Plaintiff v Defendant

2 The application is supported by the affidavit of David Ashley Pitt filed 15 February 2023. Boom Parts resists the application and relies on the affidavits of Sidney Tirimadura Mendis, filed 9 September 2022, and Paul William Kent, filed 14 March 2023. Mr Kent was at all relevant times the sole director and secretary of Boom Parts.

3 In the proceeding, Boom Parts seeks to set aside a settlement agreement made between Allied, Boom Parts, and Mr Kent in an earlier proceeding S CI 2015 05900 ('2015 proceeding'). In the 2015 proceeding, Boom Parts sought a declaration that a contract dated 5 February 2013 ('sale contract') between Allied and Boom Parts for the sale of a property known as the Newport Flour Mill, 1 McRobert Street, Newport ('property') for the sum of $2,050,000 had not been rescinded by Allied. Mr Kent provided a guarantee of the obligations of Boom Parts under the sale contract.

4 The property was a large industrial development site with an area of about 8709m², and consisted of 11 industrial buildings. The buildings had been vandalised and were in poor condition.

5 The 2015 proceeding was settled between the legal practitioners acting for the parties, and is constituted in part by consent orders made by Daly AsJ on 12 February 2016. The consent orders were to the effect that the 2015 proceeding and a counterclaim filed in the 2015 proceeding were dismissed with the parties to bear their own costs.

6 On the execution of the sale contract, Boom Parts paid the deposit of $205,000 and went into possession of the property. Under the sale contract, Boom Parts was responsible for:

(a) the payment of council rates, water rates, land tax and insurance costs for the property;

(b) the payment of rental under a railway lease;

(c) the payment of interest of $318,262.68 by 36 monthly instalments of $8,840.63;

(d) compliance with notices and orders issued after the day of sale; and

(e) maintenance of the property in good repair (fair wear and tear excepted).

7 Settlement of the sale contract was to occur on 5 February 2016 ('settlement date').

8 On 30 May 2014, a building notice under s 106 of the Building Act 1993 (Vic) ('Building Act') was served by the acting municipal building surveyor of the Hobsons Bay City Council ('Council') requiring extensive fire safety and building works. On 16 June 2015, the notice was followed by a building order under s 111 of the Building Act to similar effect.

9 On 18 September 2015, Allied's solicitors issued a default notice against Boom Parts. This was followed by a rescission notice on 7 October 2015.

10 The notices required Boom Parts to remedy its defaults under the sale contract within fourteen days including:

(a) pay the outstanding council and water rates;

(b) pay outstanding interest;

(c) rectify the building notice defaults; and

(d) pay proper legal costs of preparing the notice.

11 On 12 November 2015, Mr Kent arranged for caveat no AM 322169L ('caveat') to be lodged at the Titles Office on behalf of Boom Parts claiming an interest in the property.

12 The 2015 proceeding was issued on about 16 November 2015 by solicitors acting for Boom Parts. It sought declaratory and injunctive relief including declarations to the effect that the sale contract had not been rescinded, and that Allied was estopped from relying on the building notice breaches.

13 On 15 January 2016, Allied filed a defence and counterclaim against Boom Parts and Mr Kent. The defence pleaded that Boom Parts had not remedied the building notice defaults, and referred to previous correspondence and statutory demands by Allied on 23 May 2014 and 6 March 2015 for payment of the arrears of land tax, council water rates and interest back to 2014. In the counterclaim, Allied claimed an amount of $372,758.87 from Boom Parts and Mr Kent, as guarantor. It also sought declarations that the sale contract had been lawfully terminated and that Boom Parts and Mr Kent were not entitled to possession of the property and an order for the removal of the caveat.

14 Mr Kent deposes that, prior to the settlement date, he sought to find a substitute purchaser to purchase the property, intending that the substitute purchaser would make an offer above the contract price and complete the purchase as close as possible to the settlement date. He contacted Hocking Stuart, estate agents in Williamstown, who recommended that Boom Parts retain the services of Russell Cocks of Local Lawyers.

15 Mr Kent deposes that, on the same day, he had a lengthy telephone conversation with Mr Cocks in relation to the 2015 proceeding. He deposes that he requested Mr Cocks to assist him to ascertain the financial capacity of prospective substitute purchasers to make an offer above the amount owing to Allied under the sale contract plus a spotter's fee for Boom Parts.

16 Mr Kent deposes that, on or about 13 January 2016, he arranged a meeting between Mr Cocks and a possible substitute purchaser at the Local Lawyers office in Queen Street, Altona. The purpose of the meeting was to discuss the terms of an offer and the financial capacity of the possible purchaser to complete the purchase.

