Soden v Soden
[2024] FCA 1085
•12 September 2024
FEDERAL COURT OF AUSTRALIA
Soden v Soden [2024] FCA 1085
File number: QUD 29 of 2023 Judgment of: DERRINGTON J Date of judgment: 12 September 2024 Date of publication of reasons: 18 September 2024 Catchwords: PRACTICE AND PROCEDURE – application by plaintiff to enforce settlement agreement entered into with defendants in relation to the proceedings – where no dispute that settlement was reached – where breaches of settlement agreement alleged – where defendants otherwise appear to be avoiding their obligations under the agreement – declarations made Legislation: Federal Court of Australia Act 1976 (Cth) Cases cited: AG Cowley Holdings Pty Ltd v Central City Pty Ltd (2010) 183 FCR 102
Macteldir Pty Ltd v Dimovski (2005) 226 ALR 773
We Two Pty Ltd v Shorrock (No 2) (2005) 220 ALR 749
Division: General Division Registry: Queensland National Practice Area: Commercial and Corporations Sub-area: Corporations and Corporate Insolvency Number of paragraphs: 17 Date of hearing: 2 July and 12 September 2024 Counsel for the Plaintiff: Mr S Hogg Solicitor for the Plaintiff: Pennisi Zia Lawyers Solicitor for the Defendants: Mr P Sayer of QLD Law Group ORDERS
QUD 29 of 2023 BETWEEN: XENON SODEN
Plaintiff
AND: LUKE SODEN
First Defendant
DR PICKLES PTY LTD
Second Defendant
ORDER MADE BY:
DERRINGTON J
DATE OF ORDER:
12 SEPTEMBER 2024
THE COURT DECLARES THAT:
1.The parties have compromised the proceeding by, between 15 and 22 December 2023 entering into a contract whereby it was agreed that:
(a)The second defendant would pay the amount outstanding on the plaintiff’s Optus account.
(b)The defendants were to provide confirmation of payment of the plaintiff’s Optus account by 29 December 2023.
(c)The first defendant would indemnify the plaintiff as regards the amount of $50,000 that the plaintiff caused to be paid to himself from the second defendant’s PayPal account.
(d)By 15 January 2024, the second defendant was to provide the plaintiff with a breakdown of the superannuation payments it has made to the plaintiff’s superannuation account.
(e)In the event the second defendant had not paid the plaintiff’s superannuation it must do so within 14 days of being notified that the plaintiff’s superannuation had not been paid in full.
2.The terms of the settlement agreement between the parties referred to in paragraph 1 were more comprehensively described in the draft deed of settlement which appears at exhibit MR-17 to the affidavit of Matthew Robinson filed in support of the plaintiff’s application.
THE COURT ORDERS THAT:
3.The second defendant is to pay any outstanding amount on the Optus account number 6232 9303 044 within 14 days from the date of this Order.
4.The defendants pay 60% of the plaintiff’s costs of this application, to be taxed.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
REASONS FOR JUDGMENT
DERRINGTON J:
Introduction
By an interlocutory application filed on 17 May 2024, the plaintiff, Mr Xenon Soden, seeks to enforce an agreement to compromise the proceedings which was reached between himself and the defendants, Mr Luke Soden and Dr Pickles Pty Ltd (Dr Pickles).
The matter has a long and unfortunate history to it, but one of a type regularly seen in this Court, whereby family members engaged in business have a falling out. Here, that falling out has resulted in a corporate dispute and allegations of oppression. The protagonists have long since abandoned any concept of commercial reality in resolving the dispute, and it now appears that their motivations in conducting the litigation are only concerned with advancing personal rivalries and the like. Worse still, the matter involves a relatively small amount of money in the context of civil litigation in the Federal Court. Nevertheless, the parties are entitled to seek the quelling of their disputes before the Court, though it is necessary to iterate the obligations on legal practitioners which arise under ss 37M and 37N of the Federal Court of Australia Act 1976 (Cth), in particular the obligation to conduct litigation as cheaply and as quickly as possible. In this case it would appear that a failure to meet those obligations has occurred.
The application
As mentioned, the application before the Court is for the enforcement of a compromise agreement reached in the context of the proceedings. That agreement materialised in the course of correspondence passing between the parties in late 2023. The terms of the resolution were articulated in a letter of 7 May 2024 from Pennisi Zia Lawyers, the solicitors for the plaintiff, to the defendants’ solicitors, QLD Law Group. It now appears that the parties accept that the terms of the agreement between them are articulated in that letter and appear in a slightly clearer form in a draft deed of settlement.
