Henderson & Anor v Fox & Anor No. Scgrg-94-1459 Judgment No. S6566

[1998] SASC 6566

HENDERSON AND ANOR FOX AND ANOR

Civil (Ex Tempore)

LANDER J

This is an application by the first and second named defendants to amend their defence.  The matter has a curious history.  The plaintiffs brought action against the first and second defendants and other defendants in relation to a transaction involving a horse by the name of Redding.  The matter first came before me on Monday, 20 October when the plaintiffs opened their case and the male plaintiff gave evidence in support of that case.  At the end of the day the matter was adjourned until Wednesday, 22 October because of my unavailability on 21 October.  Apparently during the evening of 20 October and up until 9 a.m.  on 22 October the parties senior counsel negotiated in relation to the settling of the matter.  On Tuesday, 21 October discussions took place at Bar Chambers between counsel with a view to settlement and certain information was revealed by the defendants to Ms Powell QC who was then leading counsel for the plaintiffs.  These discussions continued on the telephone between Ms Powell QC and Mr Tony Gun who was junior counsel for the first and second defendants. 

During the last of those conversations on Tuesday, 21 October Ms Powell told Mr Gun that her clients would accept, in full settlement of their claim, the first and second defendants’ share of the horse known as Redding, the subject matter of the action, and an indemnity for the legal costs of the defendants, Rigg (the third and fourth defendants) which the plaintiffs had otherwise been ordered to pay.  At about 9 o'clock on Wednesday, 22 October Mr Gun said to Ms Powell that if the first and second defendants could retain one share of Redding they would transfer the remainder to the plaintiffs and pay the Rigg’s costs.  Both parties agree that that was not a counteroffer nor a rejection of the offer made by Ms Powell on Tuesday, 21 October.  Ms Powell indicated that she would obtain instructions from the plaintiffs who were expected at Bar Chambers but had not yet arrived. 

Shortly after the first conversation Mr Gun attended Ms Powell again and informed her that the defendants would not seek to retain a share and that they would agree to a settlement on the terms previously discussed.  A few minutes later, at the request of Ms Powell, Mr Clayton QC who was leading counsel for the defendants and Mr Gun held a further discussion with Ms Powell in another barrister's room which was unoccupied at the time.  Mr Martin Hoile, who is junior counsel for the plaintiffs, was also present.  Ms Powell there stated that the plaintiffs wanted Mr Fox to pay money into a trust account to cover the Rigg’s costs.  Mr Clayton rejected the proposal saying “the deed has been done”. 

It is clearly the case on Mr Gun’s affidavit that the first and second defendants at that stage were not prepared to entertain any further terms advanced by the plaintiff in relation to a settlement which they say had been arrived at shortly after 9.00am on 22 October.

Mr Gun says in his affidavit that the matter of confidentiality of the settlement was then raised.  He said words to the effect that the confidentiality of the settlement was for the benefit of the first and second defendants and the confidentiality of Mr Fox's financial position was essential as he was running a finance company. 

Mr Hoile asked the question, “What if there is a breach of confidentiality, are we back in court?”  Mr Gun said, “No the deal is off, the Fox's keep their share of the horse and don't pay Rigg's costs.  We don't go back to court and that would be the end of the matter”.  Mr Gun says he does not recall Ms Powell making any comment but he says neither Ms Powell nor Mr Hoile raised any objection.  There was then a discussion about who would prepare a Deed and Mr Hoile volunteered to do so. 

The parties then attended before me at 11.15 a.m.  on the same day and Ms Powell indicated to me that the matter had been settled on confidential terms.  The matter was then adjourned to a date in December for a Deed of Settlement to be prepared and the terms of settlement to be carried out. 

Apparently on the same day Mr Maidment, solicitor for the plaintiffs, sent a facsimile to the studmaster, at the stud where Redding was standing informing the studmaster in words to the effect that the shares in Redding held by the first and second defendants had become the property of the plaintiffs as from that date and that pending the formalisation of the transfer the first and second defendants would hold the said shares as nominees of the plaintiffs who were now the beneficial owners.  Mr Maidment did not consult with Mr Gun before sending that facsimile. 

On 4 November Mr Gun wrote to Mr Hoile in relation to the matter.  The letter was in the following terms:

“I write concerning the settlement agreement which you kindly offered to draft.

I wish to confirm the essential conditions as follows

1........... The Foxes to transfer all of their remaining interest in Redding to the Hendersons.

2.Tony Fox to indemnify the Hendersons against the Riggs’ costs.

3........... That the terms of the settlement are to be in strict confidence.

4.That the Foxes financial position as revealed to yourself and Lindy Powell be also in strict confidence. 

5............ That given that the need for confidentiality was acknowledged to be for the benefit of the Foxes the only consequences of any breach of confidentiality by the Hendersons or any of their servants or agents would be that the Foxes would be relieved of their obligation to transfer their interest in the horse to the Hendersons and to give the indemnity for the Riggs’ costs.  The matter would otherwise be regarded as settled and no further action be taken thereon by either party.

7.That each party pay their own costs.

6............ It follows that if a breach of confidentiality occurs after the transfer of the interest or after the costs are paid by Fox then the Hendersons would have to make restitution.”

