Boral Resources (NSW) Pty Ltd v Armitt

[2024] NSWSC 554

Supreme Court

New South Wales

• Amendment notes

Medium Neutral Citation:

Boral Resources (NSW) Pty Ltd v Armitt [2024] NSWSC 554

Hearing dates:

1, 2 and 3 May 2024

Date of orders:

3 May 2024

Decision date:

03 May 2024

Jurisdiction:

Equity - Real Property List

Before:

Parker J

Decision:

See [98]

Catchwords:

CONTRACT – compromise of proceedings – settlement deed negotiated following informal agreement at mediation – application to set aside settlement deed – alleged departure from informal agreement and pressure from party’s own lawyers to settle – undue influence – unconscionable conduct – economic duress – application to set aside settlement deed refused – orders made for enforcement of terms of settlement

COSTS – party/party - general rule that costs follow the event – claim and cross-claim involving different parties – general costs of proceedings to follow event of cross-claim - contractual right to indemnity costs of cross-claim – indemnity costs awarded on cross-claim only

Legislation Cited:

Civil Procedure Act 2005

Uniform Civil Procedure Rules 2005

Cases Cited:

Herron v McGregor (1986) 6 NSWLR 246

Kyabram Property Investments Pty Ltd v Murray [2005] NSWCA 87

Texts Cited:

Heydon, JD, Leeming, MJ and Turner, PG, Meagher, Gummow and Lehane’s Equity: Doctrines and Remedies (LexisNexis Butterworths, 5th ed, 2015)

J P Hamilton, G Lindsay, C Webster, NSW Civil Procedure (Looseleaf, Thomson Reuters)

JD Heydon, Heydon on Contract, (2019, Thomson Reuters)

P Keane, Spencer Bower and Handley: Res Judicata (6th ed, LexisNexis, 2024)

Category:

Principal judgment

Parties:

Statement of Claim filed 13 March 2023
Boral Resources (NSW) Pty Limited (Plaintiff)
Barry Donald Armitt (First Defendant)
Emily Louise Armitt (Second Defendant)
Jeremy Maxwell Armitt (Third Defendant)
Shaun Donald Armitt (Fourth Defendant)

Cross-Claim filed 20 April 2023
Barry Donald Armitt (Cross-Claimant)
Boral Resources (NSW) Pty Limited (Cross-Defendant)

Representation:

Counsel:
J Burnett (Plaintiff/Cross-Defendant)

Solicitors:
Maddocks Lawyers (Plaintiff/Cross-Defendant)
Self-Represented:
Barry Donald Armitt (First Defendant/Cross-Claimant)
Shaun Donald Armitt (Fourth Defendant)

File Number(s):

2022/346251

Publication restriction:

Nil

JUDGMENT- Ex Tempore

Revised from transcript and annotated; issued on 10 May 2024

1. These proceedings arise out of a dispute about who is entitled to possession of two rural properties. The plaintiff is the owner of the properties. The defendants are former owners of one of the properties who, or at least some of whom, remain in occupation of them.

2. The properties are located near Marulan in the Southern Highlands of New South Wales. One is called Old Farm, the other is called Peppers.

3. The plaintiff, Boral Resources (NSW) Pty Limited (“Boral”), operates a quarry on land which borders Old Farm and Peppers. The first defendant, Barry Donald Armitt, is a farmer. The second defendant, Emily Louise Armitt, is his wife, who, at least in the past, has been his partner in some of his farming activities. The third and fourth defendants, Jeremy Maxwell Armitt and Shaun Donald Armitt, are their sons. They too appear to be engaged in farming activities, the precise nature of which is not revealed by the evidence. For convenience, and without disrespect, I will refer to them by their given names.

4. Originally, Old Farm belonged to Mr and Mrs Armitt. They sold the property to Boral in 2012. The price was $3.2 million. The terms of the sale provided for Boral to enter into a formal lease of Old Farm to all four of the Armitts for a one-year term with four one-year options thereafter. A formal lease to this effect was executed by Boral and each of the Armitts. Boral also entered into a formal grazing licence over Peppers (which Boral already owned) in favour of Mr Armitt. This licence was for an initial period of three months and thereafter was terminable on four weeks' notice.

5. Following expiry of the lease and the option terms provided for in the original sale agreement, Boral wished to reclaim possession of Old Farm and Peppers. Boral issued a formal notice of termination of the lease over Old Farm and the grazing licence over Peppers. There was a dispute about the form of the notice of termination which led Boral to issue further formal notices, giving further time so as to be sure that the notice provisions in the lease were complied with. The final date of termination of the lease was 17 August 2020. For the grazing licence, it was 31 August 2020.

6. The disputes, however, continued. This resulted in litigation between Boral and the Armitts. In September 2020, Boral, as applicant, commenced proceedings against the Armitts, as respondents, in the New South Wales Civil and Administrative Tribunal (“NCAT”). Boral claimed vacant possession of Old Farm and Peppers, and also compensation for the period during which those properties had been occupied beyond the formal dates of termination of the lease and licence.

7. Three months later, in December 2020, Mr and Mrs Armitt commenced proceedings in this Court. They claimed that in the course of negotiations which resulted in the 2012 sale and lease and licence arrangements, representations had been made to them that they and their sons would retain possession of the properties, or at least of Old Farm, indefinitely. They also alleged that they had expended money and done works on the properties. In effect, the claim was one of estoppel.

