Daley v Donaldson

[2021] NSWSC 1507

Supreme Court

New South Wales

Medium Neutral Citation:

Daley v Donaldson [2021] NSWSC 1507

Hearing dates:

28 October 2021

Date of orders:

23 November 2021

Decision date:

23 November 2021

Jurisdiction:

Equity

Before:

Hallen J

Decision:

The Court orders that:

(a)   The Plaintiff’s notice of motion filed on 16 September 2021 be dismissed.

(b)   The costs of the notice of motion be the Defendant’s costs in the cause, other than in relation to the costs of the parties of the submissions following the conclusion of the hearing, in respect of which the Plaintiff should pay the Defendant’s costs.

(c)   The proceedings are listed for directions on 10 December 2021.

Catchwords:

CIVIL PROCEDURE – Section 73 Civil Procedure Act 2005 (NSW) - Power of court to determine questions in dispute between the parties to the proceedings as to whether and on what terms the proceedings have been compromised or settled between them – Plaintiff claims settlement reached - Evidence of Plaintiff’s adoption subsequently revealed – Whether settlement reached remains valid – Whether common mistake renders settlement void or voidable – Orders considered appropriate to give effect to determination

SUCCESSION – Substantive proceedings involve claim for family provision order under Ch 3 of the Succession Act 2006 (NSW) – Applicant alleged to be child of the deceased – Subsequent evidence given that Plaintiff was not a child of the deceased as he had been adopted by a third party

Legislation Cited:

Adoption Act 2000 (NSW) ss 95 & 102

Adoption of Children Act 1964 (Qld) ss 28 & 38AB

Civil Procedure Act 2005 (NSW) s 73

Family Provision Act 1982 (NSW)

Succession Act 2006 (NSW) ss 57 & 98

Cases Cited:

Abrahams v Abrahams (2015) 13 ASTLR 406; [2015] QCA 286

Affoo v Public Trustee of Queensland [2012] 1 Qd R 408; [2011] QSC 309

Bartlett v Coomber [2008] NSWCA 100

BMW Australia Finance Ltd v Mehajer Vision Pty Ltd [2021] NSWSC 1057

Brennan v Bolt Burdon (a firm) & Ors [2005] QB 303

Clasic International Pty Ltd v Lagos (2002) 60 NSWLR 241; [2002] NSWSC 1155

Deutsche Morgan Grenfell Group plc v Inland Revenue Commissioners & Anor [2007] 1 AC 558; [2006] UKHL 49

Gorczynski v Bendigo and Adelaide Bank Ltd [2016] NSWCA 170

Harvey v Phillips (1956) 95 CLR 235

Hore v Perpetual Trustee Co Ltd (Supreme Court (NSW), Windeyer J, 8 June 1995, unrep)

In Application of ‘A’ and ‘B’ and the Adoption Act 2000 (2005) 63 NSWLR 2005

Kleinwort Benson Ltd v Lincoln City Council [1999] 2 AC 349

Lewis v Combell Constructions Pty Ltd (1989) 18 NSWLR 528

Masters v Cameron (1954) 91 CLR 353; [1954] HCA 72

McLachlan v Sydney Trains [2021] NSWSC 283

Neale v Gordon Lennox [1902] AC 465

Oberon Shire Council v Kiangatha Holdings Pty Ltd [2021] NSWLEC 30

Perpetual Trustee Co Ltd & Anor v BNY Corporate Trustee Services Ltd & Anor [2010] Ch 347

Re D [2006] NSWSC 808

Robinson v Robinson (2020) 102 NSWLR 1; [2020] NSWCA 4

Schaechtele v Schaechtele [2008] WASC 148

Sergent v Glass (No 2) (2018) 18 ASTLR 294; [2018] NSWSC 1100

Solle v Butcher [1950] 1 KB 671

Yu v Yu [2020] NSWSC 1904

Texts Cited:

Cartwright, Misrepresentation, Mistake and Non-Disclosure (5th edition, 2019, Sweet & Maxwell)

Category:

Principal judgment

Parties:

Glenn Eric Daley (Plaintiff)
Dawn Jeanette Donaldson (Defendant)

Representation:

Counsel:
P Bates (Plaintiff)
M Daniels (Defendant)

Solicitors:
Gerard Malouf & Partners (Plaintiff)
Digital Age Lawyers (Defendant)

File Number(s):

2020/353698

Publication restriction:

Nil

Judgment

Introduction

1. By notice of motion filed on 16 September 2021, the Plaintiff/applicant, Glenn Eric Daley, seeks a declaration that the parties to the proceedings reached a binding settlement of his claim for a family provision order on 12 April 2021, as evidenced by a document headed “Consent Orders” which was signed by the legal representative of each. He also seeks an order giving effect to the settlement, as contained therein, and an order that his costs of the notice of motion be paid by the Defendant/respondent.

2. The binding settlement is said to have been reached at a Court annexed mediation, held on 12 April 2021, before Senior Deputy Registrar N Flaskas. The document was signed, at the mediation, by Mr David Cossalter, the solicitor for the Plaintiff, and Ms Katherine Hawes, the solicitor for the Defendant. Each gave evidence on this application. Only Ms Hawes was cross-examined. I shall refer to the agreement set out in the Consent Orders as “the settlement agreement” for convenience and without prejudgment.

3. The Defendant in the substantive proceedings, and the respondent to the notice of motion, is Dawn Jeanette Donaldson, the executrix named in the Will dated 14 June 2019 of John Bernard Richardson (the deceased), the biological father of both parties. She obtained Probate of the deceased’s Will on 2 July 2020.

4. Associated proceedings, involving another applicant for a family provision order, in respect of the estate of the deceased, which proceedings were also referred to a court-annexed mediation on the same date, did not settle at the court-annexed mediation. It cannot proceed to a hearing until the notice of motion has been determined.

5. At the hearing of the notice of motion, there was no real dispute that the settlement agreement was reached on the day of the mediation. It might be thought that a signed document, described as a Consent Order, would provide sufficient evidence that the proceedings had been compromised, or settled, between the parties, and the terms on which the proceedings had been settled or compromised.

6. Yet, the Plaintiff seeks the Court’s determination of precisely those matters pursuant to s 73 of the Civil Procedure Act 2005 (NSW). The Defendant opposes the relief sought. Central to the opposition case, and in summary, was that, at all material times, both parties were operating under the mistaken assumption that the Plaintiff was an eligible person, being a child of the deceased (s 57(1) (c) of the Succession Act 2006 (NSW)) when, in fact, he was not, and that the settlement agreement had been signed upon the basis of representations made, including by the deceased in his Will, and other objective evidence which was incorrect.

7. The Defendant also submitted that the mistaken assumption, which was essential to the determination of the Plaintiff’s eligibility, rendered the subject matter of the settlement agreement essentially, and radically, different from the subject matter believed by the parties to then exist. It was submitted that “[I]n light of the fact that the parties operated under a common misapprehension as to basis of their negotiations, the court … should decline to give effect to the settlement dated 12 April 2021”. Presumably, this submission means that the Court should not make orders reflecting the settlement agreement, because when the agreement was reached, the only basis advanced for eligibility was that the Plaintiff was a child of the deceased, a fact that appears, subsequently, to have been accepted as wrong, because he had been adopted by a third party.