17 Between 23 January and 25 January 2016, Mr Kent emailed Mr Cocks on three occasions, each time providing a new version of a draft letter to be sent to Allied. In substance, the letters offered to settle the purchase of the property by payment of the remaining principal, interest and outgoings less an amount of $22,000 per month for the interference by Allied in Boom Parts' quiet enjoyment of the property, and $50,000 for its legal costs associated with the rescission. Alternatively, Boom Parts was prepared to accept payment of $1,844,700 plus interest if the property was to be retained by Allied.

18 On 25 January 2016, Mr Cocks responded that Mr Kent needed to leave communication on behalf of Boom Parts and Mr Kent to him. On the same day, Local Lawyers filed a notice of change of solicitor. On 27 January and 29 January 2016 Local Lawyers filed an appearance to the counterclaim in the 2015 proceeding on behalf of Boom Parts and Mr Kent.

19 On 28 January 2016, Mr Kent advised Mr Cocks that the substitute purchaser had contacted his solicitor and sought the nominee forms prepared by Mr Cocks as soon as possible.

20 Mr Kent deposes that in or around mid to late January 2016 he and Mr Cocks conducted discussions with a second possible purchaser, and his solicitors, Frenkel Partners. Mr Kent prepared an invoice for a spotter's fee on behalf of Boom Parts. The invoice was blank as the amount of the spotter's fee was still being negotiated.

21 On 1 February 2016, Mark Woolley of Gadens, acting for Allied, advised Stephanie Vass, Allied's company secretary, that Mr Cocks had said that a 'without prejudice' proposal to settle the sale contract on 5 February 2016, or in the near future, would be provided by 12 noon tomorrow.

22 On 2 February 2016, Mr Woolley confirmed that it was Allied's position that the sale contract had been validly terminated and that Allied had suffered loss and damage as it had claimed.

23 On 3 February 2016, Mr Woolley confirmed to Ms Vass that an agreement had been reached between Boom Parts and a substitute purchaser. A joint letter would contain a proposal for Allied's consideration. In the meantime, Mr Woolley had prepared a revised contract and other documents and collected the title of the property.

24 On 4 February 2016, Mr Woolley confirmed by email to Ms Vass that the new substitute purchaser had agreed to enter into a contract to buy the property and that the contract had been amended to make the risk allocation clear.

25 On 4 February 2016, Mr Cocks confirmed, in substance, to Frenkel Partners that, subject to Boom Parts concluding an agreement with the new purchaser, Boom Parts and Mr Kent were prepared to:

(a) provide a written withdrawal of the caveat;

(b) withdraw the 2015 proceeding; and

(c) accept that the sale contract was ended and the deposit forfeited,

on the basis that Allied:

(d) withdrew the counterclaim; and

(e) acknowledged that all rights and obligations pursuant to the sale contract were at an end.

26 Mr Kent deposed that Mr Cocks phoned him on or about 5 February 2016, and advised that the second possible purchaser had been selected as the substitute purchaser. Mr Cocks asked how much Boom Parts was seeking for the spotter's fee and was advised by Mr Kent that Boom Parts needed to recover as much as it could. Mr Kent deposed that he told Mr Cocks that the spotter's fee would not cover Boom Parts' losses resulting from Allied's rescission of the sale contract, and that Boom Parts would recover the balance of losses directly from Allied. He stated that Mr Cocks informed him that he could get Boom Parts $330,000, and asked Mr Kent to prepare the spotter's fee invoice on that basis. Mr Kent said that during their telephone call, Mr Cocks did not discuss the release of Allied from liability or the settlement of the 2015 proceeding. On the same day, Mr Kent emailed Mr Cocks a copy of Boom Parts' tax invoice for the spotter's fee in the amount of $330,000.

27 In the course of a chain of emails on 5 February 2016:

(a) Mr Woolley advised Frenkel Partners that Allied's board of directors had accepted his client's proposal that morning; and

(b) Frenkel Partners advised that the new purchaser was to be Jenz Dib Properties Pty Ltd (ACN 147 441 496) ('Jenz') and that his clients and Mr Cocks' clients had reached agreement. His clients had the funds necessary for settlement.

28 On 8 February 2016, Mr Cocks advised Mr Woolley by email that:

(a) the proposed consent orders were approved;

(b) a letter would be provided that Allied accepted that all rights it had against Boom Parts under the terminated sale contract were at an end; and

(c) settlement on 9 February 2016 was acceptable.

29 Later that day, Mr Cocks provided Mr Woolley with a draft letter to that effect. In response, Mr Woolley sought a revised form of letter which accepted that the sale contract was validly terminated and the deposit forfeited, and that Allied and Boom Parts mutually released each other from liability for any claims made and pleaded in the 2015 proceeding.

30 On 9 February 2016, Mr Cocks advised that he had prepared the letter in the form requested and would attend Gadens' office that day to provide the withdrawal of the caveat and letter.

