New South Wales Supreme Court CITATION : Best v L B Estates Pty Ltd [2006] NSWSC 1283 HEARING DATE(S) : 23 November 2006 JUDGMENT DATE : 23 November 2006 JURISDICTION : Equity JUDGMENT OF : Campbell J EX TEMPORE JUDGMENT DATE : 11/23/2006 DECISION : Plaintiff succeeds in two contentions, defendant in one. No occasion to "order otherwise". CATCHWORDS : CONTRACT – construction of agreement concerning terms on which proceedings settled – no question of principle – PRACTICE – costs – whether appropriate to order otherwise when offer made by plaintiff accepted by defendant LEGISLATION CITED : Civil Procedure Act 2005 Uniform Civil Procedure Rules 2005 Errington v Errington (1952) 1 All ER 149 CASES CITED : Gray v Taylor [1998] 4 All ER 17 KJRR Pty Ltd v Commissioner of State Revenue [1999] 2 VR 174 Radaich v Smith (1959) 101 CLR 209 PARTIES : Betty Marcelle Best - Plaintiff L B Estates Pty Limited (formerly named Berkeley of Burwood Pty Ltd) - Defendant FILE NUMBER(S) : SC 6321/05 COUNSEL : E Cox - Plaintiff D Robinson - Defendant SOLICITORS : Norton White - Plaintiff NOT Lawyers - Defendant IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION DUTY JUDGE LIST CAMPBELL J THURSDAY 23 NOVEMBER 2006 6321/05 BETTY MARCELLE BEST v LB ESTATES PTY LIMITED (FORMERLY NAMED BERKELEY OF BURWOOD PTY LIMITED) JUDGMENT – Ex Tempore 1 HIS HONOUR: This litigation is an example of the sort of thing that gives lawyers a bad name. It started with the filing of a summons on 16 December 2005. 2 The plaintiff is a lady who I am told from the Bar table is now 86. She occupied a home unit at Dee Why, under the terms of a deed that her former employer had entered with her. The defendant is a company that had been connected with her former employer, and is now controlled by some of the former employer's children. The right conferred by the deed was "The personal right to reside during the term of [the plaintiff's] life" in the home unit, on the basis of a particular division of responsibilities for repair and payment of outgoings. 3 At a time when she was not in possession, the defendant indicated that, unless she obtained an injunction there would in substance be difficulties with her remaining in exclusive occupation of the premises. That led to her approaching the Court on 16 December 2005, and obtaining an injunction to protect her occupancy of the premises. The particular threat that she was faced with was one that an 18-year old young man "(and perhaps his companion) will reside in the flat leaving one bedroom free for your use." 4 The proposal was put to her, at that stage, that it might be possible for her to be paid "a modest sum" if she surrendered her rights of residence. 5 The summons sought as final relief: "1. A declaration that, in the events that have occurred, the plaintiff is for the term of her life entitled to the exclusive occupation and possession of the property comprised in Folio Identifier 4/SP2912, known as Flat 4, 149 Oaks Avenue, Dee Why, New South Wales (" Property "). 2. An order that the defendant by itself, its servants or agents, be restrained from interfering with the plaintiff's exclusive occupation and possession of the property comprised in Folio Identifier 4/SP2912, known as Flat 4, 149 Oaks Avenue, Dee Why, New South Wales (" Property "). 3. An order that the defendant by itself, its servants or agents, be restrained from interfering in any way with the Property or its contents, including but not limited to: a. changing locks, b. fitting security doors or similar c. entering the Property d. removing or bringing in additional furniture, or e. carrying out alterations or repairs or other acts of refurbishment." 6 There have been negotiations for settlement, of a kind, going on all this year. The parties now agree that the proceedings have settled, but they cannot agree about on what terms they have settled. This matter comes before me on a Notice of Motion that the defendant has taken out, that put forward the defendant's version of the terms of settlement. 7 The break through in settlement negotiations began with the writing, by Norton White, the solicitors for the plaintiff, on 11 September 2006 of a letter to NOT Lawyers, the solicitors for the defendant. 8 It said: "… Our client has a right to reside in the Dee Why flat. We have not suggested that it creates a leasehold interest, nor might we add does do we suggest that it constitutes a licence. The proceeding was commenced in response to the defendant's threat to disturb her right to reside, which is exclusive. Our client does not seek, nor will she accept, any other interest in substitution for her right to reside in the Dee Why flat. In response to your enquiry about negotiations, the matter can be settled immediately on the following basis: 1. A declaration that the plaintiff is, for the term of her life, entitled to an exclusive personal right to reside at the property comprised in Folio Identifier 4/SP2912, known as Flat 4, 149 Oaks Avenue, Dee Why, NSW (" the Property "). 2. An order that the defendant by itself, its servants or agents, be restrained from interfering with the plaintiff's exclusive personal right to reside at the Property. 