COURT
IN THE SUPREME COURT OF THE NORTHERN TERRITORY OF AUSTRALIA
Gray J.(1)

CWDS
  Judgment and Orders - consent judgment - not final - Court's inherent
jurisdiction to refuse enforcement - circumstances in which discretion
exercised.
  Mistake - consent judgment - whether entered as a result of unilateral
mistake - whether other party knowingly took advantage of mistake -
circumstances in which mistaken party entitled to have consent judgment set
aside.
  Practice and Procedure - consent judgment - final and perfected - compromise
settlement - cannot be set aside by Court of first instance in an original
action - fresh action required to attack judgment - requirement can be waived
by both parties.
  Cases referred to:
    Ainsworth v Wilding (1896) 1 Ch 673
    Bailey v Marinoff (1971) 125 CLR 529
    Deputy Commissioner of Taxation v Chamberlain (1990)
    93 ALR 729
    Easyfind (NSW) Pty Ltd v Paterson (1987) 11 NSWLR 98
    Harvey v Phillips (1956) 95 CLR 235
    Lewis v Campbell (1989) 18 NSWLR 529
    Neale v Gordon-Lennox (1902) AC 465
    Taylor v Johnson (1983) 151 CLR 422
    Waitemata City Council v Mackenzie (1988) 2 NZLR 242

HRNG
DARWIN
#DATE 14:6:1991
  Counsel for the Plaintiff:     J.B. Waters
  Solicitor for the Plaintiff:   Northern Territory
                                 Legal Aid Commission
  Counsel for the Defendant:     J.C.A. Tippett
  Solicitor for the Defendant:   Ward Keller

ORDER
  Summons dismissed with costs.

JUDGE1
  By a writ issued on 17 March 1988, the plaintiff claimed damages for
personal injuries from the defendant.   The allegation was that the plaintiff
was injured on 23 March 1985 when he was working as a deck hand on a trawling
vessel owned by the defendant.   The injury was said to have been occasioned
by the negligence of the defendant.
2.  The evidence shows that in September 1990 negotiations to settle the
action took place between the solicitors for the parties.  Mr Fitzgerald of
the Northern Territory Legal Aid Commission represented the plaintiff.   Mr
Neill of Messrs Ward Keller represented the defendant.
3.  At the time these negotiations commenced there had been a number of
interlocutory applications in the action.   One result of these applications
was that a number of orders for costs had been made in the defendant's favour.
Each of these orders required the taxation of the costs before a recoverable
amount could be ascertained.  But, as at September 1990, it was believed by
the defendant's solicitors that these interlocutory costs would tax out at
approximately $3535.   This view was communicated to the plaintiff's
solicitors by letter dated 17 September 1990.
4.  The negotiations which took place in September and October 1990 can be
summarised as follows.   For the sake of brevity I will hereafter refer to the
solicitors for the plaintiff and defendant as "Fitzgerald" and "Neill"
respectively:-
    1. On 12 September 1990 by way of facsimile
    transmission Neill offered the plaintiff $10,000.00
    inclusive of the plaintiff's costs and reserved the
    right to "set-off" interlocutory costs.
    2. On 5 October 1990 Fitzgerald spoke to Neill by
    telephone and stated:
        (i)  The plaintiff would offer to settle for
    $15,000.00 inclusive of costs.
        (ii)  $10,000.00 was a fair award of damages for
    the plaintiff, and that an agreed settlement of
    $15,000.00 would cover the fees and disbursements of
    the plaintiff's Queensland agent lawyers and meet most
    of the other disbursements.
        (iii)  The $15,000.00 offer was predicated upon the
    defendant foregoing any "set-off" of interlocutory
    costs.
    3. On 8 October 1990 by way of facsimile transmission
    Neill counter-offered to the plaintiff $10,000.00
    inclusive of costs with no "pay back" of interlocutory
    costs by way of settlement.   This was rejected by
    Fitzgerald by telephone on 11 October 1990.
    4. On 11 October 1990 by way of facsimile transmission
    Neill made a further offer of $12,500.00 inclusive of
    costs with no pay back of interlocutory costs.   This
    offer was rejected by Fitzgerald on 15 October 1990.
    5. On 24 October 1990 Fitzgerald offered in writing to
    accept $15,000.00 inclusive of plaintiff's costs.
