The question presently before the Court is whether the proceedings as between the plaintiff and the first defendant were settled on certain terms on 11 March 2020. The plaintiff contends that the proceedings were so settled. By Notice of Motion filed on 17 April 2020 the plaintiff seeks relief pursuant to s 73 of the Civil Procedure Act 2005 (NSW) accordingly. The defendants seem to accept that an agreement was reached on 11 March 2020, but they contend that the agreement should be treated as void or otherwise as unenforceable due to either duress or unconscionable conduct on the part of the plaintiff in obtaining the agreement. The matter has been determined on the papers, the parties indicating their consent to that course.
The plaintiff relies upon the affidavit of its solicitor, Mr Christopher Yam sworn on 17 April 2020. The defendants rely upon affidavits sworn by the first defendant on 21 February 2020 and 6 May 2020. The Court has read and considered those affidavits. The Court has also considered the written submissions of counsel for the respective parties.
The proceedings were commenced by the plaintiff by Summons filed on 21 January 2020. The relief sought was principally an order extending the operation of a caveat (AP281131) the plaintiff had lodged against the title to a property in The Ponds owned by the first defendant and the second defendant ("the Property"). By the caveat, the plaintiff claimed an interest as a chargee in respect of the first defendant's interest in the Property. An Amended Summons was filed on 23 January 2020. A prayer was added for a declaration that the plaintiff had an equitable charge over the first defendant's interest in the Property. I note in passing that the Registrar-General, which was named as the third defendant, filed a submitting appearance.
The proceedings came before the vacation duty judge (Henry J) on 24 January 2020. On that occasion various orders were made by consent, including an order under s 74K of the Real Property Act 1900 (NSW) extending the operation of the caveat until further order. That order was expressly made without admission by the first defendant and without prejudice to him. The Court also made a notation in the following terms:
The Court further notes that the Plaintiff undertakes to provide a withdrawal of the caveat in the event of a scheduled settlement of the proposed sale of the property, provided that the First Defendant complies with the following:
(A) The Proceeds of sale of the property inclusive of the deposit are applied to pay:
(a) The amount to discharge the mortgage to Westpac Banking Corporation;
(b) The usual standard adjustments;
(c) The real estate agent's commission and advertising expenses;
(d) The reasonable costs of the conveyance; and
(B) The remaining net proceeds of sale of the property (limited to $150,000) be paid into Court, pending finalisation of these proceedings.
The matter was adjourned to 6 March 2020 in the Real Property List.
In the meantime, on 17 February 2020 Mr Yam sent a letter to Byron & Associates solicitors. These solicitors were not at that time solicitors on the record in the proceedings, but it may be inferred that they were then retained by at least the first defendant. Mr Yam's letter was in the following terms:
We refer to:
1 our telephone discussion today;
2 our telephone discussion on Friday, 14 February 2020;
3 our without prejudice telephone discussion on Thursday, 13 February 2020.
On the condition that:
1 the sum of $150,000.00 is paid electronically to our client at the settlement of the contract of sale of the Land which is scheduled to take place electronically (PEXA Workspace ID: PEXA194034939) on Friday, 24 February 2020, at 2:00p.m. AEDT (Settlement);
2 your client and Vanessa Thumbiran give consent to the Supreme Court of New South Wales making the following orders in Case Number 2020/00020537:
(a) the proceeding is dismissed;
(b) there be no order as to costs;
hereinafter referred to as Orders;
3 upon the satisfaction of the conditions referred to in paragraphs 1 and 2 above, your client hereby release and discharge our client and forever hold our client harmless from all causes of action, claims, demands, actions, suits, proceedings or complaints of whatsoever nature which he may now have or at any time hereafter may have or might have had against our client including anything arising from or in relation to any occurrence, act or omission which happened at any time prior;
our client will:
4 accept the sum of $150,000.00 in full and final settlement;
5 withdraw Caveat AP281131 at the Settlement;
6 given consent to the Supreme Court of New South Wales making the Orders;
7 withdraw the caveats lodged against:
(a) 10 Dellit Place, Doonside NSW 2767;
(b) your client's interest in 193 Allen Street, Hamilton QLD 4007;
(c) your client's interest in 60 Sanctuary Lakes East Boulevard, Point Cook VIC 3030;
(d) your client's interest in 21 Seagull Grove, Point Cook VIC 3030;
8 release and discharge your client and forever hold your client harmless from all causes of action, claims, demands, actions, suits, proceedings or complaints of whatsoever nature which our client may have or at any time hereafter may have or might have had against your client including anything arising from or in relation to any occurrence, act or omission which happened at any time prior.