The procedural history

8. For reasons to which I shall come, it is first necessary to say something about the procedural history of the proceedings.

9. The substantive proceedings were listed in the Succession List, first, on 19 February 2021. On that date, directions were made for the filing and service of evidence by the parties and then for a Court annexed mediation on 12 April. The matter was adjourned until 23 April.

10. On 23 April, the Court noted that an issue had arisen in relation to whether an adoption order had been made in relation to the Plaintiff. On 28 May, it was noted that the Plaintiff required an opportunity to obtain information concerning his status as an eligible person. On 9 July, directions were made for further evidence and on 6 September, the Court directed the Plaintiff to file and serve any notice of motion, together with affidavits in support by 4:00 p.m. on 17 September with the Defendant to file and serve evidence in reply, or in support of the settlement reached being set aside, by 4:00 p.m. on 17 September. Further directions were made on 20 September and on 28 October. The directions were made for submissions to be delivered to my Chambers on 9 October (varied on 18 October).

11. On 18 October, at my request, my Associate sent an email to the legal representatives which included:

“His Honour refers to the discussion at Court this morning and notes that the matter of Daley v Donaldson was in the List today ready for a hearing date for the notice of motion. The legal representatives were prepared to take the first available date that the matter could be listed.

Shortly after the matter was listed, his Honour was advised of a settlement which enables this matter to be listed for hearing on Thursday, 28 October 2021.

As such, his Honour has made the following orders in proceedings 2020/353698:

Notes the associated proceedings 2021/37157.

Orders that orders 2 and 3 made in Court on 18 October 2021 be varied as follows:

(2) Directs that each party is to deliver to the Chambers of the Succession List Judge, in hard and soft copy, by 4:00 p.m. on 25 October 2021, an outline of submissions which is to include an index of affidavits upon which it is intended to rely and identify the notice of motion moved upon.

(3) Stands the notice of motion over for hearing before Hallen J at 10:00 a.m. on Thursday, 28 October 2021 with an estimated duration of one half day.”

Matter raised at the hearing

12. The hearing proceeded as a live hearing on 28 October 2021.

13. Despite the evidence to which I shall refer given by the Plaintiff, his counsel made the submission, orally, that, despite his adoption (which was said to have been finalised in Queensland), the Plaintiff remained an eligible person as a child of the deceased. This had not been raised in the written submissions, but was only raised, in the following way, during oral submissions (Tcpt, 28 October 2021, p 04(46)-05(26)):

“Bates: … There is one complication which I became aware of last night, unfortunately. Last night I actually looked through the Adoption Act and there is a wrinkle that says that where the adoption is made in favour of the step‑parent, that the biological parent still retains the‑‑

HIS HONOUR: That isn't referred to anywhere, Mr Bates.

Bates: I know it is not referred to because I only became aware of it last night.

HIS HONOUR: I am not entirely sure. I think it is the biological parent who is married to the step‑parent, but I am not entirely sure. I think once the adoption order is made‑‑

Bates: Just so your Honour is aware of the full wrinkle, up until even today we have never actually seen the formal adoption order. What we do have, what we have received, as I have mentioned as part of this issue, is we have a letter from the New South Wales Adoption saying that although the adoption had been commenced in New South Wales, it was actually finalised in Queensland and the Queensland legislation has a provision similar to the one that I just mentioned to your Honour.

HIS HONOUR: I don't know about that because I am not entirely sure that that is how I read the evidence, but that was unknown. That hasn't been raised at any time up until now.

Bates: No, your Honour, I accept that.

HIS HONOUR: So you will have to take me to that in due course.

Bates: Yes, your Honour.”

14. At the conclusion of the submissions, to enable both counsel to further consider the point, the following directions were made:

“2. Directs that any submissions that either party wishes to make on the question of the effect of the adoption be delivered to the Chambers of the Succession List Judge, in hard and soft copy, and served on the other party by the same date and time by 4:00 p.m. on 4 November 2021.

3. Directs submissions in reply, in hard and soft copy, be delivered to the Chambers of the Succession List Judge by 4:00 p.m. on Tuesday, 9 November 2021.”

15. On 4 November 2021, the Defendant’s counsel provided submissions in chief and, on 5 November 2021, the Plaintiff’s counsel did the same. On 9 November 2021, both the Plaintiff’s and the Defendant’s counsel provided the Court with submissions in reply.

16. With the Plaintiff’s submissions when first received, was an affidavit of Ms D Rakic, solicitor, of 3 November 2021. Based upon that affidavit, the Plaintiff made further submissions on the merits of the application.

17. The affidavit should not have been delivered to the Court. The Court’s direction stipulated that submissions were to be provided on a limited topic. No application was made for leave to re-open the Plaintiff’s case or to rely upon further evidence. Nor has any such application been made since the conclusion of the hearing of the notice of motion.

18. In any event, in view of the opportunities given to the Plaintiff between April and September 2021 to file and serve evidence on the topic of the Plaintiff’s adoption to which I have referred above, the dictates of justice and the need for the Court to make orders with the object of eliminating any lapse of time between the commencement of the proceedings and their final determination beyond that reasonably required for the interlocutory activities necessary for the fair and just determination of the issues in dispute between the parties and the preparation of the case for trial, I have ignored the affidavit.

19. In all the circumstances, I do not propose to delay the determination of the issue the subject of the notice of motion which notice of motion has already delayed the determination of these, and the associated, proceedings.

The evidence relied upon on the notice of motion

20. The Plaintiff relied on the affidavit of Mr Cossalter sworn 16 September 2021, three affidavits of the Plaintiff sworn 29 March 2021, 29 June 2021 and 21 July 2021, respectively, and the affidavit of Toni Thomas sworn 28 June 2021.

21. The Defendant relied on two affidavits, each of Ms Hawes, affirmed 17 September 2021 and 22 July 2021, respectively.

22. There is no dispute that the deceased’s last Will was made on 14 June 2019. Relevantly, it provided:

“3. In this will the word ‘children’ includes any child by blood or relation.

1. My trustees hold my estate on trust:

…

(c) TO GIVE the amount of $5,000.00 to each of my estranged children Glenn Daley (GLENN) and Rosealie Daley (ROSEALIE). I no longer have contract with my children GLENN and ROSEALIE, and due to the break down in our relationship it is my wish that they don’t receive any further distribution from my estate.

(d) TO GIVE the rest and residue of my estate to my daughter DAWN.”

23. The Plaintiff’s Summons was filed on 14 December 2020.

24. In his affidavit in support of the Summons, the Plaintiff said virtually nothing about the circumstances relating to his childhood and adolescence, particularly the specifics of his living situation and the circumstances in which he came to use the surname “Daley”, which, of course, is not the surname of the deceased.

25. The Plaintiff stated only that “[T]he day I was born [the deceased] walked out on my Mum”; that he had never lived with the deceased; that he did not see the deceased until he was aged about 6 or 7 years old; that he had never had any regular telephone calls, or correspondence, with the deceased; and that he had only once received a birthday present from the deceased, that he could remember, when he was aged 14 years.

26. As part of his evidence, filed after the court-annexed mediation, but read on the notice of motion, the Plaintiff stated that he had been adopted by Keith John Daley, although the circumstances surrounding the adoption, its precise date, and the documents evidencing the adoption order were not in evidence. It seems that Mr Daley was married to the Plaintiff’s mother, the former wife of the deceased.