8. A mediation took place in September 2021. This resulted in an agreed settlement. Further negotiations then took place between the parties as to the form of the deed of settlement, which was finally executed three months later, in December 2021.

9. The settlement deed provided, in broad terms, for the Armitts to give up possession of Old Farm and Peppers on 6 September 2022. In the meantime, the terms of the lease and licence would continue. Consent orders were agreed for the disposition of the NCAT proceedings and the proceedings in this Court. The NCAT consent orders formally obliged the Armitts to give up possession of Old Farm and Peppers by the agreed date. The proceedings in this Court were to be dismissed.

10. The settlement deed further provided that Boral was to pay a total sum of $150,000 to the Armitts if they delivered up possession on the agreed date. The sum of $100,000 was payable following entry into the deed but was repayable if possession was not delivered up on 6 September 2022. The other $50,000 was to be payable upon delivery up of possession, if it occurred on that date. The parties otherwise released each other from claims associated with the proceedings, the lease and the licence.

11. The settlement was put into effect. Boral paid the $100,000, and consent orders were made in NCAT and in this Court reflecting the agreed terms. But the Armitts, or at least some of them, did not deliver up possession of the properties on 6 September 2022. Mr Armitt, at least, remains in possession to this day and refuses to leave.

Claims and issues for determination

12. These proceedings were commenced on behalf of Boral, by summons, about two weeks after the date for possession had come and gone in September 2022. Later, Boral filed a statement of claim. All four Armitts were named as defendants. Boral seeks possession of Old Farm and Peppers and judgment against the Armitts for repayment of the sum of $100,000 paid under the settlement deed.

13. Mr Armitt filed a cross-claim. In the cross-claim, he asserted that, as a result of the conduct of Boral (and of his own lawyers), the settlement had been improperly procured. His cross-claim sought orders that the settlement deed be set aside. Further orders were then sought reflecting the claims which Mr and Mrs Armitt had made in the earlier proceedings in this Court. These included an order permitting the Armitts to occupy the properties, or at least Old Farm, for life, and also compensation for improvements allegedly made to the properties.

14. It was clear that the Court would not need to consider the validity of the claims relating to the events of 2012 until, and unless, an order was made to set aside the settlement deed. As I understood it, this was not disputed by Mr Armitt. He, in effect, is the plaintiff in these proceedings.

15. Last year, orders were made isolating separate questions for preliminary determination. In summary, the orders provided for the determination of the following issues: first, whether the settlement deed should be set aside on the grounds asserted by Mr Armitt in his cross-claim; secondly, if not, whether judgment should be given in accordance with Boral's claim for possession and for repayment of the $100,000.

16. The hearing was allocated to me, and I convened several pre-trial directions hearings in order to ensure that it would be ready. All of the Armitts are self-represented, and each has entered a formal notice of appearance. Previously, it seems that Mr Armitt was permitted, informally, to represent the other members of his family as defendants but I was not prepared for this arrangement to continue. I explained to Mr Armitt that, while he was within his rights to appear for himself as a defendant, and to advance his cross-claim, he would not be permitted, as an unqualified person, to represent the interests of other defendants; if the other members of his family wished for their interests to be represented, they would have to do so themselves. I had letters sent to the other defendants (who did not attend the pre-trial directions hearings) advising them of this position.

17. There was no response from any of the other defendants to these communications, but at the hearing, Shaun appeared alongside his father. There was no appearance by Mrs Armitt or Jeremy.

18. On the first day of the hearing, orders were made for the amendment of Boral's statement of claim and the variation of the separate hearing orders. These amendments clarified Boral's claims and made consequential adjustments to the separate hearing orders. They did not alter the substance of the issues, and I did not understand them to be contested.

19. I required Mr Armitt to present his case on the cross-claim first. On the second day of the hearing he applied for an adjournment. He candidly stated that he was feeling the physical and mental strain of the trial. He asked for time to consider his position and also to see whether there was any further evidence that he could find at home and bring to Court to support his claims.

20. Mr Armitt is 76 years old. He is an amputee and has experienced a host of other medical difficulties over the years. He has also experienced personal tragedy in his family. It was impossible not to sympathise with him, but it was necessary to take account of the interests of other parties in the litigation and also of the interests of other litigants who would be deprived of available hearing dates if I were to adjourn and re fix the remainder of this hearing at a later point.

21. Boral is the registered proprietor of the two pieces of land and has been for more than ten years. On the face of things, it is unconditionally entitled to possession of the two properties, and has been at least since August of 2020. Boral has judgments in its favour from NCAT and this Court. The NCAT judgment formally declares that Boral became entitled to possession of the properties on 6 September 2022. The judgment of this Court formally dismisses the claims which had been made concerning the events of 2012.

22. The only thing that was preventing Boral from enjoying its prima facie legal entitlements to possess and use the land as it wishes is the pendency of Mr Armitt's cross-claim. The reason why the hearing was necessary was to deal with the allegations which he had made in that cross-claim. As a party seeking relief from the Court, and all the more so, as a party who was holding his opposing party out of that party's prima facie legal rights, Mr Armitt had an obligation to conduct these proceedings in accordance with the Court's timetable.

23. In my opinion, it was clear that the resolution of Boral's claims to enjoy the land had already been far too long delayed. There were also the interests of the other members of Mr Armitt's family to consider. They had not joined him in the cross-claim, and they had not presented defences to the claims made by Boral. It was in their interests that Boral's claim against them be resolved as rapidly as possible and that could not happen until Mr Armitt's cross-claim had been determined.