Please obtain your client's instructions and confirm in writing by no later than 5:00 p.m. on Wednesday, 19 February 2020, that your client agrees to the matters referred to in this letter.
On 6 March 2020 directions were made, including for the filing of a Further Amended Summons, and the matter was adjourned to 3 April 2020.
It appears that settlement of a sale of the Property was scheduled to occur at some time on 10 March 2020. It further appears that the first defendant's then solicitor on the record, Mr Richard Bakoss, was in communication with the plaintiff's solicitors about the impending settlement. On 9 March 2020 Mr Bakoss sent an email to the plaintiff's solicitors in which it was stated that the net proceeds of the sale would be less than $150,000. On 10 March 2020, Mr Bakoss sent an email to Mr Yam in which reference was made to the notation that had been made by the Court on 24 January 2020, and to a statement, attributed to the plaintiff's legal representative at the 6 March 2020 directions hearing, that the plaintiff would not stop the settlement. Mr Bakoss stated in his email that he would immediately re-list the matter if the plaintiff "delays settlement proceeding today".
Settlement did not occur on 10 March 2020. There is no evidence that this was due to the plaintiff delaying or hindering the settlement. There is no evidence that Mr Bakoss sought to re-list the matter.
At 12:44pm on 11 March 2020, Mr Yam sent an email to Mr Bakoss. The email, which was marked "Without Prejudice Save as to Costs", was in the following terms:
We refer to:
our telephone discussion today subsequent to your letter dated 11 March 2020 sent by email today at 11:56 a.m.;
your letter dated 11 March 2020.
Our client is prepared to settle the dispute between our client and your client the subject of the proceeding on the basis that:
your client pays to our client the sum of $150,000.00 as follows:
(a) $32,919.69 by electronic funds transfer into our client's bank account at the settlement of the contract of sale of 2 Spearmint Street, The Ponds NSW 2769 (Settlement) which is scheduled to take place today;
(b) the balance sum of $117,080.31 by way of equal monthly instalments over a period of 9 months or more (to be discussed and agreed between our client and your client if your client requires more than 9 months);
our client withdraws Caveat AP281131 at the Settlement in exchange for the sum of $32,919.69;
our client, your client and Vanessa Thumbiran give consent to the Court making the following orders:
(a) the proceeding is dismissed;
(b) there be no order as to costs;
upon payment of the sum of $150,000.00 in full by your client to our client, our client will:
(a) withdraw the caveats lodged against:
(i) 10 Dellit Place, Doonside NSW 2767;
(ii) your client's interest in 193 Allen Street, Hamilton QLD 4007;
(iii) your client's interest in 60 Sanctuary Lakes East Boulevard, Point Cook VIC 3030;
(iv) your client's interest in 21 Seagull Grove, Point Cook VIC 3030;
(b) release and discharge your client and Absolute Pump Services Pty Ltd and forever hold them harmless from all causes of action, claims, demands, actions, suits, proceedings or complaints of whatsoever nature which our client may now have or at any time hereafter may have or might have had against them including anything arising from or in relation to any occurrence, act or omission which happened at any time prior.
our client and your client enter into a Deed of Settlement to be prepared by our office to record the terms referred to above.
Please obtain your client's instructions and confirm in writing that your client is prepared to settle the dispute between our client and your client the subject of the proceeding on the basis referred to above.