31 On 10 February 2016, Mr Kent sent emails to Mr Cocks requesting that he:

(a) attend settlement;

(b) personally sign the withdrawal of caveat; and

(c) be updated upon Jenz providing documentation which showed that it had the funds to complete the purchase.

32 On 11 February 2016, a cheque for $330,000 was deposited into Boom Parts' bank account at the CBA branch at Altona. This was the amount of the spotter's fee.

33 On 15 February 2016, Mr Kent was advised by the solicitor for the Council that settlement had occurred.

34 On 22 February 2016, Mr Kent attended the Local Lawyers office in Altona. He deposed that Mr Cocks was unavailable to meet with him, and that he collected the file and left. On reading the file, he noted that Mr Cocks had issued a letter to Gadens on 9 February 2016 confirming a mutual release from liability in the 2015 proceeding. He deposed that he was not consulted about this and would not have given instructions to provide the letter.

35 Mr Kent deposed that he had no knowledge of the correspondence between Mr Cocks and Gadens on 8 and 9 February 2016 and had never provided instructions, or given authority, to Mr Cocks other than to send the letters provided by him between 23 January and 25 January 2016.

36 On 28 April 2016, Boom Parts' new solicitors obtained additional documents from Mr Cocks. They included a letter dated 11 February 2016 to the company secretary of Boom Parts advising, among other things, that legal proceedings were at an end. Mr Kent deposed that he had not previously seen this letter.

37 Subsequently in 2016, Boom Parts retained Elvin Lawyers to act for it. They sought further documents from Boom Parts and made an FOI application to the Council.

38 In 2018, Mr Kent retired as a director of Boom Parts.

39 Mr Pitt, the Chief Executive Officer of Allied, deposed that he joined Allied in about October 2021. All of the directors and staff at Allied who had been involved in making the sale contract had left Allied by then.

40 Mr Pitt said that, in addition to the building notice and the building order, the Council had asked Boom Parts, by letter dated 18 August 2015, why no planning application had been received by the Council seeking to regularise the use of the property, and stating that the continuing use of the property was in breach of the Hobsons Bay Planning Scheme and s 126 of the Planning and Environment Act 1987 (Vic).

41 Mr Pitt said that he had reviewed Gadens' file relating to the 2015 proceeding. On 13 January 2016, Mr Woolley had emailed Ms Vass outlining a proposal for the purchase of the property.

42 On 4 February 2016, Mr Cocks forwarded to Mr Woolley an email that he had sent to Frenkel Partners which stated that Boom Parts and Mr Kent were prepared to provide a withdrawal of caveat, to withdraw the 2015 proceeding, and accept that the sale contract was at an end. This was on the basis that Allied withdrew the counterclaim and accepted that all of the rights and obligations of the parties to the sale contract were at an end.

43 On 5 February 2015, Frenkel Partners advised that Jenz was prepared to proceed with the purchase of the property and settle as soon as possible.

44 Mr Pitt deposed that settlement of the sale of the property occurred at Gadens' office with signed consent orders emailed to the Court on the following day. Orders by consent were made on 12 February 2016, dismissing the 2015 proceeding and counterclaim with each party to bear its own costs. The caveat was removed on or about 31 March 2016.

45 Mr Pitt deposed that he was unaware of any communications between Allied and Boom Parts after the settlement of the 2015 proceeding and prior to September 2022 when Allied became aware of a new proceeding which indicated that Boom Parts did not authorise or agree to the settlement.

46 When issued, the current proceeding was endorsed with a statement of claim that was similar to the statement of claim in the 2015 proceeding. The new proceeding was not served on Allied until 19 September 2022; about eleven months after issue.

47 In an affidavit filed 9 September 2022, Mr Mendis, the solicitor for Boom Parts, deposed that:

Upon review of the materials provided to me..., there appears to be a terms of settlement that was reached by the parties (made through their respective solicitors) on or around 9 February 2016. It is my position that these terms of settlement would be binding on the parties in relation to the [2015 proceeding] and in relation to the Contract.

48 In an amended statement of claim filed on 29 November 2022 ('amended statement of claim'), Boom Parts pleaded that, in making the settlement agreement with Allied on or about 9 February 2016, Local Lawyers exceeded its actual, although not its ostensible, authority. It exceeded its actual authority because Mr Kent had given instructions to Local Lawyers not to terminate the sale contract unless Allied paid Boom Parts compensation of not less than $1,844,700. Mr Kent had not been in contact with Local Lawyers between 5 and 15 February 2016, and did not see the 9 February 2016 letter until 22 February 2016. He did not approve, and would never have approved, the release term contained in the 9 February 2016 letter.

