Majak v Rose
[2021] VSC 599
•21 September 2021
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
PROPERTY LIST
S CI 2016 05260
| ZOFIA BOZENA MAJAK | Plaintiff |
| v | |
| ALAN WESLEY ROSE | First Defendant |
| and | |
| PIOTR MACIEJ CWALINA | Second Defendant |
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JUDGE: | Keogh J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 16 September 2021 |
DATE OF RULING: | 21 September 2021 |
CASE MAY BE CITED AS: | Majak v Rose & Anor |
MEDIUM NEUTRAL CITATION: | [2021] VSC 599 |
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APPEAL – Property dispute – Minute of consent orders signed in 2017 – Appeal of decision of Associate Justice dismissing application for orders to be made in terms of minute – Where one party no longer consents to orders being made in terms of minute – Where it appears terms of minute not complied with – Where dispute as to extent, effect and responsibility for non-compliance – Harvey v Phillips (1956) 95 CLR 235.
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APPEARANCES: | Counsel | Solicitors |
| The Plaintiff appeared in person | ||
| For the First Defendant | B Petrie | Byrnes Legal |
| The Second Defendant appeared in person |
HIS HONOUR:
This proceeding concerns a property in Frankston registered in the names of the first and second defendants as tenants in common (‘the property’). The plaintiff commenced the proceeding in 2016 seeking to extend the operation of the caveat which she had registered on the title of the property. In April 2017 the first defendant filed a counterclaim by which he sought relief against the plaintiff and the second defendant relevant to the property.
The plaintiff and the second defendant were both self-represented in the proceeding. The first defendant was represented by lawyer Russell Byrnes.
In October 2017 agreement was reached between the defendants to settle the counterclaim. A minute of consent was prepared and signed by Mr Byrnes for the first defendant and by the second defendant personally (‘the minute of consent’). The minute of consent was emailed to the Court by the solicitor for the first defendant. However, orders have not been made in the form of the minute of consent.
The parties are now in dispute about whether steps required by the agreement set out in the minute of consent have been taken, and the second defendant no longer consents to orders being made in the terms of the minute.
The second defendant and plaintiff applied to the Court to ‘reopen’ the counterclaim proceeding, which the first defendant opposed. At the hearing of the application by an Associate Justice the first defendant applied to have the Court make orders in terms of the minute of consent. The first defendant’s application was dismissed by the Associate Justice.
The first defendant has appealed the order of the Associate Justice on grounds that he:
(a) erred in finding that the second defendant was entitled to withdraw from the minute of consent absent any vitiating factor which would otherwise render the minute of consent void or voidable, or render it improper for entry onto the record;
(b) erroneously proceeded on the basis that the Court’s discretion to refuse to make orders which reflect terms of settlement and which are consented to by the parties, is unfettered;
(c) did not identify any vitiating factor which would render the minute of consent void or voidable, or render it improper for entry onto the record.
Background and procedural history
On 18 August 2017 Riordan J made orders dismissing the plaintiff’s claim against the second defendant, transferring the plaintiff’s claim against the first defendant to the Family Court of Australia, and that the proceeding continue as if commenced by the first defendant’s counterclaim against the plaintiff and the second defendant.
On 18 September 2017 the Court granted the second defendant leave to file a defence to the counterclaim by 9 October 2017.
On 5 October 2017 the first defendant and second defendant reached agreement to settle the matters in dispute between them on the counterclaim. The agreement set out in the minute of consent provided:
1.That the Property be subdivided in accordance with Plan of Subdivision PS 729326E subject to the loans numbered 705931809 and 556 151 808 with the Commonwealth Bank of Australia (CBA).
2.That the Property be partitioned such that lot 1 on Plan of Subdivision PS 729326E (the lot facing Geofrey Street) (the Geofrey Street Lot) is registered solely in the name of the First Defendant and lot 2 on Plan of Subdivision PS 729326E (the lot facing Helen Street) (the Helen Street Lot) is registered solely in the name of the Second Defendant.
3.That such partition occur on the basis that:
a.the Second Defendant’s liability, if any, for the loan numbered 705931809 be discharged and the Property be discharged as security for the said loan, such that the First Defendant have sole liability for the said loan and the Geofrey Street Lot and no other part of the Property be used as security for the said loan.
b.the First [D]efendant indemnifies the Second Defendant with respect to the loan numbered 705931809.
c.the First and Second Defendant be liable in each case as to 50% for the balance outstanding on loan numbered 556 151 808 as at the date of the partition and that the Property be discharged as security for the said loan, such that the Geofrey Street Lot and no other part of the Property be used as security for the First Defendant’s 50% liability and the Helen Street Lot and no other part of the Property be used as security for the Second Defendant’s 50% liability.