It should be noted that the heading to the email identified Mr Bakoss' client as the first defendant. The email should be understood as containing an offer by the plaintiff to the first defendant.
Mr Bakoss responded by email at 2:32pm. This email was in the following terms:
We refer to the above matter and your earlier correspondence including a letter of offer.
We have now received confirmation and consent that our client Trevelyn Thumbiran and Vanessa Thumbiran agree to the terms as outlined in your letter of offer earlier today.
We advise you thart [sic] settlement should now proceed and request that you update your entry in PEXA accordingly.
Later on 11 March 2020 Mr Yam and Mr Bakoss exchanged emails in relation to the settlement arrangements, including as to the making of an adjustment in the PEXA system so that the plaintiff would receive the amount of $32,919.69 on settlement.
The settlement of the sale occurred electronically in the PEXA system at 5:00pm on 11 March 2020. The plaintiff withdrew its caveat, and duly received the sum of $32,919.69.
On 18 March 2020 Mr Yam sent a draft Deed of Settlement to Mr Bakoss, inviting him to mark up any amendments or revisions for consideration by the plaintiff. It seems that Mr Yam received no response from Mr Bakoss other than being informed on 25 March 2020 and 30 March 2020 that Mr Bakoss was awaiting instructions.
On 2 April 2020 Mr Yam sent an email to Mr Bakoss which attached a proposed Consent Order which provided for the proceedings to be dismissed with no order as to costs. It was stated in the email that unless the Deed of Settlement and the proposed Consent Order were signed and returned that day, the plaintiff would seek leave to file a Notice of Motion.
Mr Bakoss replied by email later on 2 April 2020. The email included the following:
We have now received instructions that include;
That with regards to your letter of 18 March 2020 our client will not sign a deed to finalise this matter.
That our client will proceed with this matter and will not finalise it without further litigation.
Mr Bakoss no longer acts for the first defendant in the proceedings. It seems that Mr Bakoss ceased to act on about 30 April 2020.
In his affidavit of 6 May 2020, the first defendant deposed, in relation to the offer sent by Mr Yam on 11 March 2020:
However, upon the date of settlement, the Plaintiff refused to withdraw the caveat reiterating their position as to the proceeds of settlement.
A letter of offer was sent at 12:44pm on 11 March 2020 by email from the Plaintiff's solicitor to my solicitor. A copy of this email is annexed to this affidavit and marked F.
The plaintiff's refusal to remove the caveat jeopardised the sale of the property. I had not sought any further action to remove the plaintiff's caveat earlier because I had relied on the undertaking provided by the plaintiff at order 9 of the orders made 24 January 2020, refer to Paragraph 17 Annexure E mentioned above.
I could not see any other way I could complete the sale of the property. It was for this reason that I instructed my solicitor to send the email at 2:32pm on 11 March 2020. A copy of this email is annexed to this affidavit and marked G.
The first defendant then deposed, in relation to Mr Bakoss' response to the offer:
I would have lost approximately $500,000.00 if the sale had fallen through on 11 March 2020.
However, I did not wish to settle the proceedings as a whole. I maintain my position that I did not sign a personal guarantee, and that the Plaintiff has no basis to seek any relief from me personally.
I was forced into paying the $32,919.69 to the plaintiff on 11 March 2020 in order to allow the sale to occur. I would not have agreed to it in any other case. I refuse to sign the deed of settlement prepared by the defendants.
The plaintiff submitted that the email sent by Mr Bakoss at 2:32pm on 11 March 2020 amounted to an unequivocal acceptance of the terms of the offer set forth in Mr Yam's email sent at 12:44pm on that day. It was submitted that the parties thereby became immediately bound to the terms of the agreement thus made, and this was so even if it was contemplated that the parties would enter into a Deed of Settlement to record the terms of the agreement. The plaintiff submitted that the proposed Deed of Settlement in fact accorded with the agreement reached. It was submitted that in these circumstances orders should be made pursuant to s 73 of the Civil Procedure Act declaring that the dispute between the plaintiff and the first defendant has been settled on the agreed terms, and ordering the first defendant to specifically perform the agreement by signing the Deed of Settlement.