49 Paragraph 14A.9 of the amended statement of claim alleges that:

To allow the Settlement Agreement to stand would involve a grave injustice to [Boom Parts] by reason of Local Lawyers exceeding actual authority.

In the premises this Court should exercise its discretion and set aside the Settlement Agreement.

51 In Lysaght Building Solutions Pty Ltd v Blanalko Pty Ltd, Warren CJ and Nettle JA construed the test in s 63 of the Civil Procedure Act to be whether the respondent to an application for summary judgment has a 'real' as opposed to a 'fanciful' chance of success. This test was to some degree a more liberal test than the 'hopeless' or 'bound to fail' test.[1]

52 Their Honours observed that, at the same time, it must be borne in mind that the power to terminate proceedings summarily should be exercised with caution and thus should not be exercised unless it is clear that there is no real question to be tried, and that is so regardless of whether the application for summary judgment is made on the basis that the pleadings fail to disclose a reasonable cause of action (and the defect cannot be cured by amendment) or on the basis that the action is frivolous or vexatious or an abuse of process or where the application is supported by evidence.[2]

53 Neave JA observed that it went without saying that courts must consider applications for summary dismissal with appropriate care.[3]

54 In Capital One Securities Pty Ltd v Soda Kids Holdings Pty Ltd, Bell J observed that a real prospect of succeeding was required, although not a probability of succeeding. A real prospect of success is one that is not fanciful or unreal even if the prospects of success are less than 50%.[4]

55 In Trkulja v Google LLC, the High Court observed that the power to dismiss an action summarily is not lightly to be exercised, but the test in s 62 of the Civil Procedure Act permits of the possibility of cases in which the plaintiff's case is not 'hopeless' or 'bound to fail' but does not have a real prospect of succeeding.[5]

56 In written submissions in opposition to the summary dismissal filed 14 March 2023, Boom Parts stated that it appeared to be common ground that the 2015 proceeding was settled on or about 9 February 2016 on terms that the sale contract was terminated and the 2015 proceeding dismissed.

57 Boom Parts accepted that Local Lawyers had ostensible authority to compromise the 2015 proceeding even if acting outside their actual authority provided that the compromise did not involve matters collateral to the 2015 proceeding. Boom Parts submitted that the settlement agreement exceeded Local Lawyers' actual authority accepting however that the settlement agreement still bound Boom Parts and Mr Kent because it was made within the ostensible authority of Local Lawyers.

58 During the hearing, it became apparent that there was a fundamental difference between the parties as to the state of the law concerning the setting aside of settlement agreements by the Court.

59 Boom Parts submitted that a court, in its discretion, could set aside a settlement agreement where it found that there was grave injustice even if the settlement agreement was executed and carried into effect. Allied submitted that a court had no discretion to set aside a settlement agreement for grave injustice if the settlement agreement had been carried into effect. In these circumstances, Allied contended that the party seeking to set aside the settlement agreement would have to establish a ground that would suffice to render a contract void or voidable or entitle it to equitable relief. Boom Parts did not seek to rely on such a ground.

60 For its part, Boom Parts relied on the decision of the High Court in Harvey v Phillips,[6] where the Court said:

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 the like.[7]

61 However, in that decision, the High Court referred with approval to the Privy Council decision of Sheonandan Prasad Singh v Abdul Fateh Mohammad Reza[8] ('Singh'), where Lord Atkin said that a line of cases qualified the implied authority of counsel to compromise an action. Lord Atkin said:

In the first instance the authority is an actual authority implied from the employment as counsel. It may, however, be withdrawn or limited by the client; in such a case the actual authority is destroyed or restricted, and the other party if in ignorance of the limitation could only rely upon ostensible authority. In this particular class of contract, however, the possibility of successfully alleging ostensible authority has been much restricted by the authorities..., which make it plain that if in fact counsel has had his authority withdrawn or restricted the Courts 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.[9]

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.[10]

63 Boom Parts referred to Permanent Trustee Co (Canberra) Ltd v Stocks and Holdings (Canberra) Pty Ltd, where Brennan J said:

The general rule is that a perfected judgment cannot be recalled or varied, for the public interest requires that the judgment when it is entered should conclude the litigation... Until the final judgment is entered, the court retains a power to reconsider the matter, but, when entered, the jurisdiction to reconsider is gone:...

