New South Wales District Court CITATION: Nimmo v Papagiannopoulos [2006] NSWDC 27 HEARING DATE(S): 23 June 2006 JUDGMENT DATE: 29 June 2006 JUDGMENT OF: Johnstone DCJ at 1 DECISION: The plaintiff is prohibited from taking further action to enforce judgment CATCHWORDS: Practice and procedure - Section 73 Civil Procedure Act 2005 - Disputed settlement agreement - Enforcement of settlement in the same proceedings LEGISLATION CITED: Civil Procedure Act 2005 Ajayi v R. T. Briscoe (Nigeria) Ltd [1964] 1 WLR 1326 Baulderstone Hornibrook Engineering Pty Limited v Gordian Runoff Limited [2006] NSWSC 223 CASES CITED: Darling Downs Investments Pty Ltd v Ellwood (1988) FCR 510 Foakes v Beer (1884) 9 App Cas 605 Roberts v Gippsland Agricultural & Earthmoving Contracting Co Pty Limited [1956] VLR 555 Shirlaw v Southern Foundries (1926) Ltd [1939] 2 KB 206 PARTIES: John Nimmo (Plaintiff) Peter Papagiannopoulos (Defendant) FILE NUMBER(S): 494/2004 COUNSEL: Mr Butterfield (Plaintiff) Mr Jamieson (Defendant) SOLICITORS: Marsdens (Plaintiff) Abigails (Defendant) JUDGMENT HIS HONOUR 1. This judgment relates to a Notice of Motion filed by the defendant on 30 March 2006, as amended on 28 April 2006. 2. The amended motion seeks an order "that the plaintiff be prohibited from taking further action to enforce a judgment in the sum of $200,000". 3. The defendant moves under s 135(2)(c) of the Civil Procedure Ac 2005 ("the CPA 2005"), which provides: "(1) The court may, by order, give directions with respect to the enforcement of its judgments and orders. (2) Without limiting subsection (1), the court may make any of the following orders: (a) ….. (b) ….. (c) an order prohibiting any other person from taking any further action, either permanently or until a specified day, to enforce a judgment or order of the court, (d) ….." 4. The defendant moved on the affidavit of Philip Abigail of 29 March 2006. Background facts 5. The underlying facts are not in dispute. 6. The parties compromised the substantive dispute and entered into a settlement agreement pursuant to which judgment was entered for the plaintiff in the sum of $200,000.00 on 7 December 2005. It was a term of the judgment that it was stayed up to and including 14 February 2006. The court noted the agreement of the parties that: " In consideration of entry into the above terms the Plaintiff will accept the sum of $130,000 if paid on or before 14 February 2006 (in respect of which time is of the essence) in full and final satisfaction of the above judgment." 7. The court issued a sealed Order encompassing the judgment, the orders and noting the agreement, on 15 March 2006 (Exhibit 1). 8. On 13 February 2006, at about 12.00pm, the defendant's solicitor, Mr Philip Abigail, rang the plaintiff's solicitor, Mr Greg Anderson and said words to the effect, "The defendant has obtained approval for the $130,000 and signed the papers but the cheque was not to hand. Can we have a seven day extension?" Mr Anderson asked, "Do you believe this?" Mr Abigail replied, "I have not seen the approval. Might I say I was surprised as I did not expect him to get the loan". Mr Anderson then said, "It will be O.K. unless I get back to you." 9. The defendant's solicitor then wrote to the plaintiff's solicitor by letter from Abigails Solicitors to Marsdens Law Group dated 13 February 2006 (Annexure PLA 2 to the affidavit). This letter was faxed at 3.30pm that day. 10. This letter says: " I refer to your fax of 10th February 2006. I am instructed that Mr Papagiannopoulos has obtained an approval for $130,000.00 and signed the loan documents. The cheque payable to your client is not yet to hand but is expected within the next few days. Accordingly, I confirm my verbal request to you that your client agree to an extension of 7 days to arrange payment of the $130,000.00." 11. I did wonder why this letter confirmed the request but not the response from Mr Anderson, but there is no dispute that Mr Anderson said the words: "It will be O.K. unless I get back to you." 12. The plaintiff's solicitor then wrote to the defendant's solicitor by letter from Marsdens Law Group to Abigails Solicitors dated 14 February 2006 (Annexure PLA 3 and PLA 4). 13. Mr Abigail only received this letter at 1.15pm on 15 February 2006, the day following the expiry of the deadline under the agreement of 7 December 2005 for payment of the $130,000.00. 