    This offer was filed in Court.
    6. On 8 November 1990 the defendant filed and served a
    notice of acceptance of the plaintiff's offer.
    7. On 26 November 1990 Consent Judgment was entered.
5.  It can be seen that the negotiations had reached a standstill upon the
plaintiff's rejection on 15 October of the defendant's offer of 11 October.
The rejection did not lead to any further offers from the defendant. It was in
this context that the plaintiff's formal offer to compromise was filed on 24
October.   The filing in Court of this document was unaccompanied by any
letter or telephone call to Neill which qualified the offer in any way.
6.  Following the filing of the defendant's acceptance of the plaintiff's
formal offer, Neill wrote to Fitzgerald on 8 November enclosing a form of
consent judgment for Fitzgerald's signature.  This letter included the
following paragraph:
    "Please find enclosed herewith in triplicate a form
    of Consent Judgement which we have prepared.  Would you
    kindly consider very carefully that Consent Judgement
    and satisfy yourself that it faithfully reflects the
    terms of the compromise?  If you are so satisfied,
    would you then sign all three copies on behalf of the
    Plaintiff and return them to our office?  I shall then
    sign on behalf of the Defendant and attend to filing,
    uplifting and eventually serving a sealed copy of
    Judgement upon your office."
7.  The consent judgment was returned by Fitzgerald duly signed and without
comment.   Neill filed the Consent Judgment in Court and it was perfected on
26 November.
8.  On 30 November, Neill wrote to Fitzgerald enclosing the Consent Judgment
and raised the question of the interlocutory costs.  Neill proposed that these
costs be agreed upon at $3535 and that he would send a cheque for the balance,
namely $11,465 in satisfaction of the judgment.  The letter pointed out that
the Taxing officer had the power to disallow some or all of the costs.   The
letter stated that if Fitzgerald disputed the proposed figure a taxation of
the costs could be arranged.
9.  Neill's letter of 30 November provoked a reply from Fitzgerald by
telephone and a letter dated 10 December. Fitzgerald strenuously disputed the
defendant's rights to deduct the interlocutory costs from the settlement
figure.   The letter contended that it had always been made clear that the
negotiations were conducted upon the footing that the defendant's
interlocutory costs would be waived.   It was said that Fitzgerald had made it
clear that a $15,000 settlement figure was the absolute minimum required to
enable Fitzgerald to discharge his obligations to the plaintiff and to his
Queensland lawyers.   It was pointed out that, if the interlocutory costs were
deducted, the plaintiff would receive less than if he had accepted the
defendant's offer of 11 October 1990.   The letter ended with a threat that if
$15,000 was not received within 7 days a Warrant of Execution would issue.
There was a further threat that if any attempt was made to stay the execution
of the judgment proceedings for breach of agreement would be commenced.
10.  In a reply by way of facsimile transmission dated 10 December, Neill
contended that the final offer and acceptance was unaffected by any of the
without prejudice negotiations which had earlier taken place. He disputed the
allegation that all negotiations were understood to involve the non-recovery
of the interlocutory costs.  He rejected the suggestion (apparently made in a
telephone conversation) that he had deceived Fitzgerald.  He stated his
intention to have the interlocutory costs taxed in order to secure his
client's position.
11.  Subsequent events are of little present importance. An attempt was made
to execute the judgment.   This proved fruitless, apparently because the
defendant had no assets in the Northern Territory.   Neill had the defendant's
interlocutory costs taxed.   They were allowed in the sum of $3570 plus
$267.75 duty.   By letter dated 21 February 1991, a cheque for $11,162.25 was
sent to Fitzgerald.   The cheque was returned.
12.  On 7 May 1991 the plaintiff issued a summons seeking an order that the
judgment dated 26 November 1990 be set aside.  In due course, the Summons came
on for hearing before the Court on 16 May 1991.  Mr Waters of Counsel appeared
for the plaintiff.  Mr Tippett of Counsel appeared for the defendant.
13.  There was some preliminary discussion concerning the appropriateness of
attacking the judgment upon an application by summons.   Mr Waters made it
plain that his attack was founded upon an allegation that the judgment was
vitiated by unilateral mistake.  Mr Tippett submitted, correctly in my view,
that such an attack must be the subject of a separate proceeding. Mr Waters
conceded that there was no provision in the Supreme Court Rules upon which his
application could be grounded.   In the course of the ensuing debate, Mr
Tippett withdrew his objection and consented to the Summons being treated as
the appropriate procedure. In the result, the application was fully argued and
the relevant authorities discussed.