4.That the Second Defendant pay to the First Defendant 50% of the difference between the value of the Geofrey Street Lot and the Helen Street Lot, such value to be determined as the average of two sworn valuations of each lot carried out in accordance with order 5(b) and such payment to be made to the trust account of the solicitors instructed in accordance with order 6(a) within 7 days of receipt of the valuations and to be released to the First Defendant upon registration of the partition.
5.To give effect to orders 1 through 5 the First and Second Defendants must do all things and sign all documents whenever required so to do for the purpose of fully, properly and effectively implementing these orders promptly and without delay and in particular:
a.within 7 days the First and Second Defendants must jointly instruct Peter Davis of Davis Lawyers to act for them to register Plan of Subdivision PS 729326E as approved by the City of Frankston pursuant to Planning Permit No 271/2014P and to partition the Property on the basis set out in order 4.
b.within 7 days the First and Second Defendants must jointly engage Chris Mason of Mason’s Valuation Office and David Matler of BMT Valuers being two registered property valuers to provide sworn valuations of the current market value of the Geofrey Street Lot and the Helen Street Lot.
c.the First and Second Defendants must do all things and sign all documents reasonably required by CBA to request that loan numbered 705931809 be solely secured over Geofrey Street and be the sole liability of the First Defendant and that the construction loan being loan numbered 556 151 808 be divided equally and 50% of the balance as at the date of partition be secured over Geofrey Street and the remaining 50% be secured over Helen Street. If required by CBA the First and/or Second Defendants will either pay out their respective share of the two loans as detailed above or refinance same.
d.The First and Second Defendants must pay all costs of the subdivision, partition, valuation, and refinancing of the construction loan numbered 556 151 808 equally including all fees, legal costs, stamp duty, bank fees and all other costs. The First Defendant must pay all costs associated with the refinancing of the loan numbered 705931809.
6.The First and Second Defendants shall pay their own costs of the Counterclaim filed by the First Defendant herein which is hereby dismissed as against the Second Defendant.
The minute of consent was attached to an email sent to the Court by Ms von Arnim, a clerk in Mr Byrnes’ office, on 10 October 2017 which simply read:
Dear Sir/Madam,
I refer to the matter of Majak and Rose.
Please see attached executed consent orders between Mr Rose and Mr Cwalina, and a word document copy of same.
The following day the Prothonotary’s Office responded that the proceeding was no longer with the Supreme Court and had been transferred to the Family Court. In an affidavit filed on this application Mr Byrnes states that on the same day Ms von Arnim telephoned the Prothonotary’s Office, clarified that the counterclaim remained with the Supreme Court, and was told the minute of consent would be sent to a judge’s chambers.
There is nothing to indicate the minute of consent came to the attention of a judge, and no orders were made. No further step was taken in the proceeding by any party until the summons filed by the plaintiff and the second defendant on 1 October 2020 for an order to ‘reopen’ the counterclaim proceeding.
In the intervening period steps were taken by or on behalf of the first defendant and the second defendant under the agreement contained in the minute of consent. A plan of subdivision partitioning the property into two lots was registered in January 2020. However, both lots are registered in the joint names of the defendants, and the separation of secured liabilities contemplated by paragraph 3 of the minute of consent has not occurred. Inevitably disputes arose between them about alleged non-compliance with the terms of the agreement. It is apparent from the volume of material which has been filed in this proceeding since October 2020 that the disputes are ongoing.
In July 2020 the second defendant discovered orders had not been made by the Court in accordance with the minute of consent.
The application by the plaintiff and the second defendant came before the Associate Justice on 7 October 2020 and 12 February 2021. On both occasions the legal representative appearing for the first defendant applied for orders to be made in terms of the minute of consent. On 26 March 2021 the Associate Justice dismissed the oral application made by the first defendant.
Reasons of the Associate Justice
The Associate Justice observed that the issues in dispute between the parties relating to the agreement set out in the minute of consent had not yet been pleaded in the proceeding, and were not before the Court for consideration.
The Associate Justice noted that, in circumstances where the second defendant had withdrawn his consent, the only issue to be determined was whether orders should be made in terms of the minute of consent. The Associate Justice concluded:
21The court, whilst it should accept consent orders, retains a discretion not to do so. Here, the consent of the second defendant has been withdrawn prior to the entry of the orders being made. He is entitled to withdraw that consent.
Basis of appeal
The appeal is brought under s 17(3) of the Supreme Court Act 1986 (Vic) and r 77.06 of the Supreme Court (General Civil Procedure) Rules 2015 (‘Rules’), and is by way of rehearing (rather than rehearing de novo). The first defendant accepts that to succeed on the appeal he is ordinarily required to demonstrate factual, legal or discretionary error on the part of the Associate Justice.[1]
[1]Oswal v Carson [2013] VSC 355, [11] (Ferguson J); Ascot Vale Self Storage Centre Pty Ltd (in liq) v Nom de Plume Nominees Pty Ltd [2019] VSC 794, [72] (Riordan J).
