GLANDON PTY LTD v STRATA CONSOLIDATED PTY LTD SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL KIRBY P 29 December 1988, 29 December 1988 [1988] NSWCA 50 DECLARATORY ORDERS — when made — for removaL of ambiguity of earlier order — to avoid possibilitY of contempt of earlier order of Court of Appeal by reason of a misconstruction of it — held: Declaration clarifying the rights of the parties under the earlier order should be made. Cawood v Green & Anor, unreported, Court of Appeal, 26 June 1974 applied. PRACTICE — costs — proper order for — party properly brings proceedings — could have disposed of by consent order lately offered — held: Costs of motion to be costs in the proceedings. Supreme Court Act 1970, s46. Kirby P It is often the case that the most hotly disputed issue in proceedings before the courts is the matter of costs. So it has ultimately proved in these proceedings. They come before me, exercising the powers of the Court of Appeal, pursuant to s46 of the Supreme Court Act 1970. The matter comes before the Court having been listed on 23 December 1988. It has been heard in vacation. On the substantive matter which brings the matter to the Court there is now no relevant disagreement between the parties. At least, it is agreed that, for the removal of doubt, the Court may in the circumstances make a declaration, effectively in the terms set out in para2 of the Notice of Motion filed by the claimants. Certain words will be added, without objection, to protect the position of the first opponent. The first opponent says that the bringing of the proceedings to the Court, and particularly in the circumstances which will be described, was unnecessary. It says that the matter of doubt which has caused the claimants to move is unpersuasive. In any case, it argues, having regard to an earlier signification of agreement, that the matter could and should have been disposed of by a consent order without the necessity of the hearing before the Court today. I should say at once that one of the opponents named in the Notice of Motion, Tannunga Pty Ltd, the second named opponent, is not before the Court. Both counsel agreed that it was not necessary to notify that opponent of the proceedings. It was common ground that it was not aware of the fact that the matter was before me today. I am content to approach the matter upon the basis agreed by the parties. I note that, effectively, this was the position when the matter was before the Court of Appeal on 11 November 1988. It is out of the proceedings on that day (when the Court was constituted by Hope, Samuels and McHugh JJA) that the proceedings are now before me. The Court had earlier given leave to the first opponent to appeal and to bring up for review certain orders made by Kearney J on 30 September 1988. However, on the day of the return of the appeal, by such leave, the parties announced the settlement of the appeal upon terms set out in Short Minutes of Order and Terms of Settlement which were handed to the Court. Only one matter was left contested at that time. Significantly enough, that was also a matter relating to costs. 2 UNREPORTED JUDGMENTS The Court, relevantly to the proceedings before me today, by consent of the parties and without admission by the parties, made orders in accordance with paral of the Short Minutes of Order. That paragraph read (so far as relevant): "The Court orders that, in lieu of the first and second orders made by Kearney J on 30 September 1988, and upon the appellant by its counsel giving the usual undertaking as to damages to the Court, the respondents (other than Tannunga Pty Ltd) and each of them be restrained, by themselves, their servants and agents from making, or permitting or causing to be made, any payments to any person purporting to be made in right or any shares or units transferred pursuant to the transfer notice issued by the first respondent on 22 June 1988, until further order, but subject to the liberty reserved to the said respondents in O.2 below". O.2 reserved liberty to the respondents other than Tannunga Pty Ltd, on 3 days notice, to apply to a Judge of the Equity Division for dissolution or variation of the terms of O.1 in the event of a change of circumstances or in the event that the appellant failed diligently to prosecute its claim in the proceedings. I have been informed that there are listed before Brownie J, the relevant Duty Judge during the vacation, certain related proceedings. However, I am informed by counsel for the claimants that, if orders are made which effectively dispose of the motion before me in the terms sought, it will not be the intention of the claimants to press on with the summons before Brownie J. Were it otherwise, in order to avoid a duplication of proceedings in the Court, I would have been minded to remit these proceedings to Brownie J so that his Honour could deal with them in their entirety. I deal with the motion myself upon the basis of the assurance which has been given to me that the proceedings before his Honour will not be pressed. The words "made in right of any shares or units" are the source of the dispute between the parties. They are the source of the suggested doubt on the part of the claimants which brings them to the Court. The claimant has sought a declaration from the Court, in order to avoid any possibility that it might be in breach of the Court's order which, although made by consent, is an order of the Court nonetheless. Authority for the making of a declaration for the avoidance and removal of doubt is scarcely necessary. However, in Cawood v Green and Anor, unreported, Court of Appeal, 26 June 1974, the Court made it clear that where a party is not already in contempt of the Court, the Court may make a declaration as to the meaning of earlier orders in order to remove the possibility of a contempt occurring. Such a course is sensible. It is highly desirable that the orders of courts should be obeyed strictly and according to their letter. In that way contempt, which is an offence criminal in nature, may be avoided. It is therefore appropriate, if there be real doubt, that a party should bring that doubt back to the court which can then make orders removing the doubt. In that sense, so long as there be a reasonable basis for the suggested doubt, it was appropriate that the claimants should bring the matter back to me to exercise the powers of the Court of Appeal to remove that doubt. The urgency which occasioned the application on the eve of Christmas to bring the matter before the Court today is the result of a provision in a Settlement Deed of 16 May 1988 which is the subject of the original proceedings between