14.  It is clear that there can be circumstances in which a perfected judgment
based upon an agreement may be set aside on the ground of unilateral mistake.
Deputy Commissioner of Taxation v Chamberlain (1990) 93 ALR 729.
15.  So the first task for the Court is to determine whether the agreement
upon which the present judgment was based came into existence by reason of a
mistake on the part of the plaintiff.   For this purpose the Court must look
at Fitzgerald as the agent of the plaintiff. The question is whether
Fitzgerald made a mistake which played a part in the completion of the
agreement.
16.  What mistake, if any, did Fitzgerald make?   He certainly did not make
any mistake as to the amount for which the plaintiff was prepared to settle.
It is clear that Fitzgerald intended that the plaintiff should receive $15,000
inclusive of his costs.   That is precisely what the plaintiff did offer to
accept in the formal document filed in Court.   This is not one of those cases
in which a solicitor has included a mistaken figure in a contract document as
in Chamberlain's case and other cases to which I was referred.
17.  In this instance, Fitzgerald intended to offer to accept $15,000 and
costs.   The offer filed in Court was in those terms.   The ensuing judgment
gave the plaintiff the result he wanted.   The judgment is unconditional.  It
was capable of being executed in accordance with its terms.  The fact that
interlocutory costs orders had been made in the defendant's favour does not
provide any bar to the plaintiff's execution of his judgment.  At the time
when the judgment was entered, the defendant's costs were unquantifiable. They
were subject to being allowed by the taxing officer.   They may have been
allowed in part only or not allowed at all.   But whether the defendant's
costs were allowed or not, they did not impose any condition upon the
plaintiff's judgment.
18.  In short, I am not satisfied that Fitzgerald was under any mistake which
can be said to vitiate the agreement upon which the judgment is based.
19.  It was argued that Fitzgerald mistakenly believed that the plaintiff's
offer was subject to a condition that the defendant would not pursue its
costs. Therefore, it was said, there was a mistake operating upon Fitzgerald's
mind which induced the offer in the terms in which it was made.
20.  In my view, the only relevance of Fitzgerald's mistake as to Neill's
intention concerning the defendant's costs relates to the collection of those
costs.   If it could be shown that Neill, by his conduct, implicitly
represented that the defendant's costs would not be pursued, the plaintiff may
be provided with a defence to the enforcement of the costs orders.  It may be
said that the plaintiff, acting upon the representation, acted to its
disadvantage by settling his claim upon the terms that he did.   But, I
repeat, I am not satisfied that the settlement itself was influenced by any
relevant mistake.
21.  The conclusion to which I have arrived on this threshold question is
sufficient to dispose of the Summons.   But in deference to the interesting
arguments presented to the Court, I will volunteer some views upon the other
matters which were the subject of debate.
22.  All I have so far said relates to a situation, such as the present, where
a party to a judgment seeks to have it set aside.   The present circumstances
may have produced a different result if the judgment had not been entered.
Let it be assumed that Fitzgerald, having discovered Neill's intention to
pursue the defendant's costs, had refused to sign the consent judgment when it
was proffered.  Let it be further assumed that Neill made an application to
the Court to enter judgment in accordance with the offer and acceptance.   In
those assumed circumstances, the defendant would be seeking the Court's
assistance to enforce the settlement.  If the application was opposed by
Fitzgerald upon the grounds of his mistaken belief about the defendant's
costs, the Court has a far wider and more general discretion to decline to
enforce an agreement about which some question exists.   This is based upon
the inherent power of the Court to decline to lend its assistance where to do
so may produce an injustice.  The authority most often cited for this
principle is Neale v Gordon-Lennox (1902) AC 465.   In that case an order to
refer an action to an arbitrator was made by agreement between counsel
although the plaintiff's counsel had exceeded his authority. Before the order
was drawn up plaintiff's counsel moved the Court to have the case restored to
the Court list for trial.  In opposition to the application it was argued that
the unauthorised compromise should be enforced and the case referred to the
arbitrator.  When the case reached the House of Lords, each member of the
Court emphatically asserted the Court's right to refuse to enforce the order
for a reference.  In the course of his judgment the Lord Chancellor said (at p
469-70):
    "The Court is asked for its assistance when this
    order is asked to be made and enforced that the trial
    of the cause should not go on; and to suggest to me
    that a Court of justice is so far bound by the
    unauthorised act of learned counsel that it is deprived
    of its general authority over justice between the
    parties is, to my mind, the most extraordinary
    proposition I have ever heard."
