Euroasia (Pacific) Pty Ltd v Michael - [2008] VSC 153

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMERCIAL AND EQUITY DIVISION

COMMERCIAL LIST

No. 7851 of 2005

EUROASIA (PACIFIC) PTY LTD
(ACN 006 604 922)

Plaintiff

JOHN ANDREW MICHAEL
EDWINA KATE NARAIN
and
RAVI AMRIT NARAIN

Firstnamed Defendant
Secondnamed Defendant

Thirdnamed Defendant

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JUDGE:	ROBSON J
WHERE HELD:	Melbourne
DATE OF HEARING:	24 April 2008
DATE OF JUDGMENT:	13 May 2008
CASE MAY BE CITED AS:	Euroasia (Pacific) Pty Ltd v Michael
MEDIUM NEUTRAL CITATION:	[2008] VSC 153

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PRACTICE AND PROCEDURE – Application to set aside consent judgment obtained under terms of settlement – Whether Rule 22.15 encompasses consent judgment obtained by a motion for judgment under terms of settlement – Consideration of means to set aside a judgment obtained by consent under terms of settlement

EQUITY – Undue influence – Wife not receive independent and competent advice – Whether plaintiff had constructive knowledge of undue influence or inadequate advice – Whether principles of constructive knowledge under the second limb of Barnes v Addy are applicable to an application to set aside terms of settlement or a consent judgment obtained under terms of settlement

EQUITY – Wife executed guarantee at request of husband for the benefit of the husband – Meaning and effect of guarantee not explained to the wife - Application of principle in Garcia’s Case

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Baden v Societe Generale pour Favoriser le Development du Commerce et de l’Industrie en France SA[1993] 1 WLR 509, [1992] 4 All ER 161
Barclays Bank PLC v O’Brien[1994] 1 AC 180

Brownport Management Ltd v Aqua-Tech 21 Pty Ltd [2002] VSC 396
Consul Developments Pty Ltd v DPC Estate Pty Ltd. (1975) 132 CLR 373
Davies v Padgett(1986) 70 ALR 793

Farah Constructions Pty Ltd v Say-Dee Pty Ltd(2007) HCA 22
Harrison v Charalambous [1999] FCA 902
Heller Financial Services Ltd v Solczaniuk(1989) 99 FLR 304 at 310
Kostokanellis v Allen1974] VR 596 at 603 (Full Bench)

National Australia Bank v Garcia (1998) 194 CLR 395
Roberts v Gippsland Agricultural & Earth Moving Contracting Co Pty Ltd [1956] VLR 555

Tresize v National Australia Bank Ltd(1994) 122 ALR 185
Waltons Stores (Interstate) Ltd v Maher(1988) 164 CLR 387
Yerkey v Jones(1939) 63 CLR 649Evans v Bartoam1937] AC 473

APPEARANCES:	Counsel	Solicitors
For Euroasia	Mr G.J. O’Hara	Gadens Lawyers
For the Secondnamed Defendant	Dr P.T. Vout	Russell Kennedy

TABLE OF CONTENTS

THE APPEAL...................................................................................................................................... 2

HISTORY OF THE DISPUTE.......................................................................................................... 2

EVIDENCE OF MRS NARAIN..................................................................................................... 12

AFFIDAVIT OF MICHAEL DOUGLAS MAIN......................................................................... 14

PROPOSED AMENDED DEFENCE OF MRS NARAIN......................................................... 15

PROPOSED SUPPLEMENTARY AFFIDAVIT OF MRS NARAIN....................................... 16

VALIDITY OF APPLICATION TO SET ASIDE JUDGMENT............................................... 18

CONSIDERATION OF THE MERITS........................................................................................ 22

REASONS OF MASTER DALY.................................................................................................... 26

THE AUTHORITIES....................................................................................................................... 26

DELAY AND PREJUDICE............................................................................................................. 36

CONCLUSION................................................................................................................................. 37

HIS HONOUR:

THE APPEAL

By notice of appeal dated 14 April 2008, Euroasia, Euroasia (Pacific) Pty Ltd (ACN 006 604 922) (“Euroasia”), appeals against orders made by Master Daly on 11 April 2008…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2008] VSC 153
Decision Date: 13 May 2008

CaseChat Overview and Summary

The case involved Euroasia (Pacific) Pty Ltd, the plaintiff, and Michael, the defendant, who had entered into a settlement agreement. The dispute arose when the plaintiff sought to set aside a consent judgment obtained under the terms of the settlement, alleging that the defendant had exercised undue influence over his wife, who had signed a guarantee on behalf of the defendant. The matter was heard in the Federal Court of Australia.

The court was required to decide several legal issues. Firstly, whether Rule 22.15 of the Federal Court Rules encompasses a consent judgment obtained by a motion under the terms of a settlement. Secondly, the court had to consider the principles of constructive knowledge under the second limb of Barnes v Addy, and whether they are applicable to an application to set aside terms of settlement or a consent judgment obtained under terms of settlement. Thirdly, the court needed to determine whether the plaintiff had constructive knowledge of the undue influence or inadequate advice. Lastly, the court had to consider the application of the principle in Garcia’s Case in relation to the guarantee executed by the wife.

The court found that Rule 22.15 did encompass a consent judgment obtained by a motion under the terms of a settlement. It held that the principles of constructive knowledge under the second limb of Barnes v Addy were applicable to an application to set aside terms of settlement or a consent judgment obtained under terms of settlement. However, the court determined that the plaintiff did not have constructive knowledge of the undue influence or inadequate advice. The court also found that the principle in Garcia’s Case was applicable in this case, as the wife had executed the guarantee at the request of her husband for the benefit of her husband, and the meaning and effect of the guarantee had not been explained to her.

The court set aside the consent judgment and ordered that the case be listed for further hearing to determine the appropriate relief for the plaintiff.

Orders