27. In his affidavit of 29 June 2021, filed and served after the mediation, and read on the notice of motion, the Plaintiff stated:

“6. At the time of swearing my first Affidavit, I was not aware that I was formally adopted by Keith John Daley.

7. It has since come to my attention that I was in fact adopted by Keith John Daley.”

28. Mr Cossalter, gave the following evidence, in his affidavit sworn 16 September 2021, at [12] – [16]:

“When the Plaintiff swore and filed his primary Affidavit, his instructions to me as set out in the said Affidavit reflected the belief by the Plaintiff, that he was eligible to bring a family provision claim as a biological child of the deceased’s pursuant to section 57(1)(c) of the Succession Act 2006 (NSW) and clauses 3 and 5.1 (c) of the Deceased’s last Will made on 14 June 2019.

I was served with an Affidavit sworn by the common Defendant, Dawn Jeanette Donaldson on 16 March 2021 in the associated proceedings, who raised the possibility, at paragraph 41 therein, that the Plaintiff and the associated Plaintiff had been given up for Adoption by the deceased, although the common Defendant did not include any evidence to corroborate the possibility of the adoption. This affidavit caused me to reflect on the basis of the Plaintiff’s eligibility.

After I received the Affidavits by the associated Plaintiff and the common Defendant, I took further instructions from the Plaintiff, who instructed me that he had no knowledge or recollection that the deceased had given up the Plaintiff or his sister Rosalie for adoption.

The present Plaintiff’s instructions to the effect are set out in one of his Further Supplementary Affidavit sworn and filed on 29 June 2021, at paragraphs 6 to 9 therein.

Previously, the common Defendant had filed a Notice of Eligible Persons in the present proceedings on 17 December 2020, which identified the present Plaintiff as an eligible son of the deceased. The common Defendant did not withdraw the contention that the present Plaintiff was an eligible son at any time prior to the Court-annexed mediation.

On the day of the mediation, it was my belief as the Plaintiff’s Solicitor, that the aforesaid Affidavits meant that there was no actual evidence that the Plaintiff had been given up for adoption by the deceased and that he was eligible as the deceased’s biological child.” (My emphasis)

29. In her affidavit affirmed on 13 March 2021, the Defendant had actually stated, at paragraph 41:

“[The deceased] found out that Rosealie and Glen were using Keith’s name after he received and signed adoption letters for the release of Rosealie and Glenn.”

30. She did not include any further evidence regarding the possibility of the Plaintiff having been adopted. However, in her affidavit affirmed on 22 July 2021, that is, after the mediation, she wrote:

“7. I add that I learn [sic] of the adoption letters by the conversation I had with Dad at that time. I never saw the letters, nor was I ever told if the adoption was completed. As expressed in my affidavits dated 13 March 2021 at paragraph 6, I stop living and having any meaningful contact with my Mother or Keith since I was 11 years old.

…

10. Although I have not seen or been provided with documentation that Glenn is adopted, I accept that he was adopted by Keith as admitted by Glenn on his own words at paragraph 7 of Glenn’s affidavit dated 29 June 2021.”

31. Ms Hawes, in cross-examination, stated that, prior to the mediation, neither the Defendant, nor the Plaintiff in the associated proceedings, had informed her that the Plaintiff had been adopted and that, as at the date of the mediation, she was not aware of that fact: Tcpt, 28 October 2021, p 15(17-36). She added, in response to a question in cross-examination by counsel, that the basis of the reference to the Plaintiff as an eligible person, in a notice of eligible person served prior to the mediation, and in the settlement agreement, was “He was eligible as a son. There was no evidence to the contrary on that day, including put forward by your own instructing solicitor”: Tcpt, 28 October 2021, p 17(35-40).

32. The Defendant did not assert that the Plaintiff knowingly misrepresented his status as a child of the deceased. She accepted that the parties had both operated under a common mistaken assumption that the Plaintiff was a child of the deceased, neither of them knowing, at least prior to the mediation, of his adoption.

31. Nor did the Defendant attribute fault to either of the parties for not knowing of the Plaintiff’s adoption at the time the settlement agreement was signed. It was simply asserted that no family provision order could have been made if the Plaintiff was not an eligible person as defined in s 57(1)(c) of the Succession Act.

32. The Plaintiff submitted that, prior to the mediation, the Defendant had made an affidavit on 13 March 2021, in which she had, at paragraph [41], raised the possibility that the Plaintiff had been given up for adoption by the deceased, but had not provided any evidence to establish that adoption had occurred. It was submitted that despite the uncorroborated assertion, the parties, nonetheless, had agreed, at the mediation, to settle the Plaintiff's claim.

33. The Plaintiff did not assert that the Defendant knew that the Plaintiff had been adopted. This is evident from the evidence of Mr Cossalter.

34. It appears clear also that, on his instructions, the Plaintiff was only relying upon eligibility under s 57(1)(c) of the Succession Act and that despite what had been written by the Defendant, “there was no actual evidence that the Plaintiff had been given up for adoption by the deceased and that he was eligible as the deceased’s biological child”.

35. I accept the evidence of Ms Hawes, the effect of which was, that, at the mediation, both the Defendant, and she, believed, on the basis of documents that were then available, that the only ground of eligibility upon which the Plaintiff relied, was that he was a child of the deceased.

36. The Plaintiff, in affidavits filed and served after the mediation, placed reliance upon s 57(1)(e) of the Succession Act, asserting that he is a person (i) who was, at any particular time, wholly or partly dependent on the deceased, and (ii) was, at that particular time or at any other time, a member of the household of which the deceased was a member. Reliance upon this ground of eligibility was not evident from his affidavit in support of the Summons. Indeed, it might be argued, that his evidence stated, clearly, that he had never been a member of the household of which the deceased was a member. The Defendant has not had any opportunity to test the Plaintiff’s assertion of that ground of eligibility.

Submissions

39. I shall now set out the submissions in more detail.

40. The Plaintiff contended that the settlement agreement constituted a binding contract, the parties intending to be immediately bound to the performance of its terms: Masters v Cameron (1954) 91 CLR 353; [1954] HCA 72. He submitted that it embodied a compromise, the parties having agreed, despite the uncorroborated possibility of an adoption having occurred, to settle the Plaintiff’s claim for a family provision order.

41. Counsel pointed to the fact that the law encourages parties to reach settlements of their disputes, particularly in family provision matters, which avoids the uncertainty, and expense, of litigating every issue and protects the estate from being eroded by legal costs.

42. During oral submissions, counsel for the Plaintiff also stated that the settlement should not be disturbed (Tcpt, 28 October 2021, p 24(06-13)):

“Because both parties had the opportunity to investigate the extra possibility but despite that we were content to reach a settlement based on the information that was available. There are always issues in any case. There are always issues that could be investigated further. People make commercial decisions to try and resolve proceedings and everyone has acted bona fide here and they've settled the case on the basis of those orders. The fact that subsequently the plaintiff raises an issue. That was an issue that could have well been investigated by either party really up to the mediation.”