Mr Gun received no reply to that letter and on 25 November he wrote again to Mr  Hoile saying that in order to progress the matter he would prepare the settlement agreement.  A deed which has been exhibited to his affidavit was prepared by Mr Gun and that provided for a clause in relation to confidentiality.  Paragraph 6 of the deed reads:

“This Deed the settlement evidenced by this Deed and the financial position of the said Anthony John Jessop Fox shall be treated in the strictest confidence and the terms of this settlement and the negotiations between the parties and their legal advisers which have led to the Deed and the settlement and the financial position of the said Anthony John Jessop Fox shall not be disclosed to any person other than the parties their solicitors and counsel...” 

The Deed also provided in clause 8:

“In the event that a breach of clause 6 hereof occurs:

8.1........ After the transfer by the defendants of their right title interest in Redding to the plaintiffs then the plaintiffs shall transfer such interest in the horse back to the defendants and to the extent that they are unable to do so the plaintiffs shall make restitution to the defendants.

8.2.After the defendant Anthony John Jessop Fox shall have discharged his obligation to indemnify the plaintiffs for the Riggs Costs as aforesaid then the full amount paid as a consequence thereof shall be a debt owing by the plaintiffs to the Anthony John Jessop Fox and shall forthwith be paid by the plaintiffs to the said Anthony John Jessop Fox.”

In reply an alternative deed was prepared by the legal advisers to the plaintiffs in terms which rejected the consequences of a breach of confidentiality to remove the consequences included in paragraph 8 of Mr Gun’s Deed. 

This matter came on for hearing before me again on 5 February 1998 and at that stage I was advised by the parties that the matter had not settled because of a misunderstanding as to the terms of settlement. 

After that hearing an application was made by the defendants to amend their defence.  The application seeks to amend the defence to plead:

“1.......... On 22nd day of October 1997, by an agreement made partly orally and partly to be implied it was agreed between the plaintiffs and defendants Fox

1.1...... That the defendants Fox would transfer their interest in the horse Redding, the subject of the plaintiffs’ claim, to the plaintiffs

1.2The defendant Anthony John Jessop Fox would indemnify the plaintiffs against the costs of the defendants Rigg

1.3...... That the terms of the settlement and the financial position of the defendant Anthony John Jessop Fox as revealed to the plaintiffs’ legal advisers be in strict confidence

1.4That the within action was to be regarded as settled and that no further action could be taken therein by either party

1.5      That each party would pay their own costs

2On the said 22nd day of October 1997 in purported part performance of the said agreement the plaintiffs by their solicitor by facsimile advised the Independent Stallion Station that as from that date the Foxes would only hold their shares in the horse as trustees for the plaintiffs and that the plaintiffs were the beneficial owners thereof.  The defendants are unable to provide the full details of the plaintiffs’ solicitors communication until discovery has been given

3........... On the 7th day of November 1997 Sydney G Maidment advised Mr A T Gun that Mr Maidment had advised the Independent Stallion Station “ that the action had been settled” and that the shares previously held by the defendants Fox had become the property of the plaintiffs and that pending the formal transfer of the shares the defendants Fox would only hold the shares as nominees for the plaintiffs who were the beneficial owners

4The said agreement was accepted in discharge of the plaintiffs’ cause of action against the defendants Fox

5........... The plaintiffs having adopted and acted on the agreement are estopped from denying the existence thereof”

The plaintiffs opposed the amendment propounded by the defendants, principally upon the ground that the evidence adduced in support of the amendment would mean that the subject matter of the amendment would not in due course succeed. 

It was put by the defendants that the evidence of Mr Gun showed a settlement had been arrived at shortly after 9 a.m.  on 22 October 1997 and before any discussion in relation to any terms of confidentiality. 

It was put that that was recognised in Mr Gun’s affidavit where Mr Clayton rejected any proposal to amend the then terms of settlement by saying “The deal has been done”. 

I agree with the submissions made by Mr Gray QC, who appeared on this application on behalf of the plaintiffs, that the proposed amendment could not in its terms succeed on the evidence adduced in support of it.  The evidence adduced in support of the proposed defence would not allow a finding to be made that their had been any agreement as to confidentiality or any agreement as to the consequences of a breach of confidentiality. 

During argument I indicated to Mr Clayton that I thought the proposal could not be allowed in its form. 

In the circumstances Mr Clayton put as an alternative to the proposed amendment an alternative amendment in the terms of paragraphs 1.1, 1.2, 1.3, 1.5 and 1.6 but otherwise in accordance with the terms of the proposed amendment. 

I think paragraph 3 could not stand with the amended proposed amendment because the terms of the agreement which were confirmed by Mr Gun to Mr Hoile on 4 November are other than those propounded in that paragraph.  Therefore, paragraph 3 could not stand with the proposed amended application for an amendment. 

Otherwise it seems to me that there is evidence which would support the amended proposed amendment, and indeed as Mr Gray has said, that proposed amendment would be in accordance with his client's understanding of the settlement. 

I therefore give leave to the first and second defendants to amend their defence in accordance with paragraphs 1.1, 1.2, 1.3, 1.5 and 1.6 and paragraphs 2, 4, 5 and 6. 

The application seeks that the action be stayed but I will make no order in respect of that until such time as the matters now agitated in the defence are disposed of. 

I also give the plaintiffs leave to amend their reply to plead to the proposed amendments to the defence. 

Both parties have made application for costs.  Both claim that they have been successful in relation to this application. 

I think, however, that the first and second defendants have substantially failed in their application and the amendment which I have allowed is in accordance with the plaintiff’s contentions in relation to the settlement.  It would therefore be appropriate, in my opinion, that the first and second defendants pay the plaintiffs’ costs on a party and party basis.  I certify for senior counsel.