3. An order that the defendant by itself, its servants or agents, be restrained from interfering in any way with the Property or its contents, without the plaintiff's consent, including but not limited to: (a) changing locks; (b) fitting security doors or similar; (c) entering the Property (save pursuant to clause 4 hereof); (d) removing or bringing in additional furniture; or (e) carrying out alterations or refurbishment. 4. The defendant by itself, its servants or agents be entitled to inspect the Property on an annual basis to ensure the plaintiff's compliance with her covenant to keep the premises and the furniture in good repair, as found in: (a) item 3 to schedule 1 of the Deed dated 1 August 1996 between the plaintiff and the late Leo Berkeley; and (b) Recital A of the Deed dated 1 August 1996 between the plaintiff and the defendant, then known as Berkeley of Burwood Pty Limited. The annual inspection is to take place on a date to be agreed, being a day that is not less than 28 days, nor more than 45 days, after the date of service on the plaintiff of a written notice requesting an inspection. All notes to the plaintiff are to be addressed to her at PO Box 1564, BOWRAL NSW 2576. 5. The defendant to pay the plaintiff's costs, as agreed or assessed. Please advise that our client's offer is made in accordance with Rule 20.26 of the Uniform Civil Procedure Rules 2005. This offer will expire 28 days from today's date." 9 The response to that was a letter of 13 September 2006, saying: "… We accept proposed settlement terms 1 to 4. That disposes of the proceedings, except as to costs. …" 10 The parties have proceeded on the basis that the costs are effectively covered by the provisions of Part 42 Rule 13A Uniform Civil Procedure Rules, and hence that there is agreement on all terms that need to be agreed to have a binding contract. The defendants submit that, for various reasons that I will come to later, I ought "order otherwise", within the meaning of Part 42 Rule 13 A, but it is not submitted that the capacity to "order otherwise" prevents the settlement from being effective. Is Clause 4 an Order or An Agreement? 11 The dispute between the parties comes down to three topics. The first is whether the Court should give effect to the clause numbered 4 in the letter of 11 September 2006 by noting an agreement, or making an order. 12 That is, it seems to me, largely a question of construction of the letter of 11 September 2006. 13 It is a question of construction that is largely a matter of first impression. The offer that was made by that letter was to settle the proceedings "on the following basis". That is to say, the form of the offer of settlement was not the proffering of draft orders. The "basis" specifically stipulated, in paragraphs 1, 2 and 3, that the matters there dealt with were respectively, a declaration, and two orders. Nothing to that effect was said in relation to paragraph 4. 14 Ms Robinson, for the defendant, submits that paragraph 4 ought be construed as requiring an order as well. One basis on which she submits that is that, otherwise, there would be an apparent inconsistency or lack of coherence with paragraphs 2 and 3. I do not accept there would be any such inconsistency, or any lack of coherence in the way that the settlement terms operated. Clause 3(c) specifically exempts from the prohibition on the defendant entering the property those occasions when clause 4 operates. Clause 4 can operate effectively as an agreement. Thus, the prohibition in clause 3(c) is on the defendant entering the property, except when the parties have agreed, as set out in clause 4, that the defendant may enter the property. 15 The second matter Ms Robinson points to is that it would be strange if order 5 were not intended to be an order. I agree. That is because the only way an assessment of costs can take place, in an enforceable way, is if there is an order for the payment of costs that can be submitted for assessment. There is no analogous need, it seems to me, for clause 4 to be cast in the form of an order for it to have useful content. 16 Thus, in my view, the settlement that the parties have agreed to, is one which can adequately be embodied in orders by including a notation that the parties have agreed on the subject matter in clause 4. Ought Paragraphs 8 and 9 of the Defendant's Draft Minutes be Included 17 The next matter that the parties disagree about is whether clauses 8 and 9, of some draft short minutes of order proffered by the defendant, ought be made. That draft first came to light when it was handed to his Honour Barrett J on 9 November 2006. The controversial portion of that draft is: "The Court Notes the agreement of the parties that: 8. The Plaintiff does not have a leasehold interest in the Property. The Court Notes that: 9. The Plaintiff, by these Orders, does not have possession of the Property." 18 The basis on which the alleged agreement is put forward is that the first paragraph that I quoted of the letter of 11 September 2006 represents that there is no leasehold interest in the property. It was on that basis, the defendant submits, that the acceptance was given. 19 I can well understand how the defendant might be able to submit that, when that representation had been made, the plaintiff was estopped from putting a construction on the terms it proffered that was inconsistent with the representation. In saying that, I am not expressing any view about whether any such allegation of estoppel would succeed. However, an estoppel against a particular construction of an agreement being adopted is simply a different thing to an agreement. I cannot see, in the correspondence that constitutes the settlement, any actual agreement that the plaintiff does not have a leasehold interest in the property. 