43. In relation to the matter raised orally, counsel for the Plaintiff relied, firstly, on s 38AB of the Adoption of Children Act 1964 (Qld) (the Queensland Act), which states that a simple adoption does not end the legal relationship between an adopted child and individuals who were, immediately before the adoption, the child’s parents: Tcpt, 28 October 2021, p 25(31-33). Furthermore, he submitted that, although s 95(2)(d) of the Adoption Act 2000 (NSW) (the NSW Act) states that an adopted child ceases to be regarded as the child of their birth parents, this is subject to the exception in s 95(3) which relates to step-parenting.

44. Counsel for the Plaintiff acknowledged, however, that s 95(3) does not specifically address the effect of an adoption order on a biological parent with whom the child is not living at the time of the adoption.

45. Counsel for the Plaintiff pointed to the case of In Application of ‘A’ and ‘B’ and the Adoption Act 2000 (2005) 63 NSWLR 2005, in which White J, in dealing with an application by a biological mother and non-biological step-father to adopt the biological mother’s child, made a declaration that the biological mother did not cease to be the child’s parent after the adoption. White J did not comment on the effect of the adoption on the biological father.

46. Counsel for the Plaintiff submitted that the proper construction of the expression “in relation to” used in s 95(3) of the NSW Act has the effect that the biological father still remains a birth parent after the adoption and that, as such, the Plaintiff remains the son of the deceased for the purpose of his eligibility for family provision under s 57(1)(c) of the Act.

47. Counsel for the Defendant submitted that, in accordance with s 28(1) of the Queensland Act, an adopted child ceases to be the child of any person who was a parent before the making of an adoption order, and that any such person ceases to be the parent of the adopted child. Further, the adopted child becomes the child of the adopter and the adopter becomes the parent of the child. Further, he submitted that s 102 of the NSW Act makes clear that an order for adoption made in another Australian state has the same effect as an adoption order made under the NSW Act (if it is in accordance with the laws of that state and has not been rescinded).

48. Counsel for the Defendant also submitted that s 38AB of the Qld Act relates solely to foreign adoptions and is not relevant to an adoption of a person in Queensland.

49. In relation to the NSW Act, counsel for the Defendant referred to the case of Re D [2006] NSWSC 808, in which White J had stated at [4] – [6]:

“Subsection 95(3) must operate not only despite s 95(1), but also despite s 95(2)(d). If that were not so, there would be a direct conflict between ss 95(2)(d) and 95(3) in a case where an adoption order is made in favour of a step-parent with whom the birth parent is living. If there is such a conflict, subs 95(3) prevails.

The order now sought is for the adoption of the child in favour of the plaintiff only. I am prepared to make that order provided it is shown that the plaintiff is still married to the child’s mother and they are still living together. If that is not the position, the effect of making an adoption order would be that the child’s mother would cease to be regarded in law as his parent.

The evidence that the plaintiff and the child’s mother are married and living together is contained in an affidavit of 24 June 2005. A further affidavit should be filed showing whether that is still the position. If it is, I will make the order sought.”

50. Counsel for the Defendant submitted that, in the present circumstances, there can be no controversy as to the legal effect of the Plaintiff’s adoption under NSW law. Accordingly, it was submitted that, once the Plaintiff was adopted, the deceased ceased to be regarded, in law, as the Plaintiff’s parent in accordance with s 95(2)(d) of the NSW Act. The effect of s 95(3) was to preserve the legal relationship as between the Plaintiff and his biological mother, who, it is assumed, was cohabiting with Keith Daley at the time the adoption order was made.

51. Ultimately, counsel for the Defendant submitted that the Plaintiff is, in fact, lawfully the child of Keith Daley and not the deceased and should be recognised as such in these proceedings.

52. In his submissions in reply, counsel for the Defendant re-iterated that a correct interpretation of s 95(3) is that it operates to maintain the status of a birth parent on the contingency that they are living with the adoptive parent in respect of whom an adoption order is made.

53. It seems to me that I need not determine the issue. What I must do is consider the evidence available to the parties at the date of the settlement agreement and consider what facts were known to them at the time.

54. At the hearing of the substantive proceedings, the Plaintiff, can endeavour to establish any ground of eligibility referred to in s 57(1) of the Act. The Defendant will have the opportunity to test any evidence upon which the Plaintiff then relies. It is neither necessary, nor helpful, to become entangled in that debate in the determination of the notice of motion.

The Law

55. Section 73 of the Civil Procedure Act 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.

56. Section 73(1) appears to envision a three stage process. First, the Court must be satisfied that there is a question in dispute between the parties concerning whether “the proceedings have been compromised or settled between the parties”. It is only when that is established that the Court considers the terms upon which the matter has been compromised or settled. The third stage of the process is the making of such orders as the Court considers appropriate to give effect to any such determination.

57. In Oberon Shire Council v Kiangatha Holdings Pty Ltd [2021] NSWLEC 30, Moore J noted at [65] – [67]:

“For present purposes, to exercise the power in s 73 of the Civil Procedure Act, it is necessary that I can be satisfied that ‘the proceedings have been compromised or settled between the parties’ as a foundational point to determining the terms upon which that might have occurred.

I am unable to find any authority that expressly defines what might constitute a compromise or settlement that is capable of being brought under the umbrella of s 73 of the Civil Procedure Act in order to invoke jurisdiction to exercise the power contained in that provision.

To the relevant extent that Court of Appeal authority provides guidance, it is to the effect that any bargain asserted to have been reached between the parties to litigation must be an agreement that was contemplated by those parties to comprehend all issues in dispute between them.”

58. Schmidt AJ in BMW Australia Finance Ltd v Mehajer Vision Pty Ltd [2021] NSWSC 1057, provided some additional guidance, at [11] – [13]:

“There was no issue about the applicable law discussed in Masters v Cameron (1954) 91 CLR 353; [1954] HCA 72. It has been applied in later cases such as Toll (FGCT) Pty Limited v Alphapharm Pty Limited (2004) 219 CLR 165; [2004] HCA 52 and Pavlovic v Universal Music Australia Pty Limited (2015) 90 NSWLR 605; [2015] NSWCA 313.

What is decisive in a dispute over whether or not a settlement has been arrived at, which is contractually binding, is the parties’ intentions, objectively ascertained from the relevant documents, read in the context of the surrounding circumstances, including the commercial context of their dealings. The parties’ subsequent conduct may also shed light on their earlier intentions.

The parties’ intentions must be determined objectively in light of the language which they used: Masters v Cameron at 362. The objective determination of their intentions also requires that their communications be considered in their context, in light of ‘the parties’ dealings over the time leading up to the making of the alleged contract’: Pavlovic at [15].”

59. The scope of the power in s 73 was discussed by Basten JA in Gorczynski v Bendigo and Adelaide Bank Ltd [2016] NSWCA 170 at [6] - [8] (omitting citations):

“Section 73 (and its analogues in other jurisdictions) has been understood to confer power on the court to deal with settlements in the proceedings to which they relate, rather than leaving the parties to commence separate proceedings to enforce a settlement. Accepting that to be the primary purpose of the provision, it is nevertheless expressed in broad terms as to the scope of the power conferred, terms which should not be read down by implied constraints. Rather, the breadth of the power as it operates in the Supreme Court is confirmed when it is read in the context of other powers conferred on the Court. Thus, s 56 of the Civil Procedure Act, to which the primary judge referred, states that the court must give effect to the overriding purpose of facilitating ‘the just, quick and cheap resolution of the real issues in the proceedings.’ In order to undertake that function, the court must have the necessary powers to assist it to identify what are the ‘real issues’ in the proceedings. In order to determine what are the real issues in the proceedings it is necessary for the court to seek to ascertain the extent to which the parties can or have narrowed their dispute, so as to limit the proceedings to that part, if any, which remains unresolved. That was the course which the primary judge undertook. If any express power were required for the judge to act on her own initiative, the court had power to act ‘of its own motion’ pursuant to s 86(3) of the Civil Procedure Act, subject always to according procedural fairness to each party.