24. The other concern about Mr Armitt's application was that it was quite open ended. I pressed Mr Armitt but he declined to offer any particular date by which he could confidently tell me he would be in a position to proceed. It was also clear that Mr Armitt was not claiming that he did, in fact, have further evidence which he would be able to present. I was left with no confidence that if I were to grant the adjournment, it would make any difference to the evidentiary picture or the resolution of the claims before me as a matter of law.

25. In these circumstances, I considered that I had no alternative but to refuse the application.

Validity of settlement deed

26. The evidence presented at the trial was largely documentary. A court book had been prepared in advance of the trial and Mr Armitt identified various pages in the book which were tendered and received into evidence. In response, counsel for Boral tendered other documents in the book.

27. There was an affidavit filed from Mr Armitt which he sought to read. Much of the affidavit dealt with matters which were not relevant to the issues to be determined at this hearing and were rejected.

28. Counsel for Boral did not object to the part of the affidavit in which Mr Armitt set out, in effect, the allegations he makes about the conduct of the mediation and the course of the ensuing negotiations about the settlement deed. Nor did counsel seek to cross-examine Mr Armitt on those paragraphs in his affidavit. But, in truth, the affidavit evidence, so called, of Mr Armitt is really in the nature of pleading allegations. It consists almost exclusively of conclusory assertions about the nature and legal effect of Boral's conduct. Although it has been admitted, it is of little or no evidentiary weight in resolving the issues the subject of this trial.

29. I will therefore turn to summarise the documentary evidence as it affects the claim made by Mr Armitt in his cross-claim.

30. As I have said, the parties have been in dispute since 2018 or 2019. Throughout that period, Boral has been represented by solicitors from the legal firm Maddocks. The partner responsible for the matter has been Mr Timothy Atkin. He has been assisted by Ms Amanda Whiteley, who has had, it seems, day to day conduct of the matter over that period.

31. The Armitts too had the benefit of a solicitor acting for them from the beginning of the dispute. This was Mr Tarrek Naji of the firm McLachlan Thorpe.

32. The arrangements for the mediation were negotiated between Maddocks and McLachlan Thorpe over a period beginning in May 2021. The mediation ultimately took place before Mr Kevin Lindgren QC (as he then was) on 6 September. The Armitts were represented at the mediation by Mr Naji and by Mr Peter Walsh, barrister.

33. At the end of the mediation, agreement was reached orally for the resolution of the NCAT proceedings and the proceedings in this Court. The agreement involved substantially the same commercial elements as were reflected in the settlement deed ultimately signed (which I have already summarised), except that the amount to be paid to the Armitts upon their giving possession was $120,000.

34. Following the mediation, Mr Naji wrote to Ms Whiteley formally confirming the oral acceptance of Boral’s offer at the mediation. He sought the provision of a draft deed.

35. Ms Whiteley responded with an initial draft on 14 September. This was the starting point of what proved ultimately to be three months of negotiation about the terms. Although agreement in principle had been reached, the proceedings in NCAT and in this Court remained on foot. Indeed, the NCAT proceedings were fixed for hearing on 15 December.

36. For the purposes of the negotiations about the terms of the settlement deed, Mr Armitt appears to have given all of the instructions to Mr Naji on behalf of himself and the other members of his family. Not all of the communications which passed between Mr Armitt and Mr Naji are in evidence. McLachlan Thorpe was subpoenaed, and documents were produced to the Court, but some were the subject of a claim for privilege. The schedule is in evidence and indicates that advice was provided in written form to Mr Armitt at various stages of the litigation, including after the mediation. But the terms of that advice are not fully revealed by the evidence.

37. There are however some text messages and emails between Mr Armitt and Mr Naji which were placed in the court book and have been tendered. These include an email sent by Mr Naji to Mr Armitt on 28 October. In that email, Mr Naji responded to instructions given by Mr Armitt in a previous note. Mr Naji wrote (emphasis original):

I understand your note to make the following points:

1. Boral need to show you respect because of the dust problem. I assume you are saying that Boral should pay more for the potential risk it faces if you "go public" with that information; and

2. BoraI agreed at the meetings in January to allow you to stay.

I will address these points in turn.

I cannot open negotiations on the basis that Boral will be threatened with some criminal or civil action (or matters which are intended to harass) concerning the dust issue. This would be a breach of my professional obligations set out in the Solicitors Rules. Further Shaun raised this with the mediator during the mediation as a potential issue for Boral (i.e. that you would go public with it). What is to say that Boral will change its position from the mediation and want to pay you more money, or allow you further time? In my view, there is simply no incentive for Boral to do that - it has clearly discounted that risk, or made an allowance for it in making the offer. I should also note that the terms of dust agreement each of you signed contains within it certain releases concerning dust impacts from the quarry. Finally, the issue of dust impacts is not an issue in these proceedings. The primary questions in this case concerning the lease is whether the representations were made such that you are allowed to stay on Old Farm indefinitely. The operations of the quarry after that agreement do not come into question of these proceedings save for the issue of improvements to the land.

The issue of you staying on the property has been ventilated in your evidence - there is nothing more to say about that other than repeating matters which are already in your evidence. As I have set out in my letter, I believe there are real risks with proving the representations (for the reasons set out in my letter) and you should only proceed with the case if you and the family properly understand the risk of this case if it goes badly: you will lose everything. I note that Peter Walsh has said in no uncertain terms that you will lose this case (a similar sentiment was also expressed by the mediator, Mr Lindgren QC). They are both very experienced practitioners saying the same thing. I have also advised you in writing that the case has real difficulties in light of the documentary evidence. You are of course free to ignore that advice, but I cannot, in good conscience take your money whilst you face such a large downside risk, with that chances of that risk eventuating being high.