The defendants submitted, by way of background, that the essence of the dispute in the proceedings concerned whether the first defendant personally entered into a contract of guarantee with the plaintiff. The first defendant denies that he personally undertook any such obligation. The defendants then referred to the notation made by the Court on 24 January 2020 (as set out above at [4]), and submitted that the plaintiff demonstrated an intention not to comply with its undertaking. This demonstration was said to have occurred through the terms of the letter sent by Mr Yam to Byron & Associates on 17 February 2020 (which is set out above at [5]). The defendants submitted that the intention not to comply with the undertaking is shown by the plaintiff's explicit seeking of the payment of $150,000 before it would remove its caveat. It was put that the plaintiff "required a settlement of the whole proceedings before they [sic] would remove the caveat". The defendants then submitted that by acting in defiance of the undertaking, or by failing to abide by the undertaking, the plaintiff put the defendants in an impossible situation, and this caused Mr Bakoss to send the letter on 11 March 2020 which "purports to accept the plaintiff's offer".
The defendants submitted that a case of duress was made out because the plaintiff threatened the defendants with unlawful conduct (see Australia and New Zealand Banking Group v Karam (2005) 64 NSWLR 149; [2005] NSWCA 344 at [66]). It was put that the plaintiff impermissibly forced the defendants to accept the terms of the offer, which terms were contrary to the plaintiff's undertaking.
The defendants submitted that even if duress was not made out, the agreement was procured by unconscionable conduct on the part of the plaintiff. It was submitted that by giving the undertaking and then failing to abide by it, the plaintiff "procured a superior bargaining position" and then made unconscientious use of that position to defeat the first defendant's defence to the plaintiff's claim. The defendants submitted that in accordance with the principles in Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447 the plaintiff should not be able to rely on the agreement made on 11 March 2020.
For the following reasons, I am unable to accept the submissions of the defendants.
The terms of Mr Yam's letter of 17 February 2020 do not demonstrate any intention not to comply with the undertaking given on 24 January 2020. The letter contains the terms of an offer which, if accepted, would result in an agreement that would involve a settlement of a sale of the Property that differed from that envisaged in the notation made by the Court on 24 January 2020. That notation, made with the consent of the parties, records an agreed position reached by them. To offer, as the plaintiff did on 17 February 2020, to enter into a new agreement that would effectively supersede the existing agreement does not in my view demonstrate any intention to breach or repudiate the existing agreement. It is not a correct characterisation of the 17 February 2020 offer to equate it with a statement that in all events the plaintiff would require the payment to it of $150,000 before it would remove its caveat. Neither is it correct to characterise the plaintiff's conduct as requiring a settlement of the whole proceedings before it would remove the caveat. Moreover, there was no threat of any interference with any settlement of a sale of the Property.
Rather, the plaintiff offered an alternative to the agreed interlocutory regime and a continuation of the proceedings, namely, an agreement that would bring the proceedings to an end on certain terms. The defendants were not thereby placed in an impossible position. The first defendant (the only defendant who would have a liability to the plaintiff if the offer was accepted) had lawyers acting for him, and was in a position to make a sensible judgment about whether to accept the offer.
Similar observations can be made about the offer made by Mr Yam on 11 March 2020. The offer did not exhibit an intention not to comply with the undertaking that had been given on 24 January 2020. The offer was not, as asserted by the first defendant in his affidavit, a refusal to withdraw the caveat, or an assertion that it would only withdraw the caveat if the terms of the offer were accepted. The making of the offer was certainly not tantamount to a threat to refuse to abide by the undertaking, or a threat to interfere with any settlement. Again, the plaintiff offered to enter into an alternative agreement that would bring the proceedings to an end on certain terms.
I reject the suggestion that the defendants were placed in an impossible situation, and that this was the reason why Mr Bakoss accepted the terms of the offer. In my opinion, no case of actionable duress has been made out.