23.  This judgment was applied in Lewis v Campbell (1989) 18 NSWLR 529 in
circumstances where the solicitor for the plaintiff had inserted a wrong
figure by mistake in a written offer of compromise.   Before the judgment was
entered the plaintiff successfully applied to Finlay J. for an order that the
judgment be not entered. In that case, Finlay J. was satisfied that the
plaintiff's solicitor had made the mistake in question. His Honour went on to
consider whether the defendant's solicitor had appreciated that a mistake had
been made and had sought to take unfair advantage of it.   His Honour was not
satisfied that the defendant's solicitor had been aware of the mistake but
held that a reasonable solicitor would have appreciated that a mistake was
likely.   It does not appear to me that Finlay J. had any need to consider the
question of the defendant's solicitor's awareness of the mistake.  In Neale v
Gordon-Lennox the defendant's counsel was quite unaware of the plaintiff's
counsel's lack of authority. This fact did not deter their Lordships from
exercising the Court's inherent power to prevent a misuse of the Court's
process.
24.  In some ways it can be said that the judgments of the members of the
House of Lords in Neale v Gordon-Lennox do not state clearly the circumstances
in which this inherent jurisdiction may be exercised.
25.  The plaintiff's first application to set aside the reference order was
made to Lord Alverstone C.J.   His Lordship placed emphasis on the fact that
the order had not been drawn up ((1902) 1 KB at p 842) but then appears to
base his judgment setting aside the order upon the fact that the order was
interlocutory and not final.   When the matter reached the Court of Appeal,
the Court allowed an appeal against Lord Alverstone's order and restored the
order for reference.   The judgments are based upon the suggested finality of
a compromise reached by counsel in the scope of his apparent authority.   The
judgments proceed upon the footing that the order had not been drawn up,
although no emphasis is placed upon that fact.   Upon the appeal to the House
or Lords, judgments were delivered by the Earl of Halsbury, Lord Macnaghten,
Lord Brampton and Lord Lindley.   In the latter judgment it is stated that the
plaintiff complained about the unauthorised order before it was drawn up and
that the drawing up of such an order should be stayed as a matter of course.
Then follows this passage (at p 473)
    "Unfortunately the plaintiff here, wishing to get
    rid of the order drew it up with the view of getting it
    set aside, and in form this is an application, not to
    prevent the drawing up of the order, but to have it set
    aside; but that is mere forum - mere machinery.  It
    would be absolutely wrong, to my mind, for the Court to
    allow that order to be acted on and to take effect the
    moment it is judicially ascertained and brought to its
    attention that it is an order which the Court would
    never have dreamed of making if it had known the facts."
26.  Apart from the foregoing passage there is no intimation in the reports of
the proceedings before Lord Alverstone C.J., the Court of Appeal or the House
of Lords that the order had been drawn up.   The statement of the facts set
out in the report reads:  "Before the order was drawn up the plaintiff took
steps to set it aside" (p 467) and goes on to describe the application to Lord
Alverstone.  In the report of Sir Edward Clarke's argument before Lord
Alverstone, counsel is reported as placing reliance upon the fact that the
order had not been drawn up ((1902) 1 KB at p 841). The statement of the facts
in the report is to the same effect (at p 839).
27.  The passage in Lord Lindley's judgment to which I have referred was noted
by the New Zealand Court of Appeal in Waitemata City Council v MacKenzie
(1988) 2 NZLR 242.   The case was concerned with an action brought to set
aside a sealed consent order made in an earlier action.   The order was
alleged to have been made without the authority of the plaintiff.  It was
argued that because the order was sealed it could not be set aside.   The
Court of Appeal eventually held that there had been no want of authority in
counsel consenting to the order.   But the Court expressed the view, obiter,
that the inherent jurisdiction referred to in Neale v Gordon-Lennox extends to
the case of a sealed order.
