signature on it and writing "transferee" under where he signed. That would not have involved any such material alteration as to vitiate the document. 36Moreover, there were interdependent obligations of payment of consideration (of one dollar) with delivery of the transfer, and the Defendant had not paid the one dollar consideration at that point, despite request. 37Further, I am far from satisfied that the Plaintiffs were wrong initially to insist that the Defendants should submit the appropriate assurances for execution by them. Ordinarily, conveyancing practice is that the party who is to take under a transaction drafts and submits the assurance for execution by the other. And while it is unnecessary to decide whether that was so in this case, it is a further reason for doubting that it can be said that the Plaintiffs were in default. 38Finally, and in any event, the contractual rights given to the Plaintiffs under paragraph 5 of the orders were independent of and not interdependent with the obligations of the Plaintiffs under paragraph 3. 39Towards the concluding parts of her submissions in chief, Ms Richards for the applicants suggested that nonetheless, the court might stay the execution of the judgment now. This raised for consideration a line of inquiry which had not really been explored in the submissions to that point. Essentially, it involved first, the court declining to enforce paragraph 1 of the orders on the basis that it would be inequitable to do so, and as the corollary of that, staying execution of paragraph 1. 40In my judgment, courts have a discretion to decline to enforce their decrees where it would be inequitable to do so. The starting point for this is Harvey v Hall [1873] LR 16 Eq 324, where an order had been made against a solicitor under the (UK) Debtors Act 1869 for the payment of money by a certain day, with notice that in default his property would be liable to sequestration and himself to be arrested and committed to prison, and was followed by the issue of a writ of fieri facias, under which the sheriffs took possession. An arrangement was made whereby the sheriffs withdrew from possession upon the undertaking of the solicitor to pay the amount and costs and interest by instalments, and in default that they should re-enter and proceed with execution. Default was made in payment of the instalments, but Sir James Bacon V-C held that the arrangements having been made as they had, there had been such an interference with the terms of the original order that attachment could not now be issued. 41Next, in Mullins v Howell [1879] 11 Ch Div 763, Lord Jessel MR held that the court had a discretion to decline to enforce an undertaking by attachment by sending a person to prison, and added: I do not think that the rules which have been laid down as the rules under which the court will enforce agreements apply to enforcing orders of the court because the court has jurisdiction over its own orders and there is a larger discretion as to orders made on interlocutory applications than as to those which are final judgments. Here there is not only an undertaking but an agreement to which the rules of Equity would apply, so being satisfied that the Defendant made a mistake, I should not following the rule in Equity, enforce the agreement as against him, and a fortiori, I should not enforce the undertaking against him. 42It seems clear enough that that was a case of unilateral mistake, the defendant having given an undertaking in wider terms than he intended to give. Although the case arose on an interlocutory application for an injunction, the undertaking was given in final settlement of the proceedings, so that, as has been pointed out by at least one later judge, it might not be correct to treat the case as limited to interlocutory orders. Of significance is the circumstance that mistake was the ground relied upon for not enforcing the undertaking. 43Mullins v Howell was referred to by the Court of Appeal in Purcell v FC Trigell Limited [1971] 1 QB 358. That was a case in which defences had been struck out and judgment entered for the plaintiff for default by the defendants in answering interrogatories. After referring to Mullins v Howell first in the context of setting aside interlocutory orders, Lord Denning MR then said (at 364): Third the defendants asked the court to exercise its discretion so as not to enforce this consent order. Counsel for the defendants pointed out, with force, that the failure to answer these interrogatories was a mere oversight - an oversight by the lawyers - and the defendants ought not be made to suffer for it. Certainly not the first defendants, who answered their interrogatory satisfactorily. They ought not to suffer for the mistakes of the second defendant. I would be much in favour of this submission if the defendants had behaved properly in the earlier stages of this litigation, but having regard to the history of the case I do not think that any mercy should be shown to the Defendants or either of them the defendants are not in a position to ask for any discretion to be exercised in their favour. 