38. Mr Naji continued, under the heading “moving forward”:

As I said in my letter of advice, I cannot tell you how you should manage your risk, or whether you should take such a risk; that is a matter for you and the family. I will fight for you all the way but only if that fight is in your best interests. In my view, continuing to fight this case is not in your interests. I also cannot fight for you if you are unwilling to accept my advice and suggest that I pressured you into accepting the settlement.

I repeat that, in my view, the offer is likely to be more favourable to you than running this case to a hearing. The offer made cannot be viewed as simply $120K and 12 months to vacate. Boral is foregoing rent outstanding (c. $100K based on Boral's case), there is a release from payment of future rent for the 12 month period (an additional ~$50K). The proceedings are also discontinued with no orders as to costs (I estimate Boral's costs might be c ~$150K), and you will not spend further money running this case (which would be a further ~$30-50K based on a 3 day hearing). That is, in real terms, you are receiving ~$270K from Boral (without addressing the issue of costs), representing the $120K to vacate, and the benefit of the rent forgone in an amount of or over ~$150K (this has a real value as you are entitled to continue working on the land until the end of the 12 month period).

I have contemplated my professional obligations deeply after our recent discussions and in light of the above. I have formed the view that I cannot continue acting for you where I am of the strong view that this offer is better for you and the family than what you will get if your run this matter to trial, a case that you have been advised is likely to fail. I would not be acting in your bests interest if I did that. As such, l cannot continue to act as your lawyer if you want to press on with the litigation. I am not asking you to change your views on going back on the accepted offer (that is a matter for you), but rather, if that's the course you want to take, I cannot morally or ethically continue to act.

I want to make it clear: I have not come to this decision lightly, and it is not because I do not want to stand up to BoraI (which we have done on your behalf for the last 3 years). It is purely for the reasons set out above.

39. Despite this strongly worded advice, Mr Armitt did not, at least immediately, accept Boral's terms. Instead, he instructed Mr Naji to seek more favourable terms, including a better "cash settlement" and more time to vacate the property. The terms of the correspondence leave no doubt that Mr Armitt had read the terms of the proposed deed and clearly understood the financial and commercial implications of those terms. In fact, Mr Armitt's determination resulted in an increase in the cash settlement from $120,000 to $150,000, as I have described.

40. By November 2021, the parties were getting closer to agreement, but Boral was concerned about something which Mr Naji had raised in the course of negotiations with Ms Whiteley concerning Mr Armitt's capacity to give instructions. On 29 November, Ms Whiteley wrote to Mr Naji:

…

In our call on Friday, you said to me that a couple of weeks ago, your clients had provided you with a certificate stating that [Mr Armitt] was not able to review legal documents. We did not discuss whether that certificate is still valid and we assume from your email of 4.57 pm on Friday that [Mr Armitt] is giving you instructions and thus has legal capacity.

However, as you will appreciate, our client is keen to ensure that any deed it enters into is binding and beyond challenge. Before our client can consider your clients’ proposed changes, we would be grateful if you could please provide medical evidence that confirms Mr Armitt’s capacity to understand and execute the deed.

…

41. Following receipt of this email, Mr Naji obtained, apparently through Mr Armitt, a certificate from Mr Armitt's doctor. The certificate is dated 29 November and reads:

Barry Armitt, age 74 yrs, was reviewed today for an eye condition and anxiety. He is of sound mind he understands the document he will soon be signing. He has capacity to understand and execute the deed.

42. Mr Naji emailed the certificate to Ms Whiteley on 30 November. In his email which attached the certificate, Mr Naji stated:

Further to your email below, please find attached a letter from [Mr Armitt’s] treating practitioner confirming his capacity to understand and execute the deed of settlement.

43. The settlement deed was finally executed by the parties on 15 December. This, as I have mentioned, is the very day on which the matter was to proceed to hearing in NCAT.

44. As I have already described, the formal steps required to dispose of the proceedings were then undertaken. The $100,000 was paid, and, on the face of it, the position was clear.

45. I was not referred to evidence which described in detail what happened over the next eight months, but on 30 August 2022, only a week before the Armitts were due to vacate, Jeremy wrote a letter to Boral asking for further time. The letter was sent directly to a Boral executive, and it seems that, by this stage, the Armitts had dispensed with Mr Naji's services. The letter stated that the Armitts had experienced difficulties in removing their plant and equipment, furniture and stock from the properties. The letter sought a further six months to vacate. This, however, was declined by Boral.

46. That is the evidentiary background to the allegations made by Mr Armitt in his cross-claim. Those allegations can be boiled down to four main complaints.

47. The first complaint concerns the manner in which the mediation was conducted. Mr Armitt says that his health at the time was poor, and that the mediation date proposed by Boral coincided with the anniversary of the family tragedy to which I have referred. Although this was not entirely clear, it seems that Mr Armitt claims also that the date was not suitable for other members of his family either. He says that a request was made of Boral to change the date of mediation, but that Boral refused. Neither Mrs Armitt nor Jeremy attended. Mr Armitt and Shaun did attend, but at least in Mr Armitt's case, he says that that was on sufferance and subject to the health and emotional difficulties that he was then suffering from.