There are some exceptions to this general rule. The exceptions fall into three classes: those which are founded upon the inherent jurisdiction of the court to ensure that its procedures do not effect injustice; those which are [authorised] by statute; and those which override the general rule in order to give relief where the judgment is obtained by fraud or by an agreement which is void or voidable.[11]

64 Boom Parts also relied on the decision of the Queensland Court of Appeal in Broadbent v Medical Board of Australia,[12] where Fraser JA (with whom McMurdo J agreed) said:

This matter is therefore analogous to the case described by the High Court in Harvey v Phillips where a compromise has been agreed upon by counsel acting in pursuance only of an apparent authority from the client, but in opposition to the client's instructions. The analogy is not precise. It was the applicant's solicitor rather than counsel who did not give effect to the applicant's instructions but that difference is not a valid point of distinction. ... It is nonetheless clear that the compromise was made in defiance of the applicant's instructions. In this context I do not see a valid distinction between an offer to compromise litigation made without the client's express authority by counsel retained in the case and the inexplicable failure of the retained solicitors to give effect to clear instructions to withdraw an offer where there was no apparent difficulty in withdrawing the offer before it was accepted. The Court does have the power to refuse to give effect to the compromise in this case.

Should the court exercise that power? In Harvey v Phillips it was not necessary for the High Court to give any guidance about the manner in which the discretion should be exercised, but the Court referred to the statements in the second and third editions of Halsbury's Laws of England that the power is to be exercised as a matter of discretion when, to allow the compromise to stand would involve injustice in view of the restriction on counsel's authority. The statements in both editions of Halsbury were that:

"When, in the particular circumstances of the case, grave injustice would be done by allowing the compromise to stand, the compromise may be set aside, even though the limitation of counsel's authority was unknown to the other side."[13]

The authority cited for that proposition was Neale v Gordon Lennox.[14] In that case counsel consented to an action for slander and liable being referred out of the court without giving effect to the plaintiff's insistence that the defendant's counsel should first publicly state that there was no ground for the "grave and slanderous words of the plaintiff". Earl Halsbury LC regarded the omission to comply with that condition of the plaintiff's consent to the reference as producing "so gross an injustice that, upon the general jurisdiction that every Court has over its own procedure, this Court ought to refuse to allow that injustice to be committed";[15] he could "hardly conceive a case in which there is a more prominent and more important principle involved than a case in which a person is coming to vindicate her character in public".[16] ... The requirement that the compromise would produce a "grave injustice" remains in the current edition of Halsbury,[17] which cites Marsden v Marsden.[18] In that case Watkins J approved of the statement in the earlier edition. That test has been applied in New South Wales[19] and in New Zealand.[20] Similarly, in Foskett's The Law and Practice of Compromise[21] it is said that the courts' power should be exercised "with considerable caution and only where a clear injustice would arise if it were not exercised."

Any rejection of the principle that the courts retain the discretion in some circumstances to refuse to enforce a contractually valid compromise of litigation must occur in the High Court, but in my opinion the discretion should be exercised with caution and only where it is clearly demanded by the interests of justice. The growth of email and other forms of virtually instantaneous communication has made it relatively easy and commonplace for solicitors and counsel promptly to obtain and act upon express instructions in negotiations to compromise litigation, even where the clients are physically remote from the lawyers. In these circumstances, which differ from those which prevailed when this power in the courts was held to exist, a party to litigation should be able to rely upon the apparent authority of the opposite party's lawyers to compromise the litigation, within the well known limits of that apparent authority. If the courts too readily disregard compromises of litigation made by the parties' lawyers the important aim of promoting settlement of litigation will be hindered and resources will be wasted on investigating disputes which should properly be confined between lawyer and client who, unlike the opposite party, should readily be able to prove whether or not a particular compromise reflected the client's instructions.

On the present state of the law, a distinction must be drawn between the authority of counsel and solicitors to compromise litigation in which they are retained and the authority of agents generally to bind their principals to contracts. That is required by the High Court's approval in Harvey v Phillips of Lord Atkin's statement in [Singh]that the implied authority of counsel to compromise an action is qualified by the courts' power in the interests of justice in some cases to disregard the compromise. It does not follow, however, that the mere fact that a lawyer lacks actual (express or implied) authority to compromise litigation constitutes an injustice which justifies the exercise of that power. Our system of law has long adopted the doctrine that contracts are generally valid if made by an agent with the apparent authority of the principal even if the agent acts in defiance of the principal's instructions. Adjectives such as "clear", "serious" and "grave" cannot define the nature or degree of the injustice which suffices to justify the exercise of the courts' power as an exception to that general rule, but they do serve to emphasise that, whilst the compromise of litigation contrary to the client's instructions might be regarded as always involving an injustice, that is not necessarily sufficient. So much is consistent with the description in Harvey v Phillips of the courts' power to disregard a compromise in that and other cases as an "authority" and "discretion".[22]

65 Fraser JA held that the facts of the case did justify the exercise of the Court's power to decline to enforce the compromise. The compromise was contrary to the applicant's emphatic instructions and was of great importance to him as a medical practitioner, involving conclusions that his conduct as a medical practitioner fell short of a professional standard of care. It gave rise to potentially serious consequential damage to his reputation which could not be remedied by a damages claim. The applicant repudiated the compromise within hours of it being concluded and virtually immediately on becoming aware of it. There was no change of position by the other party or any injustice other than the loss of the compromise.[23]