44Winn LJ (at 365) suggested that there was no fundamental distinction in law between a consent order made in interlocutory proceedings and a consent order made on a final judgment - though his Lordship pointed out that the court would prefer to keep closer control over its interlocutory proceedings than over its final orders. 45Buckley LJ (at 367), commenting on Mullins v Howell, explained it as being a case in which, while there was an agreement between the parties, it was one that in the circumstances of the case the court would not enforce against the defendant: "that is to say, he was saying on equitable grounds, although there was a contract, it was one which ought not be enforced in its specific terms". 46In Thwaite v Thwaite [1981] 3 WLR 96, the Court of Appeal (in the context of matrimonial proceedings) said (at 794): Where the order is still executory, as in the present case, and one of the parties applies to the Court to enforce the order, the Court may refuse if, in the circumstances prevailing at the time of the application, it would be inequitable to do so; Mullins v Howell and Purcel v F C Trigell Limited, where the consent order derives its legal effect from the contract, this is equitable refuse, a decree of specific performance; where the legal effect derives from the law; as per Jessel MR in Mullins v Howell. 47For the Respondent/Plaintiffs, Mr Ashhurst SC argued that this was an observation limited to matrimonial cases. While it is correct that Ormrod LJ emphasised that there was a distinction between consent orders made in matrimonial litigation and other types of litigation, the relevant distinction was that consent orders made in matrimonial litigation depended for their effect only on the order of the court (and not the inter partes agreement), whereas, those made in other types of litigation depended on their contractual effect and perhaps also on their effect as orders of the court. This distinction is not relevant to the jurisdiction of the court to decline to enforce an order if, in the circumstances prevailing at the time, it would be inequitable to do so. 48Those cases were considered in the Full Court of the Family Court of Australia in Ramsey v Ramsey [1983] FLC 91-301 (at 78061), holding that enforcement under s 80 and s 84 of the (Cth) Family Law Act 1975 was discretionary, but founding, as it seems to me, on the general law position to come to that conclusion. 49On those authorities, it seems to me therefore that Courts have a discretion to decline to enforce their orders where it would be inequitable to do so at the time when enforcement is sought. The necessary corollary of that is that, pursuant to (NSW) Supreme Court Act 1970 s 61, the court may stay further proceedings, including enforcement, where there is an equitable objection to doing so. Previously - that is to say, before Judicature and the Supreme Court Act, a Court of Equity would have restrained the plaintiff by injunction from proceeding or issuing enforcement. The effect of s 61 is that that should now be done by a stay in the proceedings "either generally or to such extent as the court thinks fit". 50In Coco v AN Clark (Engineers) Limited [1969] RPC 41, Megarry J, as he then was, cited the dictum attributed long ago to Sir Thomas More LC: "Three things are apt to be helpt in Conscience [that is, in the Court of Chancery]: Fraud, accident and things of Confidence". In his seminal judgment on relief of forfeiture in Shiloh Spinners Limited v Harding [1973] AC 691, Lord Wilberforce spoke of "the special heads of fraud, accident, mistake or surprise" (at 723). Similarly, in Legione v Hateley (1983) 152 CLR 406, at 447 Mason and Deane JJ saw "fraud, mistake, accident, and surprise" as elements that may make it inequitable to insist on termination of a contract for failure to observe its strict terms. 51Typically at least, Equity is concerned with the consequences of mistake in connection with the rectification of documents that do not conform with the intention of those who executed them; the rescission of contracts entered into under mistake, the refusal of specific performance as a remedy in respect of a contract made by mistake; and the return of money paid or assets or property transferred by mistake. 52On the other hand, "accident" has been defined by Pomeroy in the following terms: Accident is an unforeseen and unexpected event, occurring external to the party effected by it, and of which own agency is not the proximate cause, whereby, contrary to his own intention and wish, he loses some legal right or becomes subject to some legal liability, and another person acquires a corresponding legal right, which it would be a violation of the good commonsense for the latter, under the circumstances to retain. [Pomeroy [1941] Vol 1 p 260 [823]); see Young, et al, On Equity, [5.140]. 53The definition adopted by Kirby J in Tanwar Enterprises Pty Limited v Cauchi [2003] 217 CLR 315 (at 358) of an accident was an unforeseen event which occasioned loss where neither of the event nor the loss was attributable to the conduct, negligence or culpable inadvertence of the person concerned. 