48. The second complaint concerns advice Mr Armitt claims he was given by his lawyers at the mediation. He says he was told that the "mediation was final and legally binding". He also says that he was told that Boral's offer, which was ultimately accepted, was the best result possible, and if the Armitts did not accept the offer, then they would lose in the litigation. According to Mr Armitt, Mr Naji also stated that if the offer was not accepted, he would not continue to represent them.

49. The third complaint concerns the drafting of the settlement deed. Mr Armitt pointed out that the deed was drafted by representatives of Boral and contained some provisions which were not the subject of the oral offer and acceptance at the mediation.

50. Fourth and finally, Mr Armitt complains about a lack of understanding of the terms of the settlement deed when he signed it.

51. There are two preliminary points which should be made about these complaints before I move to analyse their legal and factual merit. The first point is that the cross-claim, as I have stated, is by Mr Armitt only. Accordingly, the complaints are relevant only to the extent that they might in some way vitiate his consent to the terms of the settlement deed. No allegation is being made that the other members of Mr Armitt's family were labouring under the same or similar difficulties. It follows that, to the extent that Mr Armitt's complaints refer, for instance, to other members of the family not attending the mediation, they are not relevant.

52. The second point is that although an agreement was struck orally at the mediation for a settlement on particular terms, no party is seeking to enforce those terms. Boral's case depends upon the terms of the settlement deed of December 2021. Mr Armitt rejects any enforcement of any settlement along the lines agreed at the mediation or afterwards. It follows that attention must be focused on the terms of the settlement deed that was entered into, as I have stated, three months after the mediation and following a process of negotiation which took place between the parties' solicitors. In those circumstances, events of the mediation can have little or no relevance.

53. Mr Armitt did not in his cross-claim identify the legal doctrines on which he relied to challenge the settlement deed. He was not required to do so. All his pleading needed to state was the facts. ^[1] The legal consequence of the facts is a matter for the Court.

    1. Uniform Civil Procedure Rules 2005, r 14.7; J P Hamilton, G Lindsay, C Webster, NSW Civil Procedure (Looseleaf, Thomson Reuters) at 1-28402 [14.7.80].

54. However, for the Court to grant the relief sought by Mr Armitt, it is necessary to identify some legal doctrine which would support the granting of relief in the circumstances alleged by Mr Armitt in his cross-claim. Counsel for Boral, in his submissions, identified three possible bases: undue influence, unconscionable conduct and duress. No other doctrines were identified by Mr Armitt in his submissions, and I will therefore address the claims on each of the bases identified by counsel.

Undue influence

55. The claim of undue influence is readily dealt with. It is clear from the evidence that Mr Armitt is a determined and resourceful man with a long life experience. He is clearly intelligent and capable. It is quite obvious that he was not under the influence, as that term is used in the law, ^[2] of anyone else in the course of negotiating the terms of the deed of settlement or, indeed, earlier. Certainly, he was not under the influence, in that sense, of Mr Naji. I have already referred to the evidence which shows that Mr Armitt in fact rejected Mr Naji's advice and insisted upon holding for better terms which, in fact, he partially achieved. Furthermore, even if Mr Armitt had been under Mr Naji's influence, there is nothing to suggest that Boral was on notice of that fact. The undue influence claim therefore fails.

    2. Heydon, JD, Leeming, MJ and Turner, PG, Meagher, Gummow and Lehane’s Equity: Doctrines and Remedies (LexisNexis Butterworths, 5th ed, 2015) (“MGL”) at [15-020]. See also JD Heydon, Heydon on Contract, (2019, Thomson Reuters) (“HOC”) at [17.110].

Unconscionable conduct

56. Unconscionable conduct is somewhat different from undue influence. What it requires is not a relationship of influence, under which one person is able to procure the other to act because of the relationship. Rather it occurs where there is an exploitation by the defendant of a plaintiff's "special disadvantage".

57. In his context, the term "special disadvantage" has a particular and confined meaning; there is nothing to stop a defendant, knowing that the plaintiff may be under economic pressures to accept the terms offered, from driving a hard bargain. The exploitation must be of some other factor which prevents the plaintiff from properly exercising, in his or her own interest, such bargaining power as he or she may have. Examples are: lack of education, relevant lack of knowledge, and lack of independent advice. ^[3]

    3. MGL (n 2) at [16-010].

58. I do not think the evidence establishes that Mr Armitt was under any special disadvantage, as that term is used in the law, so far as the conduct of the negotiations were concerned. As I have already stated, he was represented at all times by a lawyer and was freely able to call the shots in the way which seemed best to him. I simply do not accept that he lacked an understanding of the terms of the settlement deed in any relevant sense. As I have stated, the evidence shows that he read the terms proposed by Boral, understood their significance and made counterproposals. The fact that Boral did not accept all of the counterproposals that he made does not establish any form of special disadvantage. It is simply that Boral did not feel the need to compromise on those particular points.

59. I have already explained why I consider the events of the mediation are of limited, if any, relevance. But even if the question were whether, at the mediation, Mr Armitt was labouring under some form of special disadvantage; then I do not think the evidence establishes that.

60. Exactly what Mr Armitt meant by complaining that he was told that the mediation "was final and legally binding" is not clear. Mr Armitt may have been advised that the result of the mediation was legally binding. If he was, that would not have been correct. The terms of the mediation agreement provided that no one was to be bound until an agreement was signed. However, even if that was the advice, then it would be of no significance. As I have explained, Boral is not attempting to enforce the terms of the oral bargain made at the mediation.