66 Boom Parts also relied on the law as stated in Dal Pont's Law of Agency:[24]

A client may invite the court to exercise its discretion to set aside the compromise on the ground that to allow it to stand would involve grave injustice by reason of the exceeding of actual authority. Yet because an exercise of this jurisdiction envisages setting aside a compromise even though the lack of authority was unknown to the other side, it is confined to exceptional cases, usually where the lawyer has made the compromise by way of mistake. Although inducement in, or knowledge of, the mistake by the opponent or his or her lawyers presents a stronger case for setting aside a compromise, it is not a prerequisite for this purpose; the court is concerned with the overall justice of allowing the compromise to stand. Having said that, only in the most compelling case would a court likely exercise this jurisdiction....

67 Allied submitted that it was a well-established general principle that a final order disposing of a proceeding which is regularly made and entered cannot be recalled and the proceeding cannot be reinstated.[25] The principle reflected the policy of finality in litigation.[26] Allied submitted that there were limited exceptions to the principle. Consent orders finally disposing of a proceeding could only be set aside on the ground of fraud, or on grounds which invalidate the agreement the consent orders expressed.[27]

68 Allied relied on the decision of the New South Wales Court of Appeal in The Owners Strata Plan No 57164 v Yau,[28] where litigation was settled and consent orders made. Sixteen months later, the owners corporation sought to set aside the consent orders because no notice had been given of the meeting of the executive committee which decided to settle the proceeding. Most of the consent orders had been performed.

69 After an extensive review of authority, Beazley P, with whom Leeming JA agreed, said:

In my opinion, contrary to the Owners Corporation's submission, it is also apparent from the authorities that the court has a discretion whether to set aside consent orders that have been entered, even if some basis for setting aside the orders has been established. Permanent Trustee Co (Canberra) v Stocks & Holdings (Canberra) is an example. In that case, the court refused to set aside consent orders because it was not satisfied that the interests of third parties had not been affected. Kay LJ in Huddersfield Banking v Henry Lister also observed that although there was power to set aside a consent order that had been entered, difficulties might arise "if the order had been acted upon, and third parties' interests had intervened and so on"...

That the court has such a discretion is an integral aspect of the court's inherent jurisdiction. As Sheller JA explained in Logwon Pty Ltd v Warringah Shire Council, integral to a superior court's inherent jurisdiction is the fulfilment of "its function by ensuring that justice is administered according to law and in an effective manner". The jurisdiction, as his Honour pointed out, is such as "to enable" the court to discharge or revoke consent orders. That is not the language of compulsion.[29]

70 Beazley P concluded that no error had been shown in the trial judge's decision not to set aside the consent orders.

Once an order disposing of a proceeding has been perfected by being drawn up as the record of a court, apart from any specific and relevant statutory provision, that proceeding is at an end in that court and is, in its substance, beyond recall by that court. It would not promote the due administration of the law or justice for a court to have a power to reinstate a proceeding of which it has finally disposed. While the inherent jurisdiction of the court may extend to varying orders that have been made, it cannot extend to the making of orders in proceedings that have been brought regularly to an end without any error or lack of jurisdiction.

...

It may be that, in wholly exceptional circumstances, a court may have jurisdiction to reopen final orders where the orders were entered by a person purporting to act on behalf of a party who did not have authority to act for the party. However, whether or not counsel appearing in proceedings has actual authority, either express or implied, to compromise the proceedings, counsel properly instructed in any proceedings has ostensible or apparent authority to compromise the proceedings on behalf of the party for whom counsel appears. If it be established that counsel entered into a compromise agreement without having actual authority, either express or implied, to do so, the other party would be entitled to rely on the ostensible or apparent authority of counsel, in the sense that the party for whom counsel appears would be estopped from denying authority, unless the other party was aware of the lack of express authority.[30]

72 In Siwick v National Australia Bank Ltd, Mukhtar AsJ observed that, in the ordinary course of litigation, there was usually no occasion for one party to question the authority or limits of authority of a lawyer engaged for the other party. There was no need to make inquiries as to the authority of the lawyer for the other party.[31]

73 It is plain from the submissions that there is a legal issue strongly contested by the parties. The issue is whether the inherent jurisdiction of the Court to set aside a consent order, where there is shown to be grave injustice, is confined to circumstances where the settlement agreement which gave rise to the consent order is still executory, and is yet to be implemented, or whether the inherent jurisdiction of the Court to set aside a consent order extends to circumstances where, as here, the settlement agreement has been carried into effect.

