Daley v Donaldson

By notice of motion filed on 16 September 2021, the Plaintiff/applicant, Glenn Eric Daley, seeks a declaration that the parties to the proceedings reached a binding settlement of his claim for a family provision order on 12 April 2021, as evidenced by a document headed “Consent Orders” which was signed by the legal representative of each. He also seeks an order giving effect to the settlement, as contained therein, and an order that his costs of the notice of motion be paid by the Defendant/respondent.

The binding settlement is said to have been reached at a Court annexed mediation, held on 12 April 2021, before Senior Deputy Registrar N Flaskas. The document was signed, at the mediation, by Mr David Cossalter, the solicitor for the Plaintiff, and Ms Katherine Hawes, the solicitor for the Defendant. Each gave evidence on this application. Only Ms Hawes was cross-examined. I shall refer to the agreement set out in the Consent Orders as “the settlement agreement” for convenience and without prejudgment.

The Defendant in the substantive proceedings, and the respondent to the notice of motion, is Dawn Jeanette Donaldson, the executrix named in the Will dated 14 June 2019 of John Bernard Richardson (the deceased), the biological father of both parties. She obtained Probate of the deceased’s Will on 2 July 2020.

Associated proceedings, involving another applicant for a family provision order, in respect of the estate of the deceased, which proceedings were also referred to a court-annexed mediation on the same date, did not settle at the court-annexed mediation. It cannot proceed to a hearing until the notice of motion has been determined.

At the hearing of the notice of motion, there was no real dispute that the settlement agreement was reached on the day of the mediation. It might be thought that a signed document, described as a Consent Order, would provide sufficient evidence that the proceedings had been compromised, or settled, between the parties, and the terms on which the proceedings had been settled or compromised.

Yet, the Plaintiff seeks the Court’s determination of precisely those matters pursuant to s 73 of the Civil Procedure Act 2005 (NSW). The Defendant opposes the relief sought. Central to the opposition case, and in summary, was that, at all material times, both parties were operating under the mistaken assumption that the Plaintiff was an eligible person, being a child of the deceased (s 57(1) (c) of the Succession Act 2006 (NSW)) when, in fact, he was not, and that the settlement agreement had been signed upon the basis of representations made, including by the deceased in his Will, and other objective evidence which was incorrect.

The Defendant also submitted that the mistaken assumption, which was essential to the determination of the Plaintiff’s eligibility, rendered the subject matter of the settlement agreement essentially, and radically, different from the subject matter believed by the parties to then exist. It was submitted that “[I]n light of the fact that the parties operated under a common misapprehension as to basis of their negotiations, the court … should decline to give effect to the settlement dated 12 April 2021”. Presumably, this submission means that the Court should not make orders reflecting the settlement agreement, because when the agreement was reached, the only basis advanced for eligibility was that the Plaintiff was a child of the deceased, a fact that appears, subsequently, to have been accepted as wrong, because he had been adopted by a third party.

For reasons to which I shall come, it is first necessary to say something about the procedural history of the proceedings.

The substantive proceedings were listed in the Succession List, first, on 19 February 2021. On that date, directions were made for the filing and service of evidence by the parties and then for a Court annexed mediation on 12 April. The matter was adjourned until 23 April.

On 23 April, the Court noted that an issue had arisen in relation to whether an adoption order had been made in relation to the Plaintiff. On 28 May, it was noted that the Plaintiff required an opportunity to obtain information concerning his status as an eligible person. On 9 July, directions were made for further evidence and on 6 September, the Court directed the Plaintiff to file and serve any notice of motion, together with affidavits in support by 4:00 p.m. on 17 September with the Defendant to file and serve evidence in reply, or in support of the settlement reached being set aside, by 4:00 p.m. on 17 September. Further directions were made on 20 September and on 28 October. The directions were made for submissions to be delivered to my Chambers on 9 October (varied on 18 October).

On 18 October, at my request, my Associate sent an email to the legal representatives which included:

The hearing proceeded as a live hearing on 28 October 2021.