61. If the advice was that mediation, as a process, was something that Mr Armitt was legally bound to engage in, then that too may not have been correct. Compulsory mediation is not unknown, but it appears that the mediation in question was a voluntary one. It is not however necessary to go any further into this point as, again, it has no significance so far as the terms of the settlement deed ultimately executed are concerned.

62. The October email from Mr Naji ([37] above) indicates that Mr Armitt was indeed advised at the mediation that his claim against Boral, arising out of the events of 2012, would not succeed. But the fact that his lawyers had given him that advice did not put Mr Armitt at a special disadvantage in any relevant sense.There is nothing to suggest the lawyers were doing anything other than what they were supposed to do, namely, giving frank advice to Mr Armitt in good faith. The fact that the advice might have been unpalatable is neither here nor there.

63. Nor would a refusal to act amount to special disadvantage. Lawyers have ethical duties not to advance claims which they do not believe have reasonable prospects of success. If that was the view that Mr Naji had formed, then he was obliged not to act and to tell Mr Armitt so.

64. If I am wrong in my view that Mr Armitt was not under a special disadvantage, however, there is a further answer to the claim. Mr Armitt cannot succeed against Boral without showing a conscious exploitation on Boral’s part of such special disadvantage that he may have had. ^[4] There is no evidence for that whatsoever.

    4. MGL (n 2) at [16-010]; HOC (n 2) at [18.820].

65. Boral's representatives at the mediation would not have been aware of what was said to Mr Armitt in the course of private negotiations and would have had no obligation to speculate on that question. They were entitled to approach the mediation on the basis that Mr Armitt had his own legal advisers who would look after his legal interests and give him appropriate advice. As I have said, there is nothing in the evidence to suggest that that did not happen. But if it did not, that was not Boral's responsibility.

66. The same observations apply to the negotiations which followed between Ms Whiteley and Mr Naji about the terms of the deed of settlement. Indeed, Ms Whiteley went to the trouble of obtaining a medical certificate to cover off the possibility that Mr Armitt might have lacked capacity. The certificate which she was provided was quite unambiguous, and she had no reason to look behind it.

67. In these proceedings, Mr Armitt has suggested that there was an earlier certificate, and he prevailed upon his doctor to "rescind" it and substitute the certificate of 29 November. It would be quite wrong for me in these proceedings to make any finding on that allegation when the doctor in question is not before the Court and has not had an opportunity to explain such inconsistency as there may be between the two certificates. But, in any event, none of this is something for which Boral is responsible or about which Boral could have or should have known. I therefore do not propose to go further into it for the purposes of this case.

Duress

68. The final legal ground identified for Mr Armitt's claim is duress. This is a term used in the law to encompass physical threats and threats to property, but which has been extended into what is sometimes called "economic duress". ^[5] The operation of the legal principles in this area is unsettled and is still the subject of academic debate. ^[6] But it can at least be said that what is required in the context of a case such as the present, where what is challenged is entry into a contract, is some threat by the defendant of wrongful or illegitimate action which results in the contract being entered into. ^[7]

    5. HOC (n 2) at [16.220].

    6. Ibid [16.260], [16.440].

    7. Ibid [16.240], [16.270].

69. There are thus at least two elements to be established. First, the threat, and secondly, that as a result of the threat being made, the plaintiff entered into the contract in question. In my view, the evidence in the present case does not establish either of these elements.

70. For reasons which I have already given, I consider that nothing in Boral's actions in negotiating the terms of the settlement deed, nor, if it matters, any of Boral's conduct in the mediation, amounted to some form of illegitimate threat. Indeed, the language of threat is really not appropriate at all. Boral simply took a position in negotiations, making an offer and counteroffers. This did not involve any threat at all, explicit or implicit. It was simply up to Mr Armitt whether he accepted the terms which Boral offered or not.

71. I am also not persuaded that the causative element is satisfied. The evidence suggests to me that Mr Armitt was well aware of the terms which he was being offered and decided to accept them as the best alternative to proceeding with the litigation, the hearing for which was imminent.

72. Counsel for Boral advanced a further reason why a claim of economic duress could not succeed. Even if the defendant subjects the plaintiff to duress in order to procure entry into the relevant contract, if the defendant, once free of the influence of the duress, voluntarily affirms the contract, then the law will not intervene. Counsel submitted that the letter written by Jeremy in August 2022 was plainly written with Mr Armitt's consent, and, in effect, involved an affirmation of the existing arrangement by asking for an extension of it. If Mr Armitt's will had really been overborne by some form of economic duress when signing the settlement deed in December 2021, then that influence was clearly no longer operative in August 2022. I think there is considerable force in counsel's point, but, owing to the conclusions that I have already reached, it is not necessary to decide it in the present case.

Rescission

73. There is a final point which is applicable to all of the ways in which Mr Armitt put his case. As I have mentioned, the cross-claim was by Mr Armitt alone, but he is not the sole party to the settlement deed. Even if, as between himself and Boral, Mr Armitt was entitled to have the settlement deed set aside, the Court would not do so if that affected other parties' interests.

74. On the evidence before the Court, the other parties appear to be satisfied with the terms of the settlement deed. Setting it aside would eliminate the releases which have been given and therefore expose not only Mr Armitt but members of his family to being sued by Boral on the claims which it would, but for the release, have against them. That is not something that the Court would do without their consent. Accordingly, even if Mr Armitt's claims had, in some way, succeeded, they could probably only have sounded in monetary compensation. The deed would have remained valid and effective at law in any event.