The Court also has power to grant any remedy to which the party appears to be entitled, so that, as far as possible, all matters in controversy may be completely and finally determined, pursuant to s 63 of the Supreme Court Act 1970 (NSW). That may include relief which has not been sought in express terms. To similar effect, s 90 of the Civil Procedure Act provides that the Court is ‘at or after a trial, or otherwise, ... to give such judgment or make such order as the nature of the case requires’. The breadth of these powers is consistent with the general jurisdiction of the Supreme Court, being that which may be necessary for the administration of justice.

None of this is to suggest that there are no limits on the powers of the Supreme Court, a proposition which would be manifestly wrong. Nevertheless, as noted above, limits are not to be implied with respect to jurisdiction or powers conferred in unqualified terms. Limits imposed by the requirements of procedural fairness and by the creation of Commonwealth judicial power under the Constitution, are not engaged in the present case.”

60. In this case, the Defendant relies upon mistake. In Harvey v Phillips (1956) 95 CLR 235; [1956] HCA 27, the High Court discussed the principles which apply to the enforcement of compromises affected by mistake. At 243-244, it was said:

“But in the case of a compromise which is made within the actual as well as apparent authority of counsel a court does not appear to possess a discretion to rescind it or set it aside. The question whether the compromise is to be set aside depends upon the existence of a ground which would suffice to render a simple contract void or voidable or to entitle the party to equitable relief against it, grounds for example such as illegality, misrepresentation, non-disclosure of material fact where disclosure is required, duress, mistake, undue influence, abuse of confidence or the like.”

61. In Lewis v Combell Constructions Pty Ltd (1989) 18 NSWLR 528, the Plaintiff asserted, by way of an alternative argument, that there were “special rules for the compromise of litigation”. Finlay J referred to a number of authorities, one of which was Neale v Gordon Lennox [1902] AC 465, writing at 536E:

“the House of Lords clearly held that a mistake made during negotiations which resulted in a contractual compromise of the proceedings entitled the plaintiff to have the agreement set aside and the cause restored to the list for trial.”

62. His Honour continued, concluding, at 538E:

“What I perceive to be the relevant principle in the category of cases into which this matter falls is that in an appropriate case, especially before judgment is made, the overriding interests of justice and the court’s concern over its own procedure may mean that the court will not enforce a contract. Of course, contracts made during the court’s process to settle, if they are bona fide and not affected by any error, will normally be enforced. But I repeat my previous observation that whenever parties agree to a compromise of litigation they do so subject to the procedures of the court which include the possibility that the court may consider it unjust to enforce the terms of settlement or that it is in the interests of justice that the matter proceed to trial.”

63. In Neale v Gordon Lennox, at 470, it had been written that the power was derived from the court’s “general authority over justice between the parties”.

Mistake

64. In Cartwright on Misrepresentation, Mistake and Non-Disclosure (5^th Edition, 2019, Sweet & Maxwell), the following paragraphs appear:

“12-02 Different meanings of ‘mistake’.

A mistake is a misunderstanding, a misapprehension, a misconception, an erroneous belief. The word ‘mistake’ is in everyday use, and it is important to understand the legal significance of the term. Certain points should be noted from the outset: a mistake requires a positive state of mind, and can be only of the present, not the future; and risk-taking excludes mistake about the subject-matter of the risk.

12-03 A positive state of mind.

In order to succeed in a claim based on mistake, the claimant must show that, at the moment when he entered into the contract, he held a belief, or understanding, which was incorrect. He ‘misunderstood’ something: that is, he had an understanding about something which was (a) legally relevant to the validity of the contract or the terms on which it was concluded, and (b) in fact relevant to his decision to enter into the contract; and this understanding was incorrect. Such a misunderstanding is a positive state of mind: ignorance and forgetfulness, if they are not reflected in a positive erroneous belief, do not constitute mistake.”

65. Merely not having thought about a particular issue or just making no assumptions about a particular issue is not enough to establish a positive state of mind.

66. A common mistake arises when the mistaken belief is held by both parties: Clasic International Pty Ltd v Lagos (2002) 60 NSWLR 241; [2002] NSWSC 1155, at [41], applying Solle v Butcher [1950] 1 KB 671, 693. The gravity of the mistaken belief must be assessed by a close examination of the facts. (The term is distinguished from mutual mistake where both parties make a mistake but make different mistakes; and unilateral mistake, where a person makes a mistake and the other party to the contract knows that he or she has made that mistake yet proceeds with the contract.)

67. The Plaintiff relies upon the Defendant’s evidence, submitting that she took a risk concerning whether he was an eligible person. It is necessary, therefore, to refer to some other authorities.

68. In Kleinwort Benson Ltd v Lincoln City Council [1999] 2 AC 349, Lord Hope of Craighead wrote at [193]:

“Cases where the payer was aware that there was an issue of law which was relevant but, being in doubt as to what the law was, paid without waiting to resolve that doubt may be left on one side. A state of doubt is different from that of mistake. A person who pays when in doubt takes the risk that he may be wrong – and that is so whether the issue is one of fact or one of law.”

69. In Brennan v Bolt Burdon (a firm) & Ors [2005] QB 303, at [35], Bodey J wrote, in relation to a defence of common mistake which was raised to re-open a compromise:

“There is not an operative common mistake where there is doubt as to the law concerned and where the party wishing to reopen the contract [to compromise] went ahead with it (the contract) anyway.”

70. What Longmore LJ wrote, in rejecting a plea of mistake in Perpetual Trustee Co Ltd & Anor v BNY Corporate Trustee Services Ltd & Anor [2010] Ch 347 at [108], is of similar effect:

“Once a party appreciates that an assumption underlying a contract may be legally questionable, that party will usually bear the risk that that assumption will turn out to be false. There is then no room for mistake.”

71. In Deutsche Morgan Grenfell Group plc v Inland Revenue Commissioners & Anor [2007] 1 AC 558; [2006] UKHL 49, Lord Hoffman wrote, at [26] and [27]:

“This was a very compressed remark in the course of a discussion of other matters and I do not think that Lord Hope could have meant that a state of doubt was actually inconsistent with making a mistake. Contestants in quiz shows may have doubts about the answer (‘it sounds like Haydn, but then it may be Mozart’) but if they then give the wrong answer, they have made a mistake. The real point is whether the person who made the payment took the risk that he might be wrong. If he did, then he cannot recover the money. Speaking for myself, I think that there is a parallel here with the question of whether a common mistake vitiates a contract. As Steyn J said in Associated Japanese Bank (International) Ltd v Crédit du Nord SA [1989] 1 WLR 255, 268:

‘Logically, before one can turn to the rules as to mistake … one must first determine whether the contract itself, by express or implied condition precedent or otherwise, provides who bears the risk of the relevant mistake. It is at this hurdle that many pleas of mistake will either fail or prove to have been unnecessary.’