14. The letter of 14 February 2006 says: " We refer to your fax of 13 February 2006 and your conversation with the writer on 13 February 2006. We understand that your client has obtained approval for a loan of $130,000. and that a cheque payable to our client in that sum is expected within the next few days. We note that your client has requested an extension of time. Our client will not agree to any variation of the terms of settlement until we have evidence that the settlement monies will be paid to our client. Would you please provide us with evidence that the loan has been approved and that the monies will be payable to our client from the proceeds of any loan. Once we have that material from you we will seek instructions from our client regarding any agreement to extend the time. In the meantime our client reserves his position as is set out in the terms of settlement." 15. The plaintiff's solicitor was informed on 15 February 2006 that the defendant's solicitor then had the cheque and it would be sent by post (Annexure 10.1). 16. Then, on 17 February 2006 (Annexure PLA 5.1), the plaintiff's solicitor received a bank cheque for $130,000.00, dated 14 February 2006 (Annexure PLA 5.2). 17. There followed further correspondence (Annexures PLA – PLA 15). The plaintiff's submissions 18. The plaintiff's legal representative made submissions which fall into two broad categories, which may conveniently be described as the procedure argument and the contract argument. 19. The plaintiff's procedure argument was to the effect that the defendant's motion was misconceived and sought orders as to which the court has no power or jurisdiction to make. 20. The procedure argument was formulated on the basis that a judgment having been entered, the defendant's application was in the nature of an application for a stay. It was, in effect a claim for declaratory relief from part of an order of the court, or a permanent and final injunction. An application for relief of that kind needs to be agitated by way of appeal, or otherwise in a separate action in discrete proceedings, alleging a variation of the original settlement agreement, or some new agreement. That involves a new cause of action, with separate facts and issues, unrelated to the present proceedings, where the parties' rights have merged in the judgment. It was not the intention of s 135 to provide for the variation of an order already taken out. 21. The defendant's remedy, it was submitted, is in separate substantive proceedings seeking a stay of the judgment. 22. I drew s 73 of the CPA 2005 to the attention of the parties, as they did not appear to be aware of this new section. The plaintiff's legal representative reserved his position as to s 73 once he had had some time to consider it. 23. The contract argument relied upon by the plaintiff had two alternative bases. The first basis was to the effect that the defendant relied upon a variation to the settlement agreement, or a new agreement, for which there was no consideration. 24. The alternative basis was, assuming there was consideration; the variation or new agreement contained the term: "It will be O.K. unless I get back to you." What in fact occurred was that the plaintiff did "get back" to the defendant, by way of the letter dated 14 February 2006 (Annexure PLA 3 and PLA 4), in which the request for any extension of time was rejected "until we have evidence that the settlement monies will be paid to our client". The letter went on to say: "In the meantime our client reserves his position as is set out in the terms of settlement." 25. The plaintiff argues that there was, therefore, no extension of the deadline for payment of the $130,000.00, as to which time was of the essence. Accordingly the $130,000.00 was not paid until after the deadline had expired, and thus the judgment has not been satisfied. 26. The plaintiff, in support of this construction of the variation to the settlement agreement, or new agreement, argued that the business efficacy rule of construction would preclude an interpretation to the effect that the stipulation "It will be O.K. unless I get back to you" needed to be effected prior to the expiry of the deadline of midnight on 14 February 2006. Nor could such a term be implied into the variation, or new agreement. The defendant's submissions 27. The defendant's counsel submitted firstly that the application falls squarely within s 135 of the CPA 2005. The settlement agreement did not merge in the judgment. The court merely noted the agreement (Exhibit 1) and s 73 clearly applies, and the court is able to make the orders sought in these proceedings. 