Effect on cross-claim

75. Having concluded that the settlement deed stands, it remains to consider its effect on the claims which Mr Armitt seeks to advance in his cross-claim concerning the events of 2012. The release clause relevantly provides:

5.1 Release by the Armitts

Except for the obligations of Boral arising under this Deed, the Armitts:

5.1.1   release and discharge Boral and its Related Entities from all Claims in any way relating to the subject matter of the NCAT Proceeding or the subject matter of the Supreme Court Proceeding or any future claim, whether presently known or unknown, relating to the Lease or the Licence;

5.1.2   agree not to commence or maintain any Claim against Bora I in any way relating to the subject matter of the NCAT Proceeding or the subject matter of the Supreme Court Proceeding or the Agricultural Tenancies Act 1990 (with the exception of a claim or action for breach or enforcement of this Deed); and

5.1.3   agree to indemnify Boral against any Loss arising from their breach of clauses 5.1.2 and/or 5.1.2

76. In the end, I did not understand there was any real dispute that the terms of the release are sufficient to cover the claims propounded by Mr Armitt in his cross-claim concerning the events of 2012. There are some complaints in the cross-claim about some later events, including references to dust and the like from the quarrying operations, but it was not suggested by Mr Armitt that those complaints gave rise to any separate cause of action, let alone a cause of action which survives the broadly worded release clause which I have quoted above.

77. Accordingly, it seems to me that the cross-claim should be wholly dismissed. In any event, the cross-claim does not prevent Boral from pursuing the claims for possession and for repayment of the $100,000 settlement payment instalment, to which I now turn.

Possession of Marulan properties

78. The recitals to the deed of settlement include a recital that the Armitts were in possession of the properties. As I have already indicated, the deed provided that their possession was to continue until 6 September 2022 in accordance with the terms of the lease and the licence. As that date has now passed, the effect of the settlement deed is quite unambiguous, and Boral is entitled under its terms to possession.

79. Counsel referred on various occasions to the fact that there is an NCAT order obliging the Armitts to give possession. My conclusion that the settlement deed is valid means that there is no basis for challenging that order; however, I am not sure how relevant it is to the claim made in these proceedings.

80. Counsel did not suggest that I was being asked to exercise any power of this Court to act in aid of the NCAT order. ^[8] The order may well give rise to a res judicata which would prevent the Armitts from defending the possession proceedings, but that has not been pleaded by way of reply. Accordingly, it seems to me that the making of the order by NCAT is of no legal significance in these proceedings. The Court can and should make its own order for possession based on the factual and legal position revealed by the evidence.

    8. At common law, an action could be brought in a superior court on the judgment of an inferior court (P Keane, Spencer Bower and Handley: Res Judicata (6th ed, LexisNexis, 2024) at [2.50]). But query whether this would extend to an order for possession by an inferior court. A superior court also has power to make an order in aid of proceedings in an inferior court or tribunal (Herron v McGregor (1986) 6 NSWLR 246 at 250).

81. The only real question is whether possession should be ordered against all of the Armitts, as counsel for Boral asked. It is true that all of the Armitts agreed to give up possession in September 2022. Mr Armitt clearly has not done so, but there is little evidence before the Court about the position of the other members of the family.

82. In their notices of appearance, both Mr Armitt and Jeremy give Old Farm as their address for service. There is no dispute that Mr Armitt remains in possession of the two properties, and I think the address given by Jeremy in his notice of appearance is a sufficient basis to infer that he too remains in possession.

83. But in Mrs Armitt's notice of appearance, she gives as her address for service somewhere other than Old Farm, an address in Goulburn. According to Mr Armitt's cross-claim, Mrs Armitt moved to Goulburn from Old Farm some years ago, that is, well before September 2022. Similarly, Shaun's notice of appearance gives a different address for service, and there is no direct evidence before me that he remains at, or that he is exercising any possessory rights over, Old Farm or Peppers.

84. Accordingly, I do not think that the Court should make an order for possession against Mrs Armitt or Shaun on the evidence presented to me on this point. The order for possession will be confined to Mr Armitt and to Jeremy. I will, however, give Boral liberty to apply on short notice to seek possession against either of the other two defendants, should that be necessary.

Repayment of settlement payment instalment

85. The obligation under the settlement deed to make the repayment is a joint and several one. Accordingly, there will be judgment for Boral in the sum of $100,000 against the defendants jointly and severally, together with pre-judgment interest under the s 100 of the Civil Procedure Act 2005, which will need to be calculated.

(The parties made submissions on the form of orders to be made, and on costs. Interest calculations were presented, resulting in an agreed judgment sum of $111,589.)

Costs

86. In the course of final submissions, counsel for Boral indicated that Boral did not seek any order for costs against Mrs Armitt, but costs orders were sought against all of the other defendants, namely, Mr Armitt, Jeremy and Shaun, and those costs were sought on an indemnity basis. Counsel relied on the general rule that the Court will award indemnity costs in the exercise of its discretion where there is a contractual right to indemnity costs. ^[9]

    9. Kyabram Property Investments Pty Ltd v Murray [2005] NSWCA 87 at [12]-[14].

87. In the course of submissions, following the delivering of my reasons; Ms Whiteley, who appears today for Boral, took me to a without prejudice letter which was sent in September 2023 to the Armitts. The letter offered to compromise the proceedings on terms which were more favourable to the defendants than they have ultimately obtained. Ms Whiteley relied upon the letter as an alternative basis for sustaining the claim for indemnity costs, but only as against Mr Armitt.

