Breen v Lambert

[1992] QCA 144

IN THE COURT OF APPEAL

[1992] QCA 144

SUPREME COURT OF QUEENSLAND

No. 4547 of 1988.

BETWEEN:

BETH BREEN as administratrix of the

estate of KEVIN PATRICK BREEN

(Plaintiff) Respondent

AND:

ARNOLD LAMBERT and

RICHARD K C WAN

(Defendants) Appellants

___________________________________________________________________

The President
Mr Justice McPherson

Mr Justice Derrington

___________________________________________________________________

Judgment of the Court delivered on the

fifteenth day of June, 1992.

___________________________________________________________________

APPEAL DISMISSED WITH COSTS

IN THE COURT OF APPEAL

SUPREME COURT OF QUEENSLAND

No. 4547 of 1988.

Before the Court of Appeal

The President

Mr Justice McPherson

Mr Justice Derrington

BETWEEN:

BETH BREEN as administratrix of the

estate of KEVIN PATRICK BREEN

(Plaintiff) Respondent

AND:

ARNOLD LAMBERT and

RICHARD K C WAN

(Defendants) Appellants

JUDGMENT - THE COURT

Delivered the fifteenth day of June 1992

MINUTE OF ORDER:

Appeal dismissed with costs.

CATCHWORDS
PRACTICE - STAY - Appeal from refusal to grant stay of execution of judgment
ordering specific performance of agreement to transfer shares after appellants
discovered post trial not all shares owned by respondent - whether this discovery

would have been entitled appellants to judgment in their favour.

Counsel:	Gotterson QC, with him Sullivan, for the appellants. D J S Jackson QC for the respondent.
Solicitors:	Carberry’s for the appellants. Corrs Chambers Westgarth for the respondent.

Hearing date:27 May 1992.

IN THE COURT OF APPEAL

SUPREME COURT OF QUEENSLAND

No. 4547 of 1988.

BETWEEN:

BETH BREEN as administratrix of the

estate of KEVIN PATRICK BREEN

(Plaintiff) Respondent

AND:

ARNOLD LAMBERT and

RICHARD K C WAN

(Defendants) Appellants

JUDGMENT - THE COURT

Delivered the fifteenth day of June 1992.

These proceedings arise out of an agreement made on 18 November 1988 for the

sale by Kevin Patrick Breen to Arnold Lambert and Richard Wan of the shares in Hayville

Pty Ltd. That company had for some time been conducting a restaurant known as

"Whittakers" in Queen Street in the city. For various reasons the business proved

unprofitable and Breen decided to sell it. To this end negotiations took place with Lambert

and Wan, and on 18 November they signed a memorandum recording their agreement to

purchase shares in the company.

It is convenient to refer to the memorandum as ex.7, because that is the way it was

identified at the trial of an action (No. 4547 of 1988) brought by Breen as plaintiff against

Lambert and Wan as defendants to enforce the agreement. The action was heard by

Byrne J, who delivered judgment on 9 August 1990 ordering that the contract be

specifically performed and awarding a large sum by way of damages for breach of

contract. Since then the defendants have been making vigorous efforts to prevent the judgment from being enforced. First they appealed against it. Pending that appeal they

applied for a stay of execution of the judgment. It was granted on 11 September 1990 on

terms requiring them to pay the amount of damages into court. They did not comply with

those terms by the date specified, but continued to pursue the appeal. It was by consent

struck out in the course of the proceedings before this Court.

In the meantime Mr Breen has died and the present proceedings are being

conducted by his widow and administratrix Mrs Breen. They result from an application

made by the defendants under O.45, r.1 for an order that execution of the judgment given

by Byrne J be stayed "until further order". The summons claiming that relief sought as an

alternative that the order made on 11 September 1990 for a stay pending appeal be varied

by dispensing with the condition that money be paid into court. However, this alternative

lost its relevance once the appeal itself was struck out.

The application made under O.45, r.1 came before Thomas J, who on 16 August

1991 delivered judgment dismissing it. In his lengthy and careful reasons his Honour

traced the history of the action and explained the basis of the application that was made.

Essentially it comes down to this. Although the memorandum ex.7 spoke of Breen’s

agreement to transfer "his" shares, Byrne J found that the agreement of which specific

performance was ordered was that Breen would transfer title to all the shares in the

company Hayville, which included the shares owned by Whittaker. The defendants claim

that since the trial they have discovered that not all the shares were owned by Breen and

Whittaker. Two were owned by a Ms Ledwidge, who was the friend and associate of

Whittaker. They say that the reason why they were not aware of this before the trial was

that discovery of documents made by Breen as plaintiff in the action was incomplete. If full

and proper discovery had been made, and they had been armed with the knowledge they

now have, they would, so the argument runs, have been entitled to a judgment or decision in their favour in the action before Byrne J, or at any rate to a different judgment or order.

In those circumstances it is said that a stay of execution of the judgment should now be

granted under O.45, r.1.

It was this application that was refused by Thomas J and it is against that decision

that the present appeal is brought.