74 Boom Parts submitted that it had a real prospect of success in the current proceeding as there was objective evidence that supported its contention that it suffered a grave injustice as:

(a) the settlement agreement did not include any form of compensation payable by Allied. This was strange as Boom Parts had paid around $2 million associated with the sale contract at the time of the settlement agreement;

(b) Mr Kent's correspondence with Mr Cocks on 23 and 24 January 2016 showed that compensation was important;

(c) on these occasions Mr Kent gave instructions to Mr Cocks that if Allied refused to complete the sale contract then Boom Parts would be prepared to accept a payment of $1,844,700 to withdraw from it;[32]

(d) it would be uncommercial for Boom Parts to capitulate on Allied's counterclaim without conditions;

(e) Mr Kent was unaware of the true nature of the settlement agreement until after it was concluded;

(f) Local Lawyers had subsequently elected not to cooperate or engage with Boom Parts or its subsequent solicitors regarding the settlement agreement;

(g) the settlement agreement was not documented by way of terms of settlement (or a deed of settlement); and

(h) there was no evidence that Boom Parts and Mr Kent personally acceded to its terms.

75 Boom Parts also submitted in respect of any prejudice to Allied that:

(a) whilst there had been delay on its part, Allied had filed a defence and counterclaim in the 2015 proceeding and referred extensively to documentary evidence such as emails and letters; and

(b) Allied had access to its solicitor's file relating to the 2015 proceeding.

76 Boom Parts relied on a valuation of the property dated 19 July 2017 completed by In Property Valuations Pty Ltd with a relevant date of 30 October 2015 for a total amount of $15,600,000 (excluding GST). This is a great deal higher than the price in the sale contract or the amount ultimately paid for the property by Jenz.

77 Review of the valuation shows that it was prepared by Robert Bath, a certified practising valuer, and licensed estate agent on the instructions of Boom Parts' former solicitors.

78 In reviewing the valuation, I note that it is based on a number of assumptions. There are two assumptions that are critical to the valuation. They are that:

(a) all orders and requirements for remediation of the buildings have been complied with; and

(b) the value of the existing buildings is assessed at current replacement cost due to the inability to access the improvements and the extent of vandalism on site.

79 Clearly, these assumptions significantly elevate the amount of the valuation. The valuation does not descend into detail or separate the valuation of the land and the replacement cost of the buildings and improvements.

80 Finally, Boom Parts submitted that, while it had a challenging task ahead of it, this did not mean that it had no real prospect of success. It contended that if Allied were to succeed in its application for summary judgment, it would mean that all proceedings brought to set aside settlement agreements would be liable to be summarily dismissed.

(a) the claims made and the relief first sought by Boom Parts in the current proceeding entirely overlap the claims made and relief sought in the 2015 proceeding save for the recent amendments seeking to set aside the settlement agreement;

(b) the current proceeding can only continue if the settlement agreement and the consent orders dismissing the 2015 proceeding are set aside;

(c) Boom Parts did not allege that Local Lawyers and Mr Cocks exceeded their ostensible authority;

(d) Boom Parts had engaged in extensive delay extending over seven years;

(e) the delay is unexplained and raises real questions about the veracity of the allegations made about the lack of actual authority;

(f) the extraordinary delay in seeking relief has caused serious prejudice to Allied's ability to respond to the allegations;

(g) the employees of Allied responsible for the conduct of the 2015 proceeding and with direct knowledge of the subject matter of the dispute are no longer employed by Allied;

(h) Allied does not have complete records of the 2015 proceeding;

(i) as part of the settlement agreement, Allied compromised a counterclaim against Boom Parts, and its claim against Mr Kent. It gave up a valuable claim for which the limitation period may have expired;

(j) there is no basis for the Court to set aside the settlement agreement, or any basis to find that there was any irregularity in the making and entering of the consent orders;

(k) the proceeding should not be permitted to proceed to trial as it does not have a real chance of success; and

(l) the interests of justice require the summary dismissal of the proceeding as an abuse of process.

82 To succeed in setting aside the settlement agreement, Boom Parts faces formidable difficulties:

(a) first, it must succeed in establishing that the Court has jurisdiction to set aside an executed settlement agreement and consent orders under the previous proceeding on the ground of grave injustice;

(b) secondly, it must show that it in fact suffered grave prejudice as a result of the settlement agreement and consent orders; and

(c) thirdly, it must persuade the Court that it should exercise its discretion to set aside the settlement agreement and consent orders.

83 As to the legal issue in dispute between the parties, it is in my view undesirable to decide this issue in the abstract on a summary judgment application where the facts are derived from affidavits and are necessarily incomplete, and where neither party has had the opportunity of cross-examining the other party's witnesses. There is no affidavit by Mr Cocks of Local Lawyers, who had a vital role in achieving the settlement agreement and gave consent to the Court orders. The Court is unaware of his position.