Likewise, the circumstances in which a payment is made may show that the person who made the payment took the risk that, if the question was fully litigated, it might turn out that he did not owe the money. Payment under a compromise is an obvious example: see Brennan v Bolt Burdon [2005] QB 303. I would not regard the fact that the person making the payment had doubts about his liability as conclusive of the question of whether he took the risk, particularly if the existence of these doubts was unknown to the receiving party. It would be strange if a party whose lawyer had raised a doubt on the question but who decided nevertheless that he had better pay should be in a worse position than a party who had no doubts because he had never taken any advice, particularly if the receiving party had no idea that there was any difference in the circumstances in which the two payments had been made. It would be more rational if the question of whether a party should be treated as having taken the risk depended upon the objective circumstances surrounding the payment as they could reasonably have been known to both parties, including of course the extent to which the law was known to be in doubt.

72. Lord Hope stated, at [64] - [65]:

“In support of these arguments reference is made to what I said in Kleinwort Benson [1999] 2 AC 349 about the state of mind of the payer who claims to have made a payment under a mistake. I said, at pp 409–410, that cases of mistake could vary from complete ignorance to a state of ample knowledge but a misapplication of what was known to the facts-from sheer ignorance to positive but incorrect belief, as Mason CJ said in David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353, 374. But I also said that a state of doubt was different from a mistake, and that a person who pays when in doubt takes the risk that he may be wrong. I ended this passage, at p 411c–d, by saying that the critical question was whether the payer would have made the payment if he had known what he is now being told was the law.

These propositions are capable of further refinement: see Professor McKendrick, ‘Mistake of Law-Time for a Change?’ in The Limits of Restitutionary Claims: A Comparative Analysis (ed Swadling) (1997), pp 232–233; Graham Virgo, The Principles of the Law of Restitution (1999), p 161; Burrows, The Law of Restitution, 2nd ed, p 140. The difficult question is what degree of doubt is compatible with a mistake claim, as Professor Burrows points out. I see the issue as being essentially one of causation. What was the effect of the mistake on the payer? But the basic principle is, of course, that of unjust enrichment. At what point can it be said that the payee has been unjustly enriched? The answer to these questions will depend on the facts of the case. One can leave on one side cases where there is another ground on which the payee was entitled to be paid: frustra petis quod mox restiturus es. As for the rest, the payer's reason for making the payment despite his doubt will have a part to play in resolving the issue as to whether the payer, who would not have made the payment had he known the true state of the facts or the law at the time of the payment, should bear the risk or can recover on the ground that he was mistaken.”

73. There remains a debate about the existence, and extent, of the jurisdiction at equity to set aside a contract on account of common mistake. The issue of common mistake and s 73 of the Civil Procedure Act was recently considered by Williams J in Yu v Yu [2020] NSWSC 1904 at [72] – [87]:

“…the Respondent contends that the parties entered into the Principal Agreement and Collateral Agreement under the common mistake …

The Respondent’s written submissions stated that the agreements were either void or voidable. During oral closing submissions, the Respondent’s solicitor refined his argument to a submission that the Principal Agreement is voidable by reason of common mistake. The Respondent did not seek a declaration to this effect, but made this submission as one of the grounds on which he opposes the relief sought by the Applicants declaratory and other relief sought by the Applicants relying on s 73 of the Civil Procedure Act.

By confining his submission to one that the agreements are voidable, rather than void, for common mistake, I understand that the Respondent is relying on the equitable jurisdiction to rescind for common mistake as described by Denning LJ in the well-known decision of the English Court of Appeal in Solle v Butcher [1950] 1 KB 671 rather than the principles pursuant to which common mistake may avoid a contract at law.

Both the Applicants and the Respondent submitted that Solle v Butcher remains good law in Australia, notwithstanding that the majority of the Queensland Court of Appeal in Australia Estates Pty Ltd v Cairns City Council [2005] QCA 328 (Australia Estates) expressed the view that Solle v Butcher is no longer good law in Australia.

In the context of discussing grounds on which contracts may be set aside in equity in Solle v Butcher, Denning LJ said (at 693):

‘A contract is also liable in equity to be set aside if the parties were under a common misapprehension either as to facts or as to their relative and respective rights, provided that the misapprehension was fundamental and that the party seeking to set it aside was not himself at fault.’

In the subsequent decision of Great Peace Shipping Ltd v Tsavliris Salvage (International) Ltd [2003] QB 679 (Great Peace Shipping), the English Court of Appeal declined to follow Solle v Butcher, holding that there was no equitable jurisdiction to set aside contracts for common mistake beyond the comparatively more restrictive approach at common law. Lord Phillips of Worth Matravers MR, writing for the English Court of Appeal, reviewed the state of authorities concerning the doctrine of mistake at common law (including the House of Lords decision in Bell v Lever Brothers Ltd [1932] AC 161 and the High Court of Australia decision in McRae v Commonwealth Disposals Commission (1951) 84 CLR 377) and formulated the following elements that must be present if common mistake is to avoid a contract at law (at [76]):

‘(i) there must be a common assumption as to the existence of a state of affairs; (ii) there must be no warranty by either party that that state of affairs exists; (iii) the non-existence of the state of affairs must not be attributable to the fault of either party; (iv) the non-existence of the state of affairs must render performance of the contract impossible; (v) the state of affairs may be the existence, or a vital attribute, of the consideration to be provided or circumstances which must subsist if performance of the contractual adventure is to be possible.’

Great Peace Shipping represents the law as it currently stands in England and Wales.

The decision of the Queensland Court of Appeal in Australia Estates is the most recent decision of an Australian intermediate appellate court following the English Court of Appeal’s decision in Great Peace Shipping.

In Australia Estates, Atkinson J conducted a detailed analysis of the English and Australian authorities that bear on the question whether there is an equitable doctrine of common mistake.

Atkinson J considered that the reasoning in Great Peace was persuasive and that the approach to Solle v Butcher in the High Court of Australia had been ‘somewhat qualified’. Her Honour concluded that the test in Solle v Butcher – that is, whether the parties’ common mistake as to the facts or their respective rights was fundamental and the party seeking to set aside the contract was not at fault – was ‘no longer the appropriate test’. The question posed by the appeal was therefore whether the contract was void at common law for common mistake. The answer to the question turned on whether the five elements identified in Great Peace Shipping were satisfied.

Jerrard JA agreed with Aktinson J’s analysis of the law. However, the outcome of Australia Estates ultimately turned on McMurdo P and Jerrard JA concluding that the evidence did not establish any common mistake.