The documents that it is said were not, but ought to have been, discovered were

identified as some eight items comprising ex.10 before Thomas J. They include

correspondence to or from Breen’s original solicitors Messrs Short Punch & Greatorix at

a stage when Breen and Whittaker were arranging to acquire a "shelf" company for the

purpose of their restaurant venture. It may be assumed that, had the defendants or their

legal advisers been in possession of those documents and studied them, they might have

learned that at one time Whittaker’s friend Ms Ledwidge was intended to acquire a share

or shares in the company. The original arrangement was that there should be five issued

shares. One was to have been issued to each of Mr and Mrs Breen and one to them jointly.

Of the other two, Mrs Ledwidge was to receive one in her own right and one as trustee for

the Whittaker family trust.

The original intention was abandoned in favour of a different share structure

pursuant to which the only shares were held by Breen and Whittaker. On appeal much time

and energy was devoted to attempting to demonstrate that in fact or in law the

shareholdings that resulted accurately reflect the original arrangement and not that later

fixed upon. This involved a digression into the actions of a Mr and Mrs van Sleve, who held

the first meeting of the company Hayville and its directors. They are the principals of

another company Inco which carries on business as a manufacturer or, it may be, a retailer

of ready-made companies. It was to them that the instructions in the correspondence

contained in ex.10 were transmitted concerning the original and subsequently varied
company share structure.

Questions were raised by the respondent on appeal about the extent to which Mr

and Mrs van Sleve had authority to pass resolutions giving effect to the original or the

varied arrangement with respect to the share structure of the company. It is not necessary

to resolve these questions. For present purposes it may be assumed that, apart from the

Breens, Ms Ledwidge became the only shareholder in the company. It does not follow that

the defendants’ application before Thomas J should have succeeded.

To make good their claim for relief under O.45, r.1 the defendants had to show that

"after the giving of judgment . . . facts were discovered which, if discovered in time, would

have entitled" them to a judgment in their favour. Paragraph 12 of the plaintiff’s statement

of claim in the action contained the conventional and formal allegation that the plaintiff "was

at all material times and is ready, willing and able to complete the agreement". The

defendants did not specifically deny this allegation, but they said in their defence that they

did not admit it. As it happens they had repudiated the agreement before the time for its

completion arrived. Disregarding this, what they were bound to show if they were to

succeed on the application before Thomas J was that proof that Ms Ledwidge was a

shareholder would have led to a different result in the action determined by Byrne J. His

Honour found the agreement to have been that Breen would transfer all the shares in the

company. The fact that one or more of them were held by Ms Ledwidge would have made

no difference if Breen remained able to ensure that all shares were transferred at the time

at which settlement was due.

Ms Ledwidge gave evidence at the hearing before Thomas J. His Honour found

that, if the defendants had been prepared to complete the contract on the due date (7

December 1988), Ms Ledwidge would, had she been a shareholder, have done whatever

was necessary to enable the contract to be completed. There were compelling reasons for reaching this conclusion. Her involvement in the original arrangement was slight. She

was simply told that she would become a shareholder and she agreed to it. The idea did

not come from her but from Whittaker and Breen. She did not pay for the shares. In late

1988 both she and Whittaker were anxious to assist Breen out of the business. They

themselves were to remain in it. Whittaker was to continue as general manager of the

company for five years subject to a trade restraint in the event of early termination by him

of his employment.

Her attitude to transferring the shares is summarised in the answer to the following

question in cross-examination:

" If Mr Breen had said ‘Look, there may be a problem with the shareholding

in the company, will you transfer?’ ".

Her answer was, "I would happily have done it". His Honour accepted what she said. He

did not consider her attitude was altered by her evidence in re-examination that she knew

she was a guarantor of the company’s lease of the restaurant premises. She was asked

what she would have wanted done with the guarantee in return for the transfer of shares,

to which she replied "My name taken off it, naturally". It was submitted on appeal that this

meant that she would not have agreed to transfer the shares without being discharged from

the guarantee. But that is not what she said, nor was it what she was asked. As it was,

when the lease in question was re-negotiated very soon afterwards, the lessor was content

with guarantees from Mr and Mrs Breen only. The agreement for a new lease was made

in January 1989. His Honour was plainly justified in finding that there was no reason to

suppose that any difficulty would have been encountered earlier in obtaining the release

of Ms Ledwidge from her guarantee had it been necessary to do so.

The ultimate finding on this point made by Thomas J was that it was improbable that Ms Ledwidge would have insisted on having her name removed from the guarantee; and that, whether or not she was released from the guarantee, she would have co-operated in

the transfer of any share owned by her.

There is no reason to hold that on this question the conclusion of the learned judge

was incorrect. The reasons he gave for it are unassailable, and he had the advantage,

which we do not share, of seeing the witness. In view of that conclusion, the plaintiff Breen

would still have succeeded in the action before Byrne J. He could have been shown that

he was able, as well as ready and willing, to transfer to the defendants all the shares in

Hayville Pty Ltd. Thomas J was therefore correct in holding that they had failed to establish

that, even if Ms Ledwidge was a shareholder and they had known of this at the trial, they

would have been entitled to judgment in their favour, or to a different judgment from that

given by Byrne J in the action.

The appeal should be dismissed with costs.