Despite the evidence to which I shall refer given by the Plaintiff, his counsel made the submission, orally, that, despite his adoption (which was said to have been finalised in Queensland), the Plaintiff remained an eligible person as a child of the deceased. This had not been raised in the written submissions, but was only raised, in the following way, during oral submissions (Tcpt, 28 October 2021, p 04(46)-05(26)):

At the conclusion of the submissions, to enable both counsel to further consider the point, the following directions were made:

On 4 November 2021, the Defendant’s counsel provided submissions in chief and, on 5 November 2021, the Plaintiff’s counsel did the same. On 9 November 2021, both the Plaintiff’s and the Defendant’s counsel provided the Court with submissions in reply.

With the Plaintiff’s submissions when first received, was an affidavit of Ms D Rakic, solicitor, of 3 November 2021. Based upon that affidavit, the Plaintiff made further submissions on the merits of the application.

The affidavit should not have been delivered to the Court. The Court’s direction stipulated that submissions were to be provided on a limited topic. No application was made for leave to re-open the Plaintiff’s case or to rely upon further evidence. Nor has any such application been made since the conclusion of the hearing of the notice of motion.

In any event, in view of the opportunities given to the Plaintiff between April and September 2021 to file and serve evidence on the topic of the Plaintiff’s adoption to which I have referred above, the dictates of justice and the need for the Court to make orders with the object of eliminating any lapse of time between the commencement of the proceedings and their final determination beyond that reasonably required for the interlocutory activities necessary for the fair and just determination of the issues in dispute between the parties and the preparation of the case for trial, I have ignored the affidavit.

In all the circumstances, I do not propose to delay the determination of the issue the subject of the notice of motion which notice of motion has already delayed the determination of these, and the associated, proceedings.

The Plaintiff relied on the affidavit of Mr Cossalter sworn 16 September 2021, three affidavits of the Plaintiff sworn 29 March 2021, 29 June 2021 and 21 July 2021, respectively, and the affidavit of Toni Thomas sworn 28 June 2021.

The Defendant relied on two affidavits, each of Ms Hawes, affirmed 17 September 2021 and 22 July 2021, respectively.

There is no dispute that the deceased’s last Will was made on 14 June 2019. Relevantly, it provided:

The Plaintiff’s Summons was filed on 14 December 2020.

In his affidavit in support of the Summons, the Plaintiff said virtually nothing about the circumstances relating to his childhood and adolescence, particularly the specifics of his living situation and the circumstances in which he came to use the surname “Daley”, which, of course, is not the surname of the deceased.

The Plaintiff stated only that “[T]he day I was born [the deceased] walked out on my Mum”; that he had never lived with the deceased; that he did not see the deceased until he was aged about 6 or 7 years old; that he had never had any regular telephone calls, or correspondence, with the deceased; and that he had only once received a birthday present from the deceased, that he could remember, when he was aged 14 years.

As part of his evidence, filed after the court-annexed mediation, but read on the notice of motion, the Plaintiff stated that he had been adopted by Keith John Daley, although the circumstances surrounding the adoption, its precise date, and the documents evidencing the adoption order were not in evidence. It seems that Mr Daley was married to the Plaintiff’s mother, the former wife of the deceased.

In his affidavit of 29 June 2021, filed and served after the mediation, and read on the notice of motion, the Plaintiff stated:

Mr Cossalter, gave the following evidence, in his affidavit sworn 16 September 2021, at [12] – [16]:

In her affidavit affirmed on 13 March 2021, the Defendant had actually stated, at paragraph 41:

She did not include any further evidence regarding the possibility of the Plaintiff having been adopted. However, in her affidavit affirmed on 22 July 2021, that is, after the mediation, she wrote:

Ms Hawes, in cross-examination, stated that, prior to the mediation, neither the Defendant, nor the Plaintiff in the associated proceedings, had informed her that the Plaintiff had been adopted and that, as at the date of the mediation, she was not aware of that fact: Tcpt, 28 October 2021, p 15(17-36). She added, in response to a question in cross-examination by counsel, that the basis of the reference to the Plaintiff as an eligible person, in a notice of eligible person served prior to the mediation, and in the settlement agreement, was “He was eligible as a son. There was no evidence to the contrary on that day, including put forward by your own instructing solicitor”: Tcpt, 28 October 2021, p 17(35-40).

The Defendant did not assert that the Plaintiff knowingly misrepresented his status as a child of the deceased. She accepted that the parties had both operated under a common mistaken assumption that the Plaintiff was a child of the deceased, neither of them knowing, at least prior to the mediation, of his adoption.

