Lerama Pty Ltd v Wortho Pty Ltd [2008] NSWSC 1307

New South Wales Supreme Court

CITATION : Lerama Pty Ltd v Wortho Pty Ltd [2008] NSWSC 1307

HEARING DATE(S) : 2 December 2008

JUDGMENT DATE : 2 December 2008

JURISDICTION : Equity

JUDGMENT OF : Hamilton J

DECISION : Entered consent order as to costs ought be set aside or varied.

CATCHWORDS : EQUITY [68] – General principles – Mistake – Effect on contracts – Mistake connected with subject matter of transaction – Compromise of litigation – Error in provision as to time of payment of costs – Reasonable solicitor likely to be aware of mistake – Orders embodying error set aside.

LEGISLATION CITED : Conveyancing Act 1919 s 88K

CATEGORY : Procedural and other rulings

Bartlett v Coomber [2008] NSWCA 100 Lewis v Combell Constructions Pty Limited (1989) 18 NSWLR 528 CASES CITED : Mohamed v Farah [2004] NSWSC 482 Newmont Yandal Operations Pty Limited v The J Aron Corporation & The Goldman Sachs Group Inc [2007] NSWCA 195 Taylor v Johnson (1983) 151 CLR 422

PARTIES : Lerama Pty Limited (P) Wortho Pty Limited (D)

FILE NUMBER(S) : SC 1999/08

COUNSEL : L Gor (P) J F Kildea (D)

SOLICITORS : Thomson Playford (P) Thompson Norrie (D)

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

HAMILTON J

TUESDAY, 2 DECEMBER 2008

1999/08 LERAMA PTY LIMITED v WORTHO PTY LIMITED JUDGMENT 1 HIS HONOUR: This case concerns whether the Court ought allow the enforcement of an agreement that was come to in settlement of proceedings for the creation of an easement under s 88K of the Conveyancing Act 1919 ("the CA"). The provision of the CA most relevant to these proceedings is s 88K(5): "(5) The costs of the proceedings are payable by the applicant, subject to any order of the Court to the contrary". 2 The plaintiff and the defendant in this case negotiated over some period for the settlement of the proceedings. In the early part of the negotiations the proposals that passed to and fro contained provisions for the grant of an easement and separate provisions for the payment of compensation and of costs. It was clear in those early drafts that the costs would be payable immediately or within some short time of the making of the orders incorporating the agreement. 3 That provision could not be said for to have flowed into the final agreement, because there was a substantial break in the negotiations when the plaintiff threatened to discontinue the proceedings. The draft notice of discontinuance that it put forward, not surprisingly, contained a provision for the payment of the defendant's costs by the plaintiff, which one would expect to be there, both under s 88K(5) and under the discontinuance rules. 4 Negotiations then resumed and further draft consent orders were put forward by the defendant's solicitor which contained the following provision as to both compensation and costs: "(4) On delivery to the plaintiff of the executed plan of easements and s 88B Instrument as set out in Order 3 above, the plaintiff shall pay to the defendant compensation some of $17,500 together with the sum of $19,300 being the agreed costs and disbursements (including expert engineering witness fees) of the defendant incurred up to and including 24 July 2008 pursuant to s 88K(4) of the Conveyancing Act 1919 as amended."