54It is said in Young, et al, (supra) that for the doctrine to apply: 1. An event must occur which was not intended, contemplated or reasonably anticipated by the parties; 2. The event must be detrimental to the legal effects of the party; 3. The event must be outside the control of the parties, and not the result of any neglect or fault on the part of the other party; 4. It must be unconscionable or inequitable for a party against whom it is sought to insist on their legal rights; and 5. It will not apply when the party against whom it is sought as an Equity equal or greater than the party seeking, for example, for a purchaser for value without notice of the accident. 55The authors explain that the difference between accident and mistake is that in the case of mistake, the party's own agency or will is the proximate cause of the loss [see also Baird v BEC Holdings Pty Limited [1996] 40 NSWLR 347, 383; Tanwar Enterprises Pty Limited v Cauchi]. Young, et al, record that in 1890, Kerly wrote that: Where...a penalty [was] incurred through the rising of a river over which the debtor must pass to effect his payment in time, or through similar unavoiding mischance, the Court forbad the enforcement of the legal rights retained or acquired thereby. 56But courts do not provide relief under the doctrine of accident where the loss is as a result of the plaintiff's own negligence or fault, nor where the possibility of the event occurring might fairly be considered to have been within the contemplation of the parties to the contract - since, in that case, the parties might have provided for such a contingency. Indeed, in this respect it is not enough that the event was both unintended and undesired [Tanwar Enterprise Pty Limited v Cauchi, 337, 358]. Nor does the principle apply in general to cases where there has been an accidental breach of contract, except in the context of the jurisdiction to relieve against forfeiture. 57There are some similarities between the present circumstances and the doctrine of relief against forfeiture. If one were to adopt that doctrine and, in particular, ask the five subsidiary questions identified by Mason and Deane JJ in Legione v Hateley, one would answer (1) that while the conduct of the Plaintiffs did not contribute to the Defendants' breach, (2) the Defendants' breach was trivial, and inadvertent, (3) that no damage or other adverse consequences flowed to the Plaintiffs by reason of the breach, (4) that the magnitude of the Defendants' gain and the Plaintiffs' loss if relief were not granted is entirely disproportionate, and (5) that for the Plaintiffs, having received payment in full of the amount it was prepared to accept on two occasions in respect of two instalments early and one only one day late, interest is ample compensation and safeguard for the Plaintiffs. On that basis, a strong case could be made that it would be unconscionable for the Plaintiffs to insist on their strict legal rights under paragraph 1 of the judgment. 58Mr Ashhurst submits, however, that the fact that the conduct of the Plaintiffs did not contribute to the Defendants' breach is a critical matter in the context of a case of this kind. It might be observed that, in Tanwar, it was noted at paragraph 39, that in cases falling within the heads of mistake or accident, activity or implication of the other party would not necessarily be required; a similar observation was also made at paragraph 58. However, at paragraph 66, their Honours expanded on the doctrine of accident as follows: 66. However, the learned writers on the subject emphasise and put to one side those situations where the event which has come to pass is one for which an express exculpatory provision might have been made, but was not sought or was not agreed to, and where to relieve against its consequences after it has occurred would deprive the other party to the contract of an essential right. In particular, Equity will not relieve where "the possibility of the accident may fairly be considered to have been within the contemplation of the contracting parties". Story wrote: "And this leads us naturally to the consideration of those cases of accident in which no relief will be granted by Courts of Equity. In the first place, in matters of positive contract and obligation created by the party (for it is different in obligations or duties created by law), it is no ground for the interference of Equity that the party has been prevented from fulfilling them by accident, or that he has been in no default, or that he has been prevented by accident from deriving the full benefit of the contract on his own side. ... The reason is, that he might have provided for such contingencies by his contract if he had so chosen; and the law will presume an intentional general liability where he has made no exception." 