Nor did the Defendant attribute fault to either of the parties for not knowing of the Plaintiff’s adoption at the time the settlement agreement was signed. It was simply asserted that no family provision order could have been made if the Plaintiff was not an eligible person as defined in s 57(1)(c) of the Succession Act.

The Plaintiff submitted that, prior to the mediation, the Defendant had made an affidavit on 13 March 2021, in which she had, at paragraph [41], raised the possibility that the Plaintiff had been given up for adoption by the deceased, but had not provided any evidence to establish that adoption had occurred. It was submitted that despite the uncorroborated assertion, the parties, nonetheless, had agreed, at the mediation, to settle the Plaintiff's claim.

The Plaintiff did not assert that the Defendant knew that the Plaintiff had been adopted. This is evident from the evidence of Mr Cossalter.

It appears clear also that, on his instructions, the Plaintiff was only relying upon eligibility under s 57(1)(c) of the Succession Act and that despite what had been written by the Defendant, “there was no actual evidence that the Plaintiff had been given up for adoption by the deceased and that he was eligible as the deceased’s biological child”.

I accept the evidence of Ms Hawes, the effect of which was, that, at the mediation, both the Defendant, and she, believed, on the basis of documents that were then available, that the only ground of eligibility upon which the Plaintiff relied, was that he was a child of the deceased.

The Plaintiff, in affidavits filed and served after the mediation, placed reliance upon s 57(1)(e) of the Succession Act, asserting that he is a person (i) who was, at any particular time, wholly or partly dependent on the deceased, and (ii) was, at that particular time or at any other time, a member of the household of which the deceased was a member. Reliance upon this ground of eligibility was not evident from his affidavit in support of the Summons. Indeed, it might be argued, that his evidence stated, clearly, that he had never been a member of the household of which the deceased was a member. The Defendant has not had any opportunity to test the Plaintiff’s assertion of that ground of eligibility.

I shall now set out the submissions in more detail.

The Plaintiff contended that the settlement agreement constituted a binding contract, the parties intending to be immediately bound to the performance of its terms: Masters v Cameron (1954) 91 CLR 353; [1954] HCA 72. He submitted that it embodied a compromise, the parties having agreed, despite the uncorroborated possibility of an adoption having occurred, to settle the Plaintiff’s claim for a family provision order.

Counsel pointed to the fact that the law encourages parties to reach settlements of their disputes, particularly in family provision matters, which avoids the uncertainty, and expense, of litigating every issue and protects the estate from being eroded by legal costs.

During oral submissions, counsel for the Plaintiff also stated that the settlement should not be disturbed (Tcpt, 28 October 2021, p 24(06-13)):

In relation to the matter raised orally, counsel for the Plaintiff relied, firstly, on s 38AB of the Adoption of Children Act 1964 (Qld) (the Queensland Act), which states that a simple adoption does not end the legal relationship between an adopted child and individuals who were, immediately before the adoption, the child’s parents: Tcpt, 28 October 2021, p 25(31-33). Furthermore, he submitted that, although s 95(2)(d) of the Adoption Act 2000 (NSW) (the NSW Act) states that an adopted child ceases to be regarded as the child of their birth parents, this is subject to the exception in s 95(3) which relates to step-parenting.

Counsel for the Plaintiff acknowledged, however, that s 95(3) does not specifically address the effect of an adoption order on a biological parent with whom the child is not living at the time of the adoption.

Counsel for the Plaintiff pointed to the case of In Application of ‘A’ and ‘B’ and the Adoption Act 2000 (2005) 63 NSWLR 2005, in which White J, in dealing with an application by a biological mother and non-biological step-father to adopt the biological mother’s child, made a declaration that the biological mother did not cease to be the child’s parent after the adoption. White J did not comment on the effect of the adoption on the biological father.

Counsel for the Plaintiff submitted that the proper construction of the expression “in relation to” used in s 95(3) of the NSW Act has the effect that the biological father still remains a birth parent after the adoption and that, as such, the Plaintiff remains the son of the deceased for the purpose of his eligibility for family provision under s 57(1)(c) of the Act.