20 The final note that the defendant seeks to have made is one that goes beyond any express agreement that there has been. It is asking the Court to, as it were, either construe its own order, or else to construe the expression contained in the deed whereby the right of occupancy was granted, namely, "personal right to reside during the term of [the plaintiff's] life". 21 The jurisdiction I am being asked to exercise is that under section 73 Civil Procedure Act 2005, 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 question." 22 It would, I think, be possible, within the scope of section 73, to decide a question of construction of terms on which proceedings have been compromised or settled. Thus, I do not accept the submission of Mr Cox, for the plaintiff, that the making of any such order is necessarily outside the scope of section 73. However, the deciding of that question is one that would involve a question of the construction of that expression in the deed, which expression has itself been adopted in the proposal put on 11 September 2006, and agreed to on 13 September 2006. 23 I have been reminded of the High Court's decision in Radaich v Smith (1959) 101 CLR 209, and have been taken to legal authorities that concern whether a granting of exclusive possession is a sufficient indicium of the creation of a leasehold: KJRR Pty Ltd v Commissioner of State Revenue [1999] 2 VR 174; Errington v Errington (1952) 1 All ER 149; Gray v Taylor [1998] 4 All ER 17. I do not intend to express any view about those matters. If there were to be a construction of the question of what was meant by "exclusive personal right to reside" it seems likely that it would involve the consideration of, virtually, the evidence in the case. It has never been, in my view, a live issue in the proceedings whether there has been possession, in the sense of an estate known to the common law, granted to the plaintiff. The proceedings were begun because the exclusivity of her occupation of the premises was threatened. In substance that exclusivity has been now conceded. 24 I recognise that, in the course of the correspondence, the solicitors for the defendant have raised questions about whether a leasehold estate was intended. However, it seems to me that that was not the real substance of the dispute. 25 The defendant, after raising that question, put on a cross-summons, on 28 April 2006 which sought a declaration that the cross-defendant's entitlement was to "a personal and non-exclusive licence to reside in the property at flat 4, 149 Oaks Avenue, Dee Why, during her life." While I can see that that was an appropriate cross-summons to put on, raising as it did the question of the exclusivity of her right, that question of exclusivity has now been conceded, and the parties are agreed that the cross-summons should be dismissed. 26 I do not regard there as being any present live dispute about the nature of the interest that is claimed, save one that the lawyers have whipped up themselves. There is no threat at present by the plaintiff to engage in any activity that she could engage in only if she had a lease, rather than a license. In these circumstances, and where the parties have in terms agreed on the form of the declaration that should be made, it is not appropriate to engage in the hypothetical exercise that deciding whether paragraph 9 of the defendant's draft should be adopted would involve. Should the Summons be Dismissed? 27 The third question in dispute is whether it is a term of the agreement that the balance of the plaintiff's summons filed on 16 December 2005 is dismissed. It seems to me that it is implicit in an offer to settle proceedings that the only orders that will be made or the only agreement that will be made, to discharge the claims made by the proceedings, are those that have been agreed. Thus I regard it as implicit that the parties have agreed that the balance of the summons be dismissed. 28 In those circumstances, I declare that a binding settlement of the proceedings has been reached in the terms of the document that I shall mark and initial today's date. Costs 29 Because the settlement arose from the defendant's acceptance of an offer of compromise made by the plaintiff, Uniform Civil Procedure Rule 42.13A sets out the costs consequences, unless I "order otherwise". There is a question about whether I should "order otherwise". 30 The first point that the defendant makes is that the plaintiff did not achieve all the relief she sought, because she did not get a declaration that she was entitled to "exclusive occupation and possession". That is self-evidently obvious. And, for the reasons that I have given, that was not a matter of real contention. The plaintiff has achieved in substance the remedy that she started the proceedings - and needed to start the proceedings - to obtain. 