the parties. By CL3 of that Deed certain payments are to be made on certain appointed times. One of the appointed times is 31 December 1988 (see CL3 of the Deed). URJ GLANDON PTY LTD v STRATA CONSOLIDATED PTY LTD (Kirby P) 3 The question therefore arose, after the orders made by the Court on 11 November 1988, as to whether anything in O.1 would prevent the claimants, or others on their behalf, making the payments in right of the shares of units transferred pursuant to the deed. The first opponent says that there is no such doubt. It contends that there was no restraint, by the order made by the Court, which would prevent such payments being made. The claimants sought to remove the doubt which they felt and to take the course which prudence would suggest of securing a consent order for that purpose. Correspondence was accordingly exchanged between the solicitors. However because it took place on the eve of Christmas, the claimants' solicitor's letter did not, at first, procure a plain and positive response from the solicitors for the first opponent. On 23 December 1988 in the first of two letters which are relevant, the first opponent's solicitors simply relied upon the terms of the order made by the Court. In a second letter of that day, however, the solicitors made it plain that: The terms of 'in right of any shares or units' in our view clearly refers to any payment of dividends or distributions and, should any other interpretation be tenable, we would consent to the varying of the terms of the Order." One might have expected that this concession would have led to a consent order being filed, even at that late stage. Alternatively one might have hoped that an agreement would have been reached that these proceedings would stand over until the next law Term and a consent order disposing of the matter filed as soon as possible, even with retrospective effect. However, such was not to be the case. The solicitors for the first opponent, in their second letter of 23 December, noted that their office would be closed for the Christmas vacation until 9 January 1989. This presented the solicitors for the claimants with the quandary. Should they press on with these proceedings, in order to avoid the possibility of a non observance of the third clause of the Deed of Settlement of 16 May 1988? Or should they rely upon the indication that the solicitors for the first opponent saw no difficulty and would therefore personally agree to variation of the terms of the order? That quandary they resolved by pressing on with the proceedings and bringing them before me today. It suffices for me to say because of the high importance which I attach to the compliance by the parties with the orders of the Court and because there was some uncertainty in the language by which the parties chose to incorporate their agreement in the minutes of 11 November, that I consider that it was reasonable that the proceedings should have been commenced in the first place. Because of the approach of the day mentioned in CL3 of the Settlement Deed of 16 May 1988 and the failure to effect a clear consent before the close of business on 23 December 1988, the proceedings having been commenced, it was also appropriate for the claimants to press on with them and to bring them to the finality which will occur today. In saying this I would merely observe that in my experience as counsel, and previously as a solicitor, it was invariably regarded as highly desirable that a party should avoid the incurring of costs such as will necessarily now be incurred in these proceedings. Usually, for the avoidance of such costs, the legal representatives of parties make such arrangements as will obviate the necessity of proceedings in the Court. This saves costs to the parties and the time of the Court. 4 UNREPORTED JUDGMENTS Be that as it may, the proceedings are here before me now. The parties do not contest the making of the declaration for the avoidance of doubt. That declaration should be made. It would have been made by consent had not time pressed on the claimants. All that remains is the disposal of the order for costs. When the matter was before the Court on 11 November 1988 the Court had to make an order disposing of certain of the costs on that occasion. As I have said, such costs were not agreed when the parties agreed to so much else. On that occasion, the Court ordered that the costs of the proceedings in the Court of Appeal should be costs in the proceedings in the Equity Division, to which Division the contest between the parties was by the consent order returned. It seems to me that a similar order should be made today. On the one hand it was prudent for the claimants to bring the matter to this Court and to press on with it as they did. On the other hand, I am left with the conviction that had the claimants really turned their attention more vigorously to disposing of the matter without a hearing before the Court today, that could have been achieved. As emerges from a consideration of the correspondence, an impediment of emotion appears to have crept into the relations of the solicitors at the critical time. In all of the circumstances, the costs of the proceedings before me today should be seen as among the incidents of a strongly contested suit in which, in the end, one or several of the parties will emerge the victors and one or several of the parties will fail and will bear a heavy burden of costs. For these reasons, the orders which I make are: 1. Without limiting or extending the restraints imposed by law by the terms of paral of the orders made by the Court of Appeal on 11 November 1988, and exercising the powers of the Court under s46 of the Supreme Court Act 1970, the Court declares that upon its true construction and in the events which have happened, O.1 made on 11 November 1988 does not restrain the respondents, being the claimants in these proceedings, from making, permitting or causing to be made the following payments: (a) The second instalment payment of the purchase moneys referred to in CL3.1(b) of the Settlement Deed made on 16 May 1988; (b) By the first claimant to (i) Paul Edward Lewis and Leslie Joan Lewis of $39,535; (ii) John Louis Hancock of $10,000 and; (c) By Dalsie Pty Ltd to (i) Paul Edward Lewis $531; (ii) John Louis Hancock of $7. Or in the case of each such payment in accordance with the directions of such payees to Deutche Bank AG. 2. The costs of these proceedings by Notice of Motion to be costs of the proceedings in the Equity Division. Representation: Counsel for the Claimant: P Brereton Instructed by: Speed and Stracey Counsel for the Opponent: E Strasser Instructed by: BQ Williams and Co