28.  The principal judgment was delivered by Casey J. His Honour drew
attention to the passage in the judgment of Lindley L.J. which shows that the
order had been taken out in Neale v Gordon-Lennox.  His Honour then observed
that the judgment of the other members of the House of Lords "appear
untrammelled by any consideration of whether or not the order had been
sealed."   His Honour concluded that the inherent jurisdiction was not
confined to cases where the order has not been sealed.
29.  But whatever be the law for New Zealand, it is, I believe, well settled
that a consent judgment, once perfected, cannot be set aside by the Court of
first instance in the original action even if entered by mistake.   It may be
set aside in a fresh action brought for the purpose on any ground which may
invalidate the agreement on which it is founded. Halsbury's Laws of England
4th Edn Vol 37 para 390. Bailey v Marinoff (1971) 125 CLR 529 where (at p 531)
Barwick C.J. said:  "However wide the inherent jurisdiction of a Court may be
to vary orders which have been made, it cannot, in my opinion, extend to the
making of orders in litigation that has been brought regularly to an end."
See also Ainsworth v Wilding (1896) 1 Ch 673, Harvey v Phillips (1956) 95 CLR
235 at p 243.
30.  In this case, as I said at the outset, the requirement of a separate
action has been waived by Mr Tippett.   Accordingly, it is open to consider
whether the present compromise agreement could be invalidated upon the ground
of unilateral mistake as known to the general law of contract.
31.  The law is now clear that a unilateral mistake will only invalidate a
contract if equity will set it aside.
32.  The question has been recently considered by the High Court in Taylor v
Johnson (1983) 151 CLR 422.  At p 432 the judgment of the majority states:
    "The particular proposition of law which we see as
    appropriate and adequate for disposing of the present
    appeal may be narrowly stated.  It is that a party who
    has entered into a written contract under a serious
    mistake about its contents in relation to a fundamental
    term will be entitled in equity to an order rescinding
    the contract if the other party is aware that
    circumstances exist which indicate that the first party
    is entering the contract under some serious mistake or
    misapprehension about either the content or subject
    matter of that term and deliberately sets out to ensure
    that the first party does not become aware of the
    existence of his mistake or misapprehension."
33.  I have already expressed my opinion that Fitzgerald did not make any
relevant mistake concerning this agreement.  Upon the assumption that he did,
I am not satisfied that Neill was aware of the mistake.   Even less am I
satisfied that Neill set out to ensure that Fitzgerald did not become aware of
his mistake.   Neill did absolutely nothing that could answer that
description.   I think the probability is that Neill was surprised that
Fitzgerald had agreed to take a figure that he had (if one allows for the
defendant's costs) previously rejected.   But the earlier offer by the
defendant had been rejected and was no longer available to the plaintiff.
This lowering of the plaintiff's expectations was by no means an
incomprehensible step.  It was explainable upon more than one rational basis.
34.  Even if Neill suspected that Fitzgerald had assumed that the defendant's
costs would not be pursued, Neill was not, in my view, under any legal or
moral obligation to draw attention to the matter.  It was his duty to accept
the offer if, he believed, that it was in his client's interest to do so.
Even if one makes the further assumption that Neill knew that Fitzgerald
mistakenly believed that the defendant's costs would be waived, Neill did or
said nothing which conduced to that mistake.   For an example of conduct, by a
party which conduces to the mistake, see Chamberlain's case (supra).
35.  It was contended by Mr Waters that the exchanges between Fitzgerald and
Neill could have left Neill in no doubt that Fitzgerald's minimum figure was
$15,000 without any deductions.   Therefore, Mr Waters said, the formal offer
to take $15,000 was made upon the mutual understanding that the defendant's
costs would not be pursued.   Therefore, so the argument goes, the failure to
express that qualification in the formal offer represented a mistake of which
Neill was aware and which, by his silence, Neill conduced to in an
unconscionable manner.
35.  As I have said, I cannot accept Mr Water's characterisation of the events
and exchanges which took place.   That an unfortunate misunderstanding
occurred is plain enough.  But, in my opinion, Neill did nothing to which
exception could reasonably be taken.   If Neill did suspect that there may be
some misunderstanding, his letter of 8 November was sufficient to alert his
opposite number to this possibility.   See Easyfind (NSW) Pty Ltd v Paterson
(1987) 11 NSWLR 98.
36.  For the reasons I have endeavoured to express the summons must be
dismissed with costs.