Clyde White & Phillip Newman as Trustees & Liquidators for the Faithful Street (Wangaratta) Property Trust v Lifetime Nutrition Pty Ltd [2004] FCA 1547

JUDGE: NORTH J

DATE: 22 NOVEMBER 2004

PLACE: MELBOURNE

REASONS FOR JUDGMENT 1 By notice of motion filed on 1 November 2004 the applicants seek judgment for $40,000 in reliance on terms of settlement entered into with the respondents. The applicants also seek costs of and incidental to this motion on an indemnity basis. 2 By the terms of settlement the parties agreed that the proceeding be struck out on the basis of the respondents' denial of liability and their promise to pay the applicants $40,000 in full and final settlement. The $40,000 was to be payable in two instalments, the first of $15,000 by 5 July 2005 and the second of $25,000 by 5 July 2006. Paragraph 5 of the terms of settlement provides, inter alia, that if the respondents fail to make either of the payments the applicants had the right to apply to enter judgment for the $40,000 and the respondents would not oppose such a judgment. 3 Paragraphs 6 and 7 of the terms of settlement provided as follows: '6. On or before 18 July 2004 each of the Respondents must complete and swear an affidavit setting out a complete statement of their respective assets and liabilities as at the date of this agreement (excluding any chose in action which the Respondents may have against their former solicitors, furniture and household effects, other than antiques and works of art and a motor vehicle to the value of $10,000 or less) exhibiting all financial records statements and other documentation verifying the contents thereof ("the affidavits and financial records"). 7. If: (a) any of the Respondents fail to disclose in the affidavits and financial records, any of their assets; or (b) it is discovered by the Applicants that the net asset value of any of the Respondents (excluding any chose in action which the Respondents may have against their former solicitors, furniture and household effects other than antiques and works of art and a motor vehicle to the value of $10,000 or less) is greater than $0, then the Applicants may immediately apply to enter judgment in default for the balance of the settlement sum and the Respondents will not oppose judgment being so entered, or alternatively the Applicants may elect to set aside this agreement.' 4 The terms of settlement were signed by the applicants and the first and second respondents on 5 July 2004 and by the third respondent on 9 July 2004. The individual respondents signed for themselves and on behalf of the first respondent. By 18 July 2004 the respondents had not provided the affidavits required by paragraph 6 of the terms of settlement. 5 On 26 August 2004 Mr Cameron, the solicitor for the applicants, wrote to Gleeson and Co, the solicitors for the respondents, as follows: 'Pursuant to clause 6 the Respondents were to complete and swear an Affidavit setting out a complete statement of their respective assets and liabilities as at the date they executed the Terms of Settlement, exhibiting all financial records, statements and other documentation verifying the contents thereof on or before 18 July 2004. We note that the Respondents have failed to provide these Affidavits and request their provision by 4 p.m. Friday 27th August, 2004, otherwise this matter will be referred back to Court and in accordance with clause 7 of the Terms of Settlement, the Applicant's will apply to enter judgment in default for the balance of the settlement sum and seek costs on an indemnity basis against the Respondents.' 6 On 30 August 2004, Mr Cameron again wrote to Gleeson and Co with a further request for the affidavits as follows: 'We request the above documentation be provided to our office, otherwise, we advise we shall issue a Notice of Motion without further notice seeking judgment be entered against the Respondent's in accordance with the Terms of Settlement dated 5 July 2004. Please note your clients are in default of the Terms of Settlement and our client is entitled to enter judgment against the Respondents.' 7 On 2 September 2004, Gleeson and Co replied in terms which were both succinct and surprising in view of the correspondence from Mr Cameron. The reply stated: '…kindly advise the Clause relied upon to enter Judgment in the Terms of Settlement.' 8 On 1 November 2004 the applicants filed the present notice of motion. The respondents were today represented by Mr Doherty whose first application was to seek leave to rely on three affidavits. Two of the affidavits were sworn this morning, one was sworn last Friday, and apparently served on the applicants late that day. 9 The applicants did not oppose the affidavits being filed and so I permitted the respondents to rely upon the affidavits. I did so reluctantly because the respondents have had more than two weeks to file the affidavits but have done so at the last moment, without the courtesy of filing them with the Court prior to the hearing. This makes it difficult for the Court to prepare for the hearing of the application. No reason was provided for this discourtesy. 10 The affidavits are a belated attempt to comply partly with the terms of settlement. But as Ms Schoff, who appeared on behalf of the applicants submitted, the affidavits do not even now comply with the terms of settlement. Mr Doherty rightly conceded that the first respondent has not even now complied with the requirements of paragraph 6 of the terms of settlement. The obligation under paragraph 6 of the terms of settlement is clear. The paragraph requires the respondents to disclose their assets and liabilities on or before 18 July 2004. That was not done. Those facts entitle the applicants to judgment under paragraph 7 of the terms of settlement. 11 Mr Doherty submitted that the occasion for the applicants to exercise their right under paragraph 7 had not arisen because provision of the affidavits by 18 July 2004 was not an essential term of the agreement, and time had not subsequently been made of the essence of the agreement. 12 In my view, time was of the essence. The terms of settlement resolved long running litigation for an amount substantially less than the amount claimed and provided a generous payment timetable. The applicants would not have entered into the agreement without the requirement that the affidavit required by paragraph 6 was supplied by 18 July 2004. In the same way that they would not have entered into the agreement without the obligation on the respondents to pay the instalments by the dates specified. 13 Mr Doherty argued that the applicants had elected to extend the time for compliance. I reject this argument. The correspondence from the applicants' solicitor at all times required compliance with the terms of settlement and foreshadowed the intention to bring this application. 14 The applicants are entitled to judgment for $40,000 in accordance with the terms of settlement, and to the costs of this application. 15 The applicants seek costs on an indemnity basis. Mr Doherty contended that the submissions on the terms of settlement were reasonably open and there is no reason to depart from the ordinary approach to costs. However, the terms of settlement are clear, the respondents' breach is obvious and the respondents' behaviour in breach of the agreement has not been explained in any satisfactory way. If there were a real problem with compliance, one would have expected the respondents to have taken up the issue with the applicants before compliance was required. Further, after two letters of reminder, the respondents' solicitor's only response was to seek information already imparted and which ought to have been obvious to him. 16 The history of this litigation shows that the respondents have used every possible strategy to avoid the final day of judgment. There is no reason that the applicants should be out of pocket for this final stage of the litigation. It therefore seems quite proper that the costs to be ordered against the respondents should be calculated on an indemnity basis. I certify that the preceding sixteen (16) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice North .