The learned authors of Meagher Gummow & Lehane’s Equity: Doctrines & Remedies (5th ed, LexisNexis Butterworths, 2015) state (at [14–080]):

‘Save perhaps for one matter, it may now confidently be said that the views of Lord Denning that there was a jurisdiction in equity to rescind for common mistake, although they were followed in a number of cases, do not represent the law …

The possible qualification is whether, as a matter of precedent, it remains free to Australian courts below the High Court to disregard Solle v Butcher as has occurred in England because of the reliance upon it in Taylor v Johnson. However, the reasons of Atkinson J in the Queensland Court of Appeal in Australia Estates Pty Ltd v Cairns City Council, with whom Jerrard JA agreed, carefully address the English and Australian authorities and conclude not only that Solle v Butcher is no longer good law in Australia either, but also that because Taylor v Johnson was a case of unilateral mistake, courts other than the High Court were free to follow the earlier scepticism of Solle v Butcher to be found the McRae and Svansio decisions. Whether it was open to that intermediate appellate court of appeal to take that step is no doubt debatable …’

In Schwartz Family Co Pty Ltd v Capitol Carpets Pty Ltd [2019] NSWSC 238 (Schwartz Family Co), Wright J referred to Great Peace Shipping and Australia Estates and the subsequent judgments of Australian courts at first instance in the years since Australia Estates. His Honour referred to:

(1) Hawcroft v Hawcroft General Trading Co Pty Ltd (2016) 18 BPR 35,863; [2016] NSWSC 555 (Hawcroft), in which it was not strictly necessary for Young AJ to decide whether equity would give relief in respect of an operative common mistake, but his Honour expressed the view that ‘despite what is said in Great Peace Shipping, there must be some room for the operation of equitable principles’. [6] As Wright J observed in Schwarz Family Co, the New South Wales Court of Appeal allowed the appeal in Hawcroft on grounds that did not relate to common mistake, and Emmett AJA (with whom Basten and Leeming JJA agreed) made no adverse comment on the part of Young AJ’s judgment addressing common mistake: Hawcroft General Trading Co Pty Ltd v Hawcroft [2017] NSWCA 91 at [160]–[164];

(2) Rees v Rees [2016] VSC 452 (Rees), in which McMillan J found that the parties were operating under two common mistakes when they executed the settlement deed in question. Her Honour acknowledged the ‘debate about the existence and extent of the jurisdiction at equity to set aside contracts on account of common mistake’ and concluded that there is such jurisdiction although the circumstances in which it may be exercised are not clearly defined. McMillan J declined to follow Australia Estates ‘[t]o the extent that [it] says otherwise’;

(3) Westpork Pty Ltd v Bio-Organics Pty Ltd [2018] WASC 291 in which Kenneth Martin J concluded that the High Court had not yet spoken definitively to endorse all of Solle v Butcher or, at least, had not spoken in terms that were inconsistent with Atkinson J’s analysis in Australia Estates, and followed the five elements test in Great Peace Shipping that Atkinson J identified as representing the law in Australia Estates. [8] The judgment contains no reference to Hawcroft or Rees.

Wright J stated in Schwartz Family Co that the law in Australia in relation to common mistake ‘is in an unclear, if not quite unsatisfactory, state’ and that ‘there may be some doubt whether there exists any equitable jurisdiction to set aside a contract for common mistake’. [9] I respectfully agree. The uncertainty arises from the possible qualification referred to by the learned authors of Meagher Gummow & Lehane’s Equity: Doctrines & Remedies to which I have already referred above.

Ultimately, Wright J did not need to resolve the controversy in Schwartz Family Co because the party seeking to set aside the contract in question relied on alleged fundamental misconceptions going to the root of the contract. His Honour found that there were no such fundamental misconceptions in that case, and nor were any misconceptions shared by both parties to the contract. Accordingly, the circumstances of the case did not attract the exercise of any equitable to jurisdiction to set aside a contract on the grounds that the parties were under a common misapprehension that was fundamental and the party seeking to set it aside was not at fault, if such jurisdiction exists.

Wright J added that if, contrary to his Honour’s finding, the parties did enter into the contract under a misapprehension that was fundamental to the contract, it would not follow that equity would set aside the contract, assuming that the equitable jurisdiction referred to in Solle v Butcher exists. His Honour considered that Lord Denning’s statement of principle in Solle v Butcher had not been endorsed by the High Court in either McRae v Commonwealth Disposals Commission (supra) or Svanosio v McNamara (1956) 96 CLR 186 and it follows from those decisions of the High Court that any equitable jurisdiction to rescind contracts for common mistake is limited to circumstances in which it would be so inequitable for a party to be held to his contract that equity would set it aside, and that equity will rarely grant that relief outside circumstances involving equitable fraud or misrepresentation on the part of the party seeking to uphold the contract.”

74. In McLachlan v Sydney Trains [2021] NSWSC 283, Parker J wrote, at [107]:

“A further potential basis for equitable intervention left open in Taylor v Johnson would be common mistake. On my findings, both parties in this case were labouring under the same mistake about Dr Ahmed’s opinion. In England the proposition that equity allows rescission for common mistake has been rejected, but its status in Australia remains subject to debate: see Heydon, J D, M J Leeming and P G Turner, Meagher, Gummow and Lehane’s Equity Doctrines and Remedies (5th ed, 2015, LexisNexis Butterworths) at [14-080].”

75. In my opinion, it is neither necessary, nor desirable, to resolve whether or not the equitable jurisdiction exists because I am satisfied that the justice of the case warrants the intervention of the Court.

76. Putting the issue of common mistake to one side, it is also necessary to refer to s 98 of the Succession Act, which contemplates the making of consent orders following mediation. Relevantly, s 98(3) provides:

“98 Mediation, orders with consent and costs

…

(3) The Court may make a family provision order in terms of a written agreement (a consent order) that:

(a) is produced to the Court by the affected parties in relation to an application after mediation, or on the advice of a legal practitioner, and

(b) indicates the parties’ consent to the making of the family provision order in those terms.”

77. In relation to the settlement of family provision proceedings generally, in Hore v Perpetual Trustee Co Ltd (Supreme Court (NSW), Windeyer J, 8 June 1995, unrep), the Court referred to the provisions of the Family Provision Act 1982 (NSW), and wrote, at 11-12:

"Those provisions give the basis for exercise of jurisdiction by the court. Parties are absolutely entitled of course to make any rearrangement of the terms of a will they wish, if all beneficiaries are of age and absolutely entitled. That has nothing whatever to do with the jurisdiction under the relevant Act.

Section 7 and s 9(2) raise jurisdictional questions. This has been described in various ways, sometimes making it appear discretionary, but there is no doubt now that for the court to assume jurisdiction, the provisions of s 9(2) must be satisfied. See Singer v Berghouse (1994) 181 CLR 201 and White v Barron (1980) 144 CLR 431.

As the power to make orders is governed by s 9(2) and s 7, the court cannot by consent, assume a wider jurisdiction. Parties cannot by consent, confer power upon the court to make orders which the court lacks power to make. See Thomson Australian Holdings Pty Ltd v The Trade Practices Commission (1981) 148 CLR 150 at 163.

Settlements of claims under the Family Provision Act are, of course, very common. It is obviously in the interest of the parties and the court to encourage settlement and in any week the Masters and Equity Division may be asked to make a number of orders agreed between the parties in such actions. In such matters, in my experience, the court looks quickly at the evidence, and is informed of the relevant facts by counsel or solicitor, and if the matter appears to be reasonable makes the orders. No detailed consideration of jurisdiction takes place as long as the plaintiff appears to have a proper basis for his or her claim. In cases where the interests of infants or unascertained classes of persons may be affected by the orders, then the proposed orders are considered in more detail, not usually on the jurisdictional question, but more often on relevant terms of the orders themselves, and the extent of the benefit provided by them. On occasions the court refused to make the orders proposed, but this is unusual."