Neither has any case of unconscionable conduct been established. The defendants have not shown that either of them laboured under any special disability of the type referred to in Commercial Bank of Australia Ltd v Amadio (supra). The defendants have not shown that the plaintiff sought to take advantage of any such disability. I should also state that I reject the suggestion that the plaintiff, by making the offers, or in some other way, procured for itself a superior bargaining position which it then took advantage of in an unconscientious manner. Indeed, it is clear that the first defendant was represented by a solicitor who appreciated that if the plaintiff acted to delay or otherwise thwart settlement of the sale, it was open to the defendants to re-list the matter "immediately". As I have said, there is no evidence that the plaintiff in fact delayed or hindered any settlement, and there is no evidence that Mr Bakoss sought to re-list the matter.
The evidence is clear that the first defendant consciously and deliberately instructed Mr Bakoss to accept the offer made by Mr Yam. An agreement was thereby concluded between the plaintiff and the first defendant to settle the dispute between them. The objective intention of the parties was to be immediately bound to the agreed terms, albeit that a Deed of Settlement would later be entered into to record (or restate) those terms (see Masters v Cameron (1954) 91 CLR 353 at 360). Insofar as the agreement could be said to be conditional upon the second defendant agreeing to give her consent to a dismissal of the proceedings with no order as to costs, her agreement was conveyed by Mr Bakoss. The agreement was partly performed later on 11 March 2020 when, as part of the settlement of the sale of the Property, the plaintiff withdrew its caveat and the first defendant paid $32,919.69 to the plaintiff. The defendants have failed to make out any basis to impugn the validity or enforceability of the agreement.
Section 73(1) of the Civil Procedure Act provides:
In any proceedings, the court:
(a) has and may exercise jurisdiction to determine any question in dispute between the parties to the proceedings as to whether, and on what terms, the proceedings have been compromised or settled between them, and
(b) may make such orders as it considers appropriate to give effect to any such determination.
In my opinion it would be appropriate to make an order that the proceedings between the plaintiff and the first defendant were settled on 11 March 2020 on the terms set out in Mr Yam's email to Mr Bakoss sent at 12:44pm on that day, which terms were accepted by Mr Bakoss' email sent at 2:32pm on that day.
By those terms, the first defendant became obliged to pay $150,000 to the plaintiff: - $32,919.69 on settlement of the sale, and $117,080.31 by equal monthly instalments over 9 months (or longer period if agreed by the parties). The first defendant also became obliged to consent to a dismissal of the proceedings with no order as to costs, and to enter into a Deed of Settlement with the plaintiff that records (or restates) the terms of the settlement.
The Deed of Settlement proffered by the plaintiff on 18 March 2020 provides for the $117,080.31 to be paid by equal monthly instalments over 18 months. Strictly, that is in the nature of an offer to the first defendant. The first defendant is not obliged to accept that offer, but he would remain bound to enter into a deed which provided for the $117,080.31 to be paid over 9 months. In these circumstances, I do not think that the Court should at this stage make any orders in the nature of specific performance of the settlement agreement.
The Court will order pursuant to s 73 of the Civil Procedure Act that the proceedings as between the plaintiff and the first defendant were settled on 11 March 2020 on the terms set out in Mr Yam's email to Mr Bakoss sent at 12:44pm on that day, which terms were accepted by Mr Bakoss' email sent at 2:32pm on that day.
The Court will further order that the defendants pay the plaintiff's costs of the Notice of Motion filed on 17 April 2020. The plaintiff sought an order that the costs be paid on the indemnity basis, largely because the defendants made unfounded allegations of a serious nature in relation to the plaintiff's conduct. There is some force in the plaintiff's submission in this regard but, on reflection, I do not think that an order for indemnity costs is warranted. Whilst the arguments raised by the defendants have been found lacking, I am prepared to assume in the first defendant's favour that he genuinely believes that he accepted the plaintiff's settlement offer in circumstances of considerable commercial pressure.
[2]
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Decision last updated: 21 May 2020