Nevertheless, the terms, as so articulated, are not entirely clear, and reference might need to be made to prior communications in order to ascertain exactly what is meant by the words used. In any event, as the parties have recognised that there is an agreement between them to resolve the current proceedings, it is within the scope of the jurisdiction of this Court to enforce that settlement agreement. That is recognised in a number of cases, including AG Cowley Holdings Pty Ltd v Central City Pty Ltd (2010) 183 FCR 102, 105 [20]. It was articulated earlier by Finkelstein J in We Two Pty Ltd v Shorrock (No 2) (2005) 220 ALR 749, 752 [15] as follows:
I am in no doubt that, speaking generally for the moment, the Federal Court has jurisdiction to enforce the terms of an agreement made to settle or compromise an action properly instituted in this court. The court’s jurisdiction, that is both its federal and pendent jurisdiction, is to decide any issue necessary to the disposition of a case properly before it. If an action is compromised by terms of settlement those terms can be given effect by consent orders. If the settlement breaks down and the wronged party requires the assistance of the court to enforce the settlement so as to bring the litigation to its intended conclusion, the court can make the appropriate order. It will make no difference if the enforcement of the settlement agreement is sought, as it is here, in the action itself or by a separate proceeding: compare Re Wakim; Ex parte McNally (1999) 198 CLR 511 at 586; 163 ALR 270 at 312; [1999] HCA 27 at [141]–[142]. In each case the necessary federal element is in the “matter” or controversy the subject of the underlying action. The position might be different if the terms of settlement travel far beyond the settlement of the action. Enforcement of the extended aspects may or may not be within the court’s pendent jurisdiction and each case will have to be looked at separately.
Similar comments were also made by Allsop J in Macteldir Pty Ltd v Dimovski (2005) 226 ALR 773, 796 [95]:
The seriousness of the matter for all the parties has necessitated a lengthy judgment. Lest it be thought that the issue of federal jurisdiction is complex in a case such as this a number of things should be said. In relation to the enforcement of settlements of proceedings in this court the following (non-exhaustive) considerations should be noted, subject to the exigencies of any given circumstances:
(1)Orders can be enforced by contempt proceedings.
(2)Undertakings can be enforced under O 35 r 11.
(3)Undertakings can be enforced by orders to prevent the undermining of the administration of justice: the BLF case.
(4)Contracts to settle cases can be enforced: Darling Downs, though noting Pallas and its limits.
(5)The enforcement of a contract to settle a case (at least between the parties to the suit) concerning rights owing their existence to Commonwealth law, and hitherto sought to be vindicated in the Federal Court under the FCA Act or the Judiciary Act or another Commonwealth Act will be a matter arising under a law of the parliament: LNC Industries, if it is not (as it may well be) part of the original matter.
(6)In a motion, or a statement of claim, if one claim is expressed to be made under a Commonwealth Act all claims in the same matter or controversy, which generally can be assessed by seeing whether it is based on the same substratum of facts, will be within federal jurisdiction.
It is fair to say that the terms of the compromise reached between the parties were fairly broad and wide-ranging. They are inexpertly articulated, but nevertheless, that is the manner in which the parties agreed to them. Neither party submitted that any of the terms were so uncertain that they were unenforceable.
It would seem that ever since the agreement was entered into, the parties on both sides have sought to delay or prevaricate in their performance. Several issues have arisen, although for the purposes of the present application, the number of issues has been whittled down.
The written submissions filed on behalf of the plaintiff identified a number of obligations in respect of which it was said had not been performed. Ultimately, not all were pursued. One was concerned with entitlement to access the Facebook account of the second defendant, Dr Pickles. It appeared that the plaintiff previously had access to that account and wished to maintain that access. This was rather bizarre in circumstances when the plaintiff was no longer involved in the business, but it tends to reveal the level of acrimony between the parties. Nevertheless, any relief sought in relation to this issue was abandoned at the commencement of the hearing.
The second issue which arose concerned the existence of an agreement by the first defendant, Mr Luke Soden, to indemnify the plaintiff, Mr Xenon Soden, in respect of an amount of indebtedness in a PayPal account belonging to the plaintiff, but which was apparently used for the business of the second defendant, Dr Pickles. As matters transpired, it appeared that the sum of $50,000 was removed from that account and paid to Mr Xenon Soden, but as he remains liable on the account, he wanted confirmation of his right to indemnification in respect of that liability. His apprehension in relation to this arose earlier this year, when the defendants proposed an amendment to that term, in particular that another person, Mr Nigel Soden, be named as the person giving the indemnity in respect of that liability. That proposed amendment was not accepted. There was, however, no breach of the obligation to indemnify as it appears in the terms of the settlement agreement in the letter of 7 May 2024 and, ultimately, this alleged breach of the settlement agreement was not pressed either.