31 The next ground is that the defendant has made offers of compromise in the course of the proceedings. One of them was made on 29 March 2006. One of the terms it offered was: "The Court is to note the following agreement as between the Plaintiff and the Defendant: (a) The Defendant by itself, its servants or agents, be restrained from interfering with the Plaintiff's exclusive right of residence comprised in Folio Identifier 4/SP2912, known as Flat 4, 149 Oaks Avenue, Dee Why, NSW (" the Property "); (b) The Defendant by itself, its servants or agents, be restrained from interfering in any way with the Property or its contents, including but not limited to: (i) Changing locks; (ii) Fitting security doors or similar; (iii) Entering the property; (iv) Removing or bringing in additional furniture; or (v) Carrying out alterations or repairs or other acts of refurbishment. (c) The Defendant by itself, its servants or agents, be entitled to inspect the property on an annual basis by giving the Plaintiff 14 days notice to ensure the Plaintiff's compliance with: (i) Item 3 to Schedule 1 of the Deed dated 1 August 1996 between the Plaintiff and the late Leo Berkeley; and (ii) Recital A of the Deed dated 1 August 1996 between the Plaintiff and Berkeley of Burwood Pty Limited. Please be advised that our client's offer is made in accordance with Rule 20.26 of the Uniform Civil Procedure Rules 2005. We await your client's response." 32 An agreement that someone be restrained is a strange juristic entity. It is not, in itself, an injunction. In substance, it is just an agreement about what the defendant will not do. The plaintiff has fared considerably better than that, in obtaining an injunction, that has contempt sanctions for its breach. 33 Another offer of compromise was made on 14 June 2006. It offered: "2. An order that the Defendant by itself, its servants or agents, be restrained from interfering with the Plaintiff's exclusive personal licence to reside at the Property. 3. An order that the defendant by itself, its servants or agents be restrained from interfering with the plaintiff's exclusive personal license to reside at the property: (a) changing locks; (b) fitting security doors or similar; (c) entering the Property; (d) removing or bringing in additional furniture; or (e) carrying out alterations or repairs or other acts of refurbishment. 4. The Defendant by itself, its servants or agents be entitled to inspect the property on an annual basis by giving the Plaintiff 14 days notice to ensure the Plaintiff's compliance with her covenant to keep the premises and furniture in good repaid, as found in: (a) item 3 to schedule 1 of the Deed dated 1 August 1996 between the Plaintiff and the late Leo Berkeley; and (b) Recital A of the Deed dated 1 August 1996 between the Plaintiff and Berkeley of Burwood Pty Limited. …" 34 Order 2 involved, in substance, seeking to impose a construction about the legal nature of the right that had been granted. The defendant has not obtained that. Order 3(c) did not contain any qualification that made it subject to order 4. Without that qualification, orders 3 and 4 had a potential for problems inherent within them. In these circumstances, I do not regard the letter of 14 June 2006 as providing a reason to otherwise order. 35 Another reason why the defendant says that there should be an order otherwise is that, after the offer of 11 September 2006, in two separate ways there were costs in substance wasted through indecisiveness of the plaintiff. One of those ways was when the plaintiff at one stage indicated a willingness to allow her unit to be inspected by valuers, so that an offer of settlement might be put to her, but then changed her mind about allowing the valuers in. Another is that, after the offer of 11 September 2006 had been accepted, there were ongoing questions about whether the right of the plaintiff was indeed a lease or a license. For the reasons I have already given, that seems to me to be a manufactured dispute, not one that the parties had by reason of any real state of affairs or threat that arose outside the legal world, and that lawyers needed to solve. 36 In these circumstances, I see no reason to order otherwise than as Uniform Civil Procedure Rule 42.13A provides. I order that the defendant pay the plaintiff's costs in respect of the claim assessed up to the time that the offer was made. 37 I note that the effect of that order will be that the plaintiff bears her own costs in relation to indecisiveness since the offer was made. I do not regard that as an inappropriate outcome. 38 There remains the question of the costs of the notice of motion itself. Someone needed to bring a Notice of Motion, it seems to me, to resolve the impasse that the parties' lawyers had got themselves into. The proceedings came on before Barrett J, but were adjourned when the defendant propounded short minutes of order which included paragraphs 8 and 9 that I have earlier set out. 39 The defendant has lost all of the matters in contention about the short minutes of order, save for whether there should be an order that the balance of the plaintiff's summons be dismissed. 40 In the circumstances that there was no real dispute about some of the orders that the defendant sought, the fact that it achieved a declaration embodying many of the terms that it sought does not have the significance that partial success on a Notice of Motion usually brings. Nonetheless, the plaintiff's success has not been total. I order the defendant to pay 80 percent of the plaintiff's costs of the Notice of 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. 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