28. It was then submitted that the original settlement agreement was varied and there had been a clear agreement for extension of the time limit of 7 days. The letter purporting to withdraw the agreed extension was not delivered to the defendant's solicitor until 1.15pm on 15 February 2006, by which time it was too late. 29. The defendant then paid the plaintiff the $130,000.00 within the agreed period, as extended, and in accordance with the settlement agreement the judgment was thereby satisfied. 30. Alternatively, the defendant relied on promissory estoppel. Counsel quoted from Snell's Principles of Equity (at page 629): " The promisor may resile from his position by giving the promisee notice so that he has a reasonable opportunity of resuming his former position: and only if that is impossible does the promise become final and irrevocable." 31. The defendant, it was submitted, altered his position in reliance on the plaintiff's representation, and the plaintiff was therefore precluded from resiling from his agreement: Ajayi v R. T. Briscoe (Nigeria) Ltd [1964] 1 WLR 1326 at 1330. The procedure argument 32. In my view the court has the power to entertain and make orders in respect of this application. 33. I paused to consider whether the plaintiff "is any other person" within the meaning of s 135(2)(c). No submission was made to the contrary and the wording of the section is unqualified, such that I was satisfied the subsection applies to the plaintiff in these proceedings in the present circumstances. 34. In any event, the application could equally have been brought under s 135(1), s 61(1) or s 67 of the CPA 2005. 35. I come then to s 73, which provides: "(1) 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. (2) This section does not limit the jurisdiction that the court may otherwise have in relation to the determination of any such section." 36. In the second reading speech introducing the Civil Procedure Bill 2005, the Attorney General said: " With a package as large as this, I cannot hope to address all of the matters covered by the Bill and rules. If members want more information, they can log onto the Attorney General's Department at www.lawlink.nsw.gov.au/ucpr . The website contains a copy of the detailed information paper on the Bill and rules which I tabled at the beginning of this speech." 37. The information paper stated, as to s 73, the following: " CPA s. 73 is a new provision that gives a court jurisdiction to determine a question as to whether proceedings have been compromised or settled and to make appropriate orders to give effect to any such determination. This provision is designed to allow such questions to be determined in the proceedings rather than in separate proceedings, perhaps in the Supreme Court." 38. There is useful commentary in Ritchie's Uniform Civil Procedure Practice: " The jurisdiction conferred by the present section resolves the differing views that have been expressed as to whether a settlement agreement can be enforced in the original proceedings. In England the view had been taken that enforcement of the settlement generally requires new proceedings to be commenced…In Australia a different view has been taken – founded on the power and duty of the courts…to grant all remedies to which any of the parties appears to be entitled so that as far as possible all matters in controversy may be finally determined and all multiplicity of proceedings avoided: Darling Downs Investments Pty Ltd v Ellwood (1988) FCR 510." 39. The commentary continues: " On this approach, in appropriate cases, a settlement agreement may be enforced on an application by motion in the original proceedings: Roberts v Gippsland Agricultural & Earthmoving Contracting Co Pty Limited [1956] VLR 555 at 557, 562-7. This is so, even though the settlement agreement may involve matters extraneous to the action, provided that the Court is satisfied that the procedure is appropriate." 40. In my view the commentary correctly and succinctly states the effect of s 73. 41. There may have been inherent jurisdiction in the court to regulate, oversee and enforce its own orders. Such inherent jurisdiction may have been limited to superior courts. Any doubt that this court now has the power to entertain the present application and make appropriate orders is now removed by s 73. 42. I am satisfied that this is an appropriate case in which to apply s 73, and that the procedure, namely the defendant's application to enforce the agreed extension of time under the settlement agreement by preventing the plaintiff from taking any further action to enforce the judgment of $200,000.00, is appropriate to the circumstances. 