78. The same principles apply in respect of the Act.

79. In Schaechtele v Schaechtele [2008] WASC 148, Le Miere J, in the Supreme Court of Western Australia, wrote, at [18]:

"This Court cannot make an order giving effect to the proposed settlement unless the Court thinks that such provision should be made out of the estate of the deceased for the proper maintenance or support of the plaintiff. But that does not mean that the Court is in effect to hear the matter as if it were it a contested application and then to give or withhold orders to give effect to the settlement by comparing the settlement with the judgment which the Court would have given. The Court must give proper consideration to the evidence before it. The Court should be aware of the risks of litigation in an area in which reasonable people can reasonably reach different conclusions and give proper weight to the fact that the parties wish to effect the settlement. If the Court is satisfied that the settlement falls within the bounds of a reasonable exercise of discretion then the Court should make orders to give effect to that settlement."

80. Mason P, in Bartlett v Coomber [2008] NSWCA 100 at [56] – [58], referred to the role of compromise agreements as follows:

“I accept that the court’s power to reject a compromise reached in proceedings under the Act is available both where the sum to be provided is too low or too high. Either extreme might indicate, for example, that the proceedings were being conducted through to completion for a purpose foreign to that of the Act and/or that some fundamental mistake vitiated the settlement process.

But it must be borne in mind that litigation under the Act takes place in an adversary context in which the active parties to the particular litigation are usually expected to be the best judges of what is in their own interests. The policy of Australian law encourages the settlement of disputes ... Our legal system would collapse were it not for the fact that most disputes are resolved by agreement.

One of the principles giving effect to this policy is the principle that a valid compromise gives effect to an agreement that effectively supersedes the antecedent rights of the parties. The possibility of greater success and the risk of greater failure is transposed into an arrangement that frees the litigants and witnesses of the risks, costs and toils of further disputation. This principle is not displaced in the context of proceedings under the Act, although for reasons already outlined, the court may decline to give effect to a settlement if doing so failed to effectuate the specific policies of the Act, amounted to an abuse of process or otherwise offended public policy in a demonstrable way.”

81. Bryson AJA wrote in Bartlett v Coomber, at [84]-[85]:

“The agreement could only be given effect by an order made by the Court, and the Court could only act in exercise of the power in s 7 of the Family Provision Act 1982. If claimants and executors agree to settle a Family Provision claim their agreement cannot have effect unless the Court exercises its power under s 7 and orders provision in accordance with the agreement. Whatever their agreement says, obtaining an order of the Court is impliedly a condition of its effectiveness.

If the Court simply accepted the agreement of the parties and ordered the provision for which the agreement provides without considering exercise of its power under s 7 the Court would act in error; it would in substance fail to exercise its power.”

82. What had been written by Mason P at [58] above was repeated by Ward JA in Robinson v Robinson (2020) 102 NSWLR 1; [2020] NSWCA 4, at [105]

83. As was also written by Dalton J in Affoo v Public Trustee of Queensland [2012] 1 Qd R 408; [2011] QSC 309, at [24]:

“The final disposition of a family provision application calls for the exercise of the Court’s discretion, it cannot be achieved by agreement or deed. The rule has its origins in the policy that a person cannot by contract exclude the jurisdiction of the Court to make a family provision order. When parties to a family provision application make an agreement as to the final orders they believe ought to be made in the proceeding, a court will have regard to that agreement as a factor, usually a significant factor, in deciding what order to make in the exercise of its discretion. Accordingly, whatever the terms of the agreement reached at mediation in this case, it could not dispose of the family provision application made by Mr Blair; an order of this Court was required to do that.” (Footnotes omitted).

84. The statement made by Dalton J was approved by the Queensland Court of Appeal in Abrahams v Abrahams (2015) 13 ASTLR 406; [2015] QCA 286, at [30].

85. In Sergent v Glass (No 2) (2018) 18 ASTLR 294; [2018] NSWSC 1100, I wrote, at [75], albeit in the context of a case involving a person under a legal incapacity:

“Consequently, the role of this Court is to consider the terms of the proposed orders. The Court must be satisfied, on the evidence available before it, that such an order for provision is one that ought to be made. This, of course, involves a consideration of whether adequate provision has been made to the Plaintiffs. Without such a consideration, the Court does not have jurisdiction to make an order.”

86. Putting it another way, the Court must consider, in every case involving a claim for a family provision order, whether it should make orders to give effect to the compromise reached between the parties.

Determination

87. At the time the parties signed the settlement agreement, neither was aware of the actual existence of an adoption order.

88. In my view, there can be little doubt that the actions of the parties were the result of a common mistake. Their common misapprehension that the Plaintiff was a child of the deceased was fundamental to entering into the settlement agreement on the terms that they did. If someone had pointed out, unequivocally, at the time, that the Plaintiff was not an eligible person, under the definition of that term in s 57(1)(c) of the Succession Act, it would have been plain, and obvious, to both the Plaintiff and the Defendant, that the matter should not be settled on the basis that he was.

89. The Plaintiff failed to provide any detail in his evidence as to with whom he had lived throughout his childhood; where he had lived; and with whom he shared a parental relationship, particularly with his adoptive father. (However, given that the Plaintiff was not cross-examined, I am unable to draw any inference from his failure to do so. I merely mention it as a fact that enables me to draw the conclusion that there was a common mistake.)

90. Whilst the Defendant’s affidavit made on 13 March 2021 referred to documents relating to an adoption having been signed, I do not accept that this, when taken with the deceased’s Will, the allegation of the Plaintiff that he was a son of the deceased, the deceased’s Death Certificate, and the Notice of Eligible Persons, prevented each party from having a positive state of mind that the Plaintiff was in fact the deceased’s child.

91. The fact that neither party investigated the possibility of the Plaintiff’s adoption, despite having the opportunity to do so, does not preclude the parties from having formed a positive state of mind that the Plaintiff was the son of the deceased. In my view, this they did.

92. It seems to me that there was no settlement or compromise because of the mistake or misapprehension in relation to the status of the Plaintiff as an eligible person. Both parties were mistaken about a fundamental matter underlying the settlement or compromise, namely the status of the Plaintiff, a fact that went to the root of the settlement or compromise.

93. Furthermore, assuming in favour of the Defendant, and without deciding that Denning LJ’s statement of principle in Solle v Butcher represents the law in Australia unless and until the High Court decides otherwise, the common misapprehension concerning the status of the Plaintiff as an eligible person attracts the exercise of the Court’s jurisdiction in the interests of justice.

94. Even if I am wrong in reaching this conclusion, any settlement or compromise reached requires orders to give effect to it. As a matter of discretion, I would refuse to make orders that reflect any compromise that was reached between the parties.

95. I shall allow the parties to consider these reasons. Subject to any party seeking a different costs order within 7 days of the delivery of these reasons, the orders of the Court are that:

1. The Plaintiff’s notice of motion filed on 16 September 2021 be dismissed.

2. The costs of the notice of motion be the Defendant’s costs in the cause, other than in relation to the costs of the parties of the submissions following the conclusion of the hearing, in respect of which the Plaintiff should pay the Defendant’s costs.

3. The proceedings are listed for directions on 10 December 2021.

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Decision last updated: 25 November 2021