84 Likewise, it is in my view inappropriate to seek to assess summarily whether the settlement agreement gave rise to grave injustice to Boom Parts. For such an assessment to be made, a trial is essential where the facts can be established, and the evidence can be tested by cross-examination.

85 As for discretion, it is apparent that Boom Parts faces very serious problems by reason of its long delay in seeking relief, with the consequence that Allied personnel are no longer with the company. A second very serious problem for Boom Parts arises from the fact that the counterclaim was compromised as part of an overall settlement. It would be difficult, if not impossible, to reinstate the counterclaim against Boom Parts and Mr Kent. A third very serious problem is that the settlement agreement conferred rights on the new purchaser, Jenz, that cannot be undone or adversely affected.

86 Despite these major hurdles, it is unwise in my view to predict prior to a comprehensive assessment based on evidence, how a court will exercise its discretion. The exercise of discretion by a court is fundamentally dependent on the court's assessment as to what the interests of fairness and justice require having regard to the evidence before the court.

87 In RCR Energy Pty Ltd v WTE Co-Generation Pty Ltd, the Court of Appeal considered that it could not be said that a claim advanced by the respondents had no real prospect of success given the subtle interplay between contractual warranties and conduct said to be misleading and the state of the authorities.[33] There was a risk that the Court may embark upon an inappropriately narrow inquiry. It was better not to opine on certain matters raised by the parties in an application for summary judgment. Those matters were best left to trial.[34]

88 Likewise, in my view, it is best not to opine on the contested issues that have been raised by the parties in an application for summary judgment. Those issues are far better heard and determined at trial when all of the evidence is before the Court and the legal consequences of the established facts can be fully canvassed.

89 The authorities that I have cited repeatedly confirm the need for a cautious and careful approach to summary judgment applications. I am of the view that I should take such an approach.

90 I am of the opinion that this is not a case where summary judgment should be given. The prospects of success are real and not fanciful. Given the nature of the issues, summary judgment would be inappropriate in this case. The proceeding must await trial for proper determination. For the same reasons, I find that the proceeding should not be dismissed as an abuse of process.

91 Allied's summons filed 15 February 2023 will be dismissed.

[1] [2013] VSCA 158; (2013) 42 VR 27, [35(a) - (c)].

[4] [2012] VSC 163, [12].

[5] (2018) 263 CLR 149; [2018] HCA 25, [23].

[6] [1956] HCA 27; (1956) 95 CLR 235 ('Harvey').

[8] (1935) 62 Ind App 196.

[10] Harvey, 243, referring to Halsbury's Laws of England, vol 3, 3rd ed., p. 51; 2nd ed., vol. 2, pp. 526, 527.

[11] (1976) 28 FLR 195, 198.

[12] [2010] QCA 352.

[13] LexisNexis, Halsbury's Laws of England, vol. 3 (3rd ed.,1953),51;LexisNexis, Halsbury's Laws of England, vol. 2 (2nd ed., 1931),526-527.

[14] [1902] UKLawRpAC 38; [1902] AC 465.

[17] Lord Mackay (Ed), Halsbury's Laws of England, vol. 66, (5rd ed., 2009) at p 339, paragraph 1138.

[18] [1972] Fam 280; [1972] 2 All ER 1162.

[19] Coomber v Stott [2007] NSWSC 513, [31] -[35] (Macready AsJ).

[20] Newbrook v Marshall [2001] NZCA 332; [2002] 2 NZLR 606,[16] (Richardson P, Gault and Tipping JJ).

[21] David Foskett, The Law and Practice of Compromise (Sweet and Maxwell, 6th Ed, 2005),330-331[29-20] - [29-21].

[24] G.E. Dal Pont, Law of Agency (Lexis Nexis Butterworths, 3rd ed, 2013) [20.59] (citations omitted).

[25] Bailey v Marinoff [1971] HCA 49; (1971) 125 CLR 529.

[26] Quach v New South Wales Health Care Complaints Commission (No 4) [2016] NSWCA 285, [10].

[27] Harvey v Phillips (1956) 95 CLR 275, 243-244.

[28] (2017) 96 NSWLR 587; [2017] NSWCA 341.

[29] Ibid [81], [82] (citations omitted).

[31] [2010] VSC 547, [39]. See also Bruno v RJ & SM Fuller Family Partnership [2020] VSC 133 (Ierodiaconou AsJ); Reed v Courtney [2022] VSC 815 (Irving AsJ); O'Keeffe v Wyndham City Council [2010] VSC 394 (Robson J).

[32] Referring to Broadbent v Medical Board of Queensland [2010] QCA 352, [38].

[33] [2017] VSCA 50, [56].