67. It is here that the circumstances leading up to, and the terms of, the 2001 Deeds are of critical importance. The vendors withdrew the earlier notices of termination in return for the assumption by Tanwar of obligations to complete couched in unqualified terms. The obligation in the 2001 Deeds to settle by the stipulated time was not made subject to the availability of Tanwar's finance on that day. That there might be a failure by a third party to provide the finance was reasonably within the contemplation of Tanwar. The failure by Tanwar to avail itself of the advantages it obtained by negotiating the 2001 Deeds and by keeping the contracts on foot had the effect of exposing Tanwar again to the exercise by the vendors of their rights to terminate the contracts. Equity does not intervene to prevent the effective exercise of those rights. The claim by Tanwar for relief against the consequences of the failure in the timely provision of the second mortgage does not succeed. 59As was pointed out by Young, et al, equity will not relieve for accident where the possibility of the accident may fairly be considered to have been within the contemplation of the contracting parties. Nor, as has been seen from the passages and works to which I have referred, will equity relieve for the consequences of accident where the accident was not independent of but the fault of the plaintiff or its agent. 60In this case, both of those exceptions apply. Essentially, what happened in this case was a clerical error in the misdiarisation of the date for payment of the second instalment. While the precise mechanism for clerical error may not have been within the contemplation of the parties, the possibility that a payment might be delayed or missed by reason of clerical error or oversight must have been within their contemplation. It seems to me that it, in this respect, if anything, the case is a fortiori Tanwar, in that in every case of corporations or businesses making payments, the possibility of clerical error causing a date to be missed must be a live one. This is accentuated by the agreement, recorded in the orders, that time was essential. It was therefore imperative on the applicants to make the payments punctually. 61Further, this was not the case of a supravening event arising by act of a third party, but something entirely within the scope and control of the applicants in diarising and making the relevant payment. It is far removed from the rising of the floods referred to in the example given by Kerly J mentioned above. 62As it transpires, under the perhaps more generous discretion permitted by UCPR r 1.12, the judgment of the Court of Appeal in Paino v Hofbauer suggests that the same result would obtain. As McHugh J, as he then was, said in that case. In my opinion, having regard to the terms of settlement and the terms of the Court's order, the application to extend the times for payment must be G refused. Both under the terms of settlement and the Court's order "time for payment of each instalment of the judgment is of the essence." The agreement between the parties was that, with the exception of the instalments of $3,000, the dates for payment of the instalments had to be strictly complied with. Whatever the reason for non-compliance, failure to pay on the appropriate date meant that the appellants were entitled to recover the $750,000 plus interest on that sum instead of the $530,000 which they had agreed to take if payments were made in accordance with cl 5 of the Court's order. The effect of an extension of time would be to transfer about $300,000 from the appellants to the respondents. This is the additional sum to which the appellants are now entitled to under the contractual arrangement which they made with the respondents. In the circumstances, it would not be a proper exercise of the discretion conferred by Pt 2, r 3, to extend the time for complying with the Court's order after the time for doing so had passed. The respondents entered into an agreement which gave them a benefit of $220,000 together with the interest forgone on the judgment of $750,000. They knew that to maintain those benefits they had to comply strictly with the time stipulations as set out in cl 5 and cl 6 of the order. They failed to adhere to those stipulations. The appellants are entitled to retain what is now lawfully theirs. Sympathy for the plight of the respondents is not sufficient reason to deprive the appellants of their rights. The present plight of the respondents is the foreseeable and inevitable consequence of an agreement which required them to make payments on the due dates or forfeit their benefits. This Court ought not to exercise its discretionary power to confer a further benefit on the respondents when to do so would conflict with the parties' free and voluntary agreement. 63For those reasons, it seems to me that while the court would have jurisdiction to decline to enforce on equitable grounds paragraph 1 of the judgment, analogy with the law relating to relief against forfeiture, particularly as enunciated in Tanwar, and analogy with UCPR r 1.12 particularly as enunciated in Paino v Hofbauer, indicates that those equitable grounds are not made good in this case. 64Accordingly, it seems to me that the Defendants' interlocutory process must be dismissed, and that the writ and statement of claim in the Victorian proceedings must be dismissed, with costs. 65My order is that the Defendants' interlocutory process be dismissed with costs; and that the writ and statement of claim be dismissed with costs.