Submissions
First defendant
The minute of consent represented a concluded agreement from which the second defendant could not ‘withdraw’.
In drawing a distinction between consent orders that have been signed but not yet made by the Court, and orders that have been both signed and made, the Associate Justice ignored the judicial basis on which consent orders have been held to be binding. It is the underlying agreement between the parties which binds them, not the fact that the agreement has been given the imprimatur of the Court by formal entry into the record. In Harvey v Phillips,[2] the High Court 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 a material fact where disclosure is required, duress, mistake, undue influence, abuse of confidence or the like.[3]
Accordingly, while the failure to formally enter a consent order may leave open a window in which the Court retains jurisdiction and power to refuse to make the order, it can only do so in confined circumstances which do not exist in this case.
[2](1956) 95 CLR 235.
[3]Ibid 243-4.
Further, the need for litigation to be conducted efficiently and with certainty requires that parties be held to agreements which they reach. In Wilkinson v Perisher Blue Pty Ltd,[4] the New South Wales Court of Appeal said:
Agreements are made between solicitors as to … matters of practice and procedure all the time. Without such agreements, the conduct of litigation would be needlessly expensive and in practical terms, almost impossible to manage. There is a public interest in solicitors being held to their agreements in the course of litigation. This is particularly so when the solicitors concerned are experienced and know exactly what they are agreeing to.[5]
[4][2012] NSWCA 250.
[5]Ibid [96].
The Associate Justice erred by concluding that the second defendant was entitled to withdraw his consent before the orders were made. Further, the conclusion that the Court retained a discretion not to accept consent orders failed to take into account that it may only do so where a vitiating factor is established. In submissions on this application the second defendant confirms that he consented to the orders, and complains they have not been complied with. If the second defendant wishes to maintain that complaint he may commence a new proceeding for breach of contract, or may seek to enforce the Court orders. However, his complaint that the minute of consent has not been complied with does not entitle him to avoid the orders being made.
Analysis
The Court may at any stage of a proceeding make such order as the case requires.[6] An order is a formal decision of the Court which determines a question in a proceeding. The making of an order and its authentication are separate steps. An order takes effect on the day it is made, unless the Court otherwise orders.[7]
[6]Supreme Court (General Civil Procedure) Rules 2015 (Vic), r 59.01.
[7]Ibid 59.02(1); Carroll v Price [1960] VR 651, 659-8.
The minute of consent has not been made an order by the Court.
By the time the proceeding came before the Associate Justice the following matters were clear: first, there has not been strict compliance with the terms of the agreement contained in the minute of consent; second, there is dispute as to the extent, effect and responsibility for non-compliance; and third, the second defendant no longer consents to orders being made in terms of the minute of consent.
Harvey v Phillips, and other cases on which the first defendant relied, concerned the attempt by a party to withdraw consent after the orders had been made by the Court. The plaintiff in Harvey v Phillips claimed damages for personal injury resulting from allegedly negligently performed surgery. On the day of trial, after considerable efforts were made by her legal team, the plaintiff agreed to terms of settlement. The trial judge was informed of the settlement and made orders to which the parties consented. The following day the plaintiff sought to resile from the settlement on the basis that, despite her determination not to settle the action, she was temporarily overborne by extreme pressure exerted on her by her lawyers. It was in those circumstances that the Court determined that, absent grounds such as illegality, misrepresentation, non-disclosure of a material fact where disclosure is required, duress, mistake, undue influence, abuse of confidence or the like, there was no discretion to rescind or set aside the compromise contained within the orders that had been made.
The materially different circumstances of this case make Harvey v Phillips distinguishable. First, orders have not been made in terms of the minute of consent. Second, steps required by the minute of consent depended on approval of relevant authorities for the subdivision and partition of the property, and of the mortgagee for discharge of mortgages. It would seem more appropriate that such an agreement be recorded in terms of settlement rather than be made as orders of the court. Third, three years elapsed between the minute of consent being signed by the parties and the application to the Associate Justice to make orders in those terms. Fourth, steps taken in the intervening period may not comply in a number of respects with the terms of the agreement contained in the minute of consent. The second defendant argues the first defendant is responsible for failure to comply with the terms of the agreement, and that non-compliance is of consequence. Fifth, the second defendant does not consent to the orders being made. It is not appropriate that the Court make the orders about substantive matters where there has already been what is arguably material non-compliance, and a party opposes orders being made in those terms.
The first defendant’s reliance on Wilkinson v Perisher Blue Pty Ltd is misplaced. That decision concerned whether parties should be bound by agreements about matters of practice and procedure made between legal practitioners. In this case the second defendant is not legally represented, and the agreement in the minute of consent resolved the substantive issues in dispute on the cross-claim.
The first defendant has not established error in the decision of the Associate Justice to dismiss his application for orders to be made in terms of the minute of consent. In any event, I conclude the Associate Justice was correct to dismiss the application.
The appeal will be dismissed.
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