The next matter concerned the indemnification of the obligations of the plaintiff in respect of his liability on an account with Optus. It was said that the plaintiff is liable on the account and, pursuant to the terms of the settlement, it was agreed that the second defendant would pay the Optus bill as soon as possible and provide confirmation of same. That was required to be done by the end of December 2023, but the amount remains outstanding. It was submitted on behalf of the defendants that negotiations had been occurring with Optus in relation to the amount actually due and owing, and that a complaint had been made to the ombudsman but, as yet, had not been resolved. The obligation of Dr Pickles to pay and discharge the indebtedness to Optus is obvious from the material. The import of the obligation was to free Mr Xenon Soden from any chance of being made liable at the suit of Optus, or to prevent his credit rating being impinged by reason of the unpaid amount. It was ultimately accepted at the hearing that there was an obligation to immediately pay the Optus account, and the defendants can do what they might in their negotiations with Optus in the fullness of time. The plaintiff is entitled to an order requiring the defendants to perform their obligation under the settlement agreement to discharge the obligation to Optus.
A further issue arose in relation to the superannuation entitlements of the plaintiff, arising from his time as an employee with Dr Pickles. In relation to this the plaintiff is in a difficult position — he is no longer part of the operations of Dr Pickles, and he is dependent upon the defendants providing information about the amount of superannuation paid. As evidenced by the letter of 7 May 2024, the settlement agreement provided as follows:
By 15 January 2024, the Second Defendant is to provide a breakdown of the superannuation payments it has made to our client’s superannuation account. In the event the Second Defendant has not paid our client’s superannuation, it must do so in full within 14 days of being notified that our client’s superannuation has not been paid in full;
On the material before the Court there is nothing which indicates a failure by the defendants to provide relevant material; they have done so by producing a printout of the amounts which they say have been paid by Dr Pickles to Mr Xenon Soden’s superannuation account. Dr Pickles, by its directors, believe that to be a full record of the payments made, but indicate that other amounts might have been paid by it that they are not aware of despite undertaking reasonable searches. In any event, the breakdown has not been shown to be inadequate. What needs to occur under that term of the agreement is for the plaintiff to indicate the extent to which, if any, the amounts paid fall below the amounts to which he was entitled. Once that occurs, the agreement can operate according to its terms.
Nevertheless, in circumstances where the defendants appear to be avoiding their obligations under the agreement to some extent, the plaintiff is entitled to a declaration as to its rights under the agreement. If, in the fullness of time — and when they are informed of the amount they are obliged to pay — the defendants fail to pay any outstanding amounts, appropriate proceedings can be undertaken to recover those amounts.
In the circumstances, therefore, it is appropriate to make the following declarations:
(1)The parties have compromised the proceedings by, between 15 and 22 December 2023 entering into a contract whereby it was agreed that:
(a)The second defendant would pay the amount outstanding on the plaintiff’s Optus account.
(b)The defendants were to provide confirmation of payment of the plaintiff’s Optus account by 29 December 2023.
(c)The first defendant would indemnify the plaintiff as regards the amount of $50,000 that the plaintiff caused to be paid to himself from the second defendant’s PayPal account.
(d)By 15 January 2024, the second defendant was to provide the plaintiff with a breakdown of the superannuation payments it has made to the plaintiff’s superannuation account.
(e)In the event the second defendant had not paid the plaintiff’s superannuation it must do so within 14 days of being notified that the plaintiff’s superannuation had not been paid in full.
(2)The terms of the settlement agreement between the parties referred to in paragraph 1 were more comprehensively described in the draft deed of settlement which appears at exhibit MR-17 to the affidavit of Matthew Robinson filed in support of the plaintiff’s application.
Costs
On the question of costs, there is tension between ordering that the defendants pay the plaintiff’s cost of the application in full on the basis that costs usually follow the event on the one hand (the substance of the event being the claims made in the interlocutory application), and on the other, ordering that the defendants pay a lesser amount on the basis that the plaintiff has only succeeded in part in obtaining the relief which it sought.
Necessarily, the application had to be brought in circumstances where the defendants were delaying in performing their obligations, and that should weigh in the discretion. However, the plaintiff has not been entirely successful. As mentioned, the claim in respect of access to the company’s Facebook account was abandoned, and quite rightly so. Parties should not be penalised for properly abandoning matters, but still, it was only abandoned at the last minute. The other issue on which the plaintiff did not succeed in the way he sought to was in relation to the superannuation payments. He sought orders for the payment of amounts but there were no amounts payable at this time. Nevertheless, some orders were made to provide clarity for the parties.
In the circumstances, a broad brush approach to these matters is required. Given that the application had to be brought, on the one hand, and given that the plaintiff did not succeed wholly, on the other, the appropriate order is that the defendants pay 60 per cent of the plaintiff’s costs of the application to be taxed.
I certify that the preceding seventeen (17) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Derrington. Associate:
Dated: 18 September 2024
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