Counsel for the Defendant submitted that, in accordance with s 28(1) of the Queensland Act, an adopted child ceases to be the child of any person who was a parent before the making of an adoption order, and that any such person ceases to be the parent of the adopted child. Further, the adopted child becomes the child of the adopter and the adopter becomes the parent of the child. Further, he submitted that s 102 of the NSW Act makes clear that an order for adoption made in another Australian state has the same effect as an adoption order made under the NSW Act (if it is in accordance with the laws of that state and has not been rescinded).

Counsel for the Defendant also submitted that s 38AB of the Qld Act relates solely to foreign adoptions and is not relevant to an adoption of a person in Queensland.

In relation to the NSW Act, counsel for the Defendant referred to the case of Re D [2006] NSWSC 808, in which White J had stated at [4] – [6]:

Counsel for the Defendant submitted that, in the present circumstances, there can be no controversy as to the legal effect of the Plaintiff’s adoption under NSW law. Accordingly, it was submitted that, once the Plaintiff was adopted, the deceased ceased to be regarded, in law, as the Plaintiff’s parent in accordance with s 95(2)(d) of the NSW Act. The effect of s 95(3) was to preserve the legal relationship as between the Plaintiff and his biological mother, who, it is assumed, was cohabiting with Keith Daley at the time the adoption order was made.

Ultimately, counsel for the Defendant submitted that the Plaintiff is, in fact, lawfully the child of Keith Daley and not the deceased and should be recognised as such in these proceedings.

In his submissions in reply, counsel for the Defendant re-iterated that a correct interpretation of s 95(3) is that it operates to maintain the status of a birth parent on the contingency that they are living with the adoptive parent in respect of whom an adoption order is made.

It seems to me that I need not determine the issue. What I must do is consider the evidence available to the parties at the date of the settlement agreement and consider what facts were known to them at the time.

At the hearing of the substantive proceedings, the Plaintiff, can endeavour to establish any ground of eligibility referred to in s 57(1) of the Act. The Defendant will have the opportunity to test any evidence upon which the Plaintiff then relies. It is neither necessary, nor helpful, to become entangled in that debate in the determination of the notice of motion.

Section 73 of the Civil Procedure Act provides:

Section 73(1) appears to envision a three stage process. First, the Court must be satisfied that there is a question in dispute between the parties concerning whether “the proceedings have been compromised or settled between the parties”. It is only when that is established that the Court considers the terms upon which the matter has been compromised or settled. The third stage of the process is the making of such orders as the Court considers appropriate to give effect to any such determination.

In Oberon Shire Council v Kiangatha Holdings Pty Ltd [2021] NSWLEC 30, Moore J noted at [65] – [67]:

Schmidt AJ in BMW Australia Finance Ltd v Mehajer Vision Pty Ltd [2021] NSWSC 1057, provided some additional guidance, at [11] – [13]:

The scope of the power in s 73 was discussed by Basten JA in Gorczynski v Bendigo and Adelaide Bank Ltd [2016] NSWCA 170 at [6] - [8] (omitting citations):

In this case, the Defendant relies upon mistake. In Harvey v Phillips (1956) 95 CLR 235; [1956] HCA 27, the High Court discussed the principles which apply to the enforcement of compromises affected by mistake. At 243-244, it was said:

In Lewis v Combell Constructions Pty Ltd (1989) 18 NSWLR 528, the Plaintiff asserted, by way of an alternative argument, that there were “special rules for the compromise of litigation”. Finlay J referred to a number of authorities, one of which was Neale v Gordon Lennox [1902] AC 465, writing at 536E:

His Honour continued, concluding, at 538E:

In Neale v Gordon Lennox, at 470, it had been written that the power was derived from the court’s “general authority over justice between the parties”.

In Cartwright on Misrepresentation, Mistake and Non-Disclosure (5th Edition, 2019, Sweet & Maxwell), the following paragraphs appear:

Merely not having thought about a particular issue or just making no assumptions about a particular issue is not enough to establish a positive state of mind.

A common mistake arises when the mistaken belief is held by both parties: Clasic International Pty Ltd v Lagos (2002) 60 NSWLR 241; [2002] NSWSC 1155, at [41], applying Solle v Butcher [1950] 1 KB 671, 693. The gravity of the mistaken belief must be assessed by a close examination of the facts. (The term is distinguished from mutual mistake where both parties make a mistake but make different mistakes; and unilateral mistake, where a person makes a mistake and the other party to the contract knows that he or she has made that mistake yet proceeds with the contract.)