88. Returning to the contractual basis of the claim for indemnity costs; counsel for Boral referred to cl 5.1.3 of the settlement deed, which I have already set out ([75] above). Counsel also relied on a separate obligation contained in cl 7 of the deed:

7. Default

7.1 If the Armitts fail to comply with clauses 6.2.2 and 6.2.4 of this Deed by 12.01 am on the day after the Vacation Date, then Boral will be entitled to seek enforcement of the Judgment and the Armitts agree to pay the costs of Boral in enforcing the Judgment (to be assessed on an indemnity basis).

7.2 The Armitts undertake not to take any step, or cause any other person to take any step, which would or could have the effect of delaying or preventing the enforcement of the Judgment in accordance with clause 7 .1.

7.3 Boral will be entitled to produce this Deed to the Court or Tribunal as the case may be as evidence of the Armitts' consent to any such costs order and the enforcement of the Judgment.

89. The general rule is that costs follow the event and Boral has been successful in the litigation. But I must deal with the costs of two separate claims; namely, Boral's claim and Mr Armitt's cross-claim. It is necessary to keep these in mind separately because the parties to them are not the same. The other members of Mr Armitt's family were not party to his cross-claim.

90. In such a case, the first question for the Court is to which of the claims the general costs of the proceedings, such as the cost of the trial, where both of the claims were under consideration, should fall. Should they follow the event of the claim, or the cross-claim, or should they be, in some way, apportioned between the claims?

91. I have already stated that, in substance, Mr Armitt is the plaintiff in these proceedings. It is his cross-claim which has occupied substantially the whole of the hearing time and no doubt the preparation time. While the other defendants did not enter submitting appearances, they have not filed defences and have not taken any active steps to oppose the relief sought by Boral. If the proceedings had been confined to the claims by Boral on its claim, then the case could have been proved simply by tendering the settlement deed and evidence that the defendants had not vacated on the nominated date. There would probably have been no need for a hearing at all.

92. In these circumstances, I think that the general costs of the proceedings should follow the cross-claim. It would be wrong for the other members of Mr Armitt's family to be required to meet Boral's costs of a dispute that they have done nothing to support or encourage.

93. Accordingly, the form of the order which I will make will be for Mr Armitt to pay Boral's costs of the proceedings, except for the costs that are solely referable to Boral's claims against the defendants; and to order the defendants, collectively, to pay those costs of Boral.

94. The remaining question is whether either or both of those costs orders should be on the indemnity basis. So far as the costs order against Mr Armitt on the cross-claim is concerned, I think it is plain that there is a contractual right to indemnity costs. The bringing of the cross-claim is covered by the indemnity which Mr Armitt gave in cl 5.1.3 of the settlement deed. Accordingly, the costs order against him on the cross-claim, which will include the general costs of the proceedings after the cross-claim was filed, will be on the indemnity basis. I therefore do not consider it necessary to say anything about the alternative basis on which costs were sought against Mr Armitt, namely in the letter.

95. So far as the costs solely referable to Boral's claim are concerned, the position is different. Those costs are not covered by the indemnity in cl 5.1.3. Counsel submitted that they were caught by cl 7.1. However, I think there is some doubt about that. For the purpose of cl 7.1, the term "Judgment" is defined by reference to the orders made by NCAT. As I have explained, Boral, in these proceedings, is not seeking, at least directly, to enforce the orders against NCAT. Rather, it is advancing an independent claim for possession based on its rights under the settlement deed.

96. Clause 7.3 does refer to further proceedings in “the Court or Tribunal”. Counsel for Boral suggested that the clause contemplated that proceedings to enforce the NCAT judgment could therefore be brought in other courts. I do not find the wording of the clause easy to follow. But even if counsel’s submission is correct, I still do not think that it is clear that in these proceedings Boral is enforcing the NCAT judgment in the relevant sense. I also note that the costs argument based on cl 7.3 does not seem to have been foreshadowed in Boral's pleadings or submissions for the purposes of this hearing.

97. In the circumstances, the order for the costs of the proceedings, apart from the costs of the cross-claim (which will include the general costs), will be on the ordinary basis only.

(The Court handed down a minute of order for final submissions by the parties.)

Orders

98. The orders of the Court are:

1. Judgment for the plaintiff against the first and third defendants for possession of the land comprised in:

1. folio identifier X/XXXXX XX and known as ‘Old Farm’, 357 Marulan South Road, MARULAN SOUTH NSW 2579; and

2. folio identifier XX/XXXXX X and known as ‘Peppers’, 111 Greenhills Road, MARULAN SOUTH NSW 2579.

2. Reserve leave to the plaintiff to apply, on short notice, for orders for possession against the second and fourth defendants of the properties referred to in order 1.

3. Judgment for the plaintiff against the defendants in the sum of $111,589.

4. Order that the first defendant’s cross-claim be dismissed.

5. Order that the cross-claimant/first plaintiff pay the cross-defendant/plaintiff’s costs, on the indemnity basis, of the proceedings, other than costs solely referable to the plaintiff’s claim against the defendants.

6. Order that the defendants pay the plaintiff’s costs, on the ordinary basis, solely referable to the plaintiff’s claim against them.

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Endnotes

Amendments

16 May 2024 - [98] Correction to grammatical error in orders.

Decision last updated: 16 May 2024