43. Any doubt about this is removed having regard to the provisions of s 56, s 57 and s 58 of the CPA 2005: Baulderstone Hornibrook Engineering Pty Limited v Gordian Runoff Limited [2006] NSWSC 223 at [1233]. 44. I am satisfied further that the application of s 73 extends not just to the original settlement agreement but also to the extension of the deadline agreed to by the plaintiff. The contract argument 45. The plaintiff submits that the proper construction of the agreement, whether it was a variation of the original settlement agreement or a new agreement, is that it was conditional upon the plaintiff not revoking the agreed extension prior to payment of the $130,000.00. It is argued that the words: "It will be O.K. unless I get back to you", meant it was open to the plaintiff to do so at any time. 46. I do not consider the contract can fairly be construed in this way. 47. I find that the extension to which the plaintiff agreed, when using the words: "It will be O.K. unless I get back to you", was clearly in the contemplation of the parties as requiring Mr Anderson to get back to Mr Abigail in the short term, in time for the defendant to take whatever other steps might be required to meet the deadline should the agreed extension be revoked. 48. I do not think that it is necessary to imply a term, such as the plaintiff submitted would be required for the defendant to succeed, to the effect that the plaintiff agreed to get back to the defendant before the deadline under the original agreement. That is because the proper construction of the words: "It will be O.K. unless I get back to you", is that the plaintiff was saying the defendant was entitled to proceed on the basis of the extension unless it was revoked within a time which enabled the defendant to take alternative action. 49. Even if this construction of those words were wrong, I would nevertheless find that a term to that effect was implied. Invocation of the business efficacy rule, in my view, works against the plaintiff, not in his favour. The variation, by way of extension of the time limit, can only have been effective in a business sense if it was understood that the plaintiff could only revoke the extension within a reasonable time before the expiry of the deadline. The implication of such a term arises not just because it is reasonable to do so, or by reason of equity between the parties, but is a conclusion which results from an application of the principle as to obviousness: Shirlaw v Southern Foundries (1926) Ltd [1939] 2 KB 206 at 227. 50. But even if such a term could not be implied, the plaintiff would still fail. What was said in the letter dated 14 February 2006 was: " Our client will not agree to any variation of the terms of settlement until we have evidence that the settlement monies will be paid to our client. Would you please provide us with evidence that the loan has been approved and that the monies will be payable to our client from the proceeds of any loan." 51. In other words, the revocation of the extension of time was conditional upon the defendant providing evidence of the loan. The defendant provided that evidence by delivering a bank cheque for $130,000.00 on 15 February 2006. 52. The plaintiff submitted that there was no consideration for the extension of the time limit for payment of the $130,000.00. In my view there was consideration. It cannot be said that some benefit was not be passed from the defendant to the plaintiff, namely the certainty of the immediate receipt of $130,000.00 as opposed to the delayed receipt or even the possible recovery by the plaintiff of nothing: Foakes v Beer (1884) 9 App Cas 605. 53. I turn, finally, to the promissory estoppel argument. Whatever else may be arguable, it is in my view abundantly clear that the defendant relied on the plaintiff's clear representation, to his potential detriment. 54. Having been assured that the time limit would be extended, and there having been no revocation of that extension before the expiry of the deadline, the defendant irrevocably altered his position in reliance on that representation. 55. It would be unconscionable for the plaintiff to be permitted, in those circumstances, to resile from the agreed extension of time. 56. I find, therefore, that the plaintiff was estopped from revoking the agreed extension of time. Disposition 57. For these reasons I make the order number 1 sought in the defendant's amended motion. 58. I will hear argument as to the costs of the motion. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. 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