The Plaintiff relies upon the Defendant’s evidence, submitting that she took a risk concerning whether he was an eligible person. It is necessary, therefore, to refer to some other authorities.

In Kleinwort Benson Ltd v Lincoln City Council [1999] 2 AC 349, Lord Hope of Craighead wrote at [193]:

In Brennan v Bolt Burdon (a firm) & Ors [2005] QB 303, at [35], Bodey J wrote, in relation to a defence of common mistake which was raised to re-open a compromise:

What Longmore LJ wrote, in rejecting a plea of mistake in Perpetual Trustee Co Ltd & Anor v BNY Corporate Trustee Services Ltd & Anor [2010] Ch 347 at [108], is of similar effect:

In Deutsche Morgan Grenfell Group plc v Inland Revenue Commissioners & Anor [2007] 1 AC 558; [2006] UKHL 49, Lord Hoffman wrote, at [26] and [27]:

Lord Hope stated, at [64] - [65]:

There remains a debate about the existence, and extent, of the jurisdiction at equity to set aside a contract on account of common mistake. The issue of common mistake and s 73 of the Civil Procedure Act was recently considered by Williams J in Yu v Yu [2020] NSWSC 1904 at [72] – [87]:

In McLachlan v Sydney Trains [2021] NSWSC 283, Parker J wrote, at [107]:

In my opinion, it is neither necessary, nor desirable, to resolve whether or not the equitable jurisdiction exists because I am satisfied that the justice of the case warrants the intervention of the Court.

Putting the issue of common mistake to one side, it is also necessary to refer to s 98 of the Succession Act, which contemplates the making of consent orders following mediation. Relevantly, s 98(3) provides:

In relation to the settlement of family provision proceedings generally, in Hore v Perpetual Trustee Co Ltd (Supreme Court (NSW), Windeyer J, 8 June 1995, unrep), the Court referred to the provisions of the Family Provision Act 1982 (NSW), and wrote, at 11-12:

The same principles apply in respect of the Act.

In Schaechtele v Schaechtele [2008] WASC 148, Le Miere J, in the Supreme Court of Western Australia, wrote, at [18]:

Mason P, in Bartlett v Coomber [2008] NSWCA 100 at [56] – [58], referred to the role of compromise agreements as follows:

Bryson AJA wrote in Bartlett v Coomber, at [84]-[85]:

What had been written by Mason P at [58] above was repeated by Ward JA in Robinson v Robinson (2020) 102 NSWLR 1; [2020] NSWCA 4, at [105]

As was also written by Dalton J in Affoo v Public Trustee of Queensland [2012] 1 Qd R 408; [2011] QSC 309, at [24]:

The statement made by Dalton J was approved by the Queensland Court of Appeal in Abrahams v Abrahams (2015) 13 ASTLR 406; [2015] QCA 286, at [30].

In Sergent v Glass (No 2) (2018) 18 ASTLR 294; [2018] NSWSC 1100, I wrote, at [75], albeit in the context of a case involving a person under a legal incapacity:

Putting it another way, the Court must consider, in every case involving a claim for a family provision order, whether it should make orders to give effect to the compromise reached between the parties.

At the time the parties signed the settlement agreement, neither was aware of the actual existence of an adoption order.

In my view, there can be little doubt that the actions of the parties were the result of a common mistake. Their common misapprehension that the Plaintiff was a child of the deceased was fundamental to entering into the settlement agreement on the terms that they did. If someone had pointed out, unequivocally, at the time, that the Plaintiff was not an eligible person, under the definition of that term in s 57(1)(c) of the Succession Act, it would have been plain, and obvious, to both the Plaintiff and the Defendant, that the matter should not be settled on the basis that he was.

The Plaintiff failed to provide any detail in his evidence as to with whom he had lived throughout his childhood; where he had lived; and with whom he shared a parental relationship, particularly with his adoptive father. (However, given that the Plaintiff was not cross-examined, I am unable to draw any inference from his failure to do so. I merely mention it as a fact that enables me to draw the conclusion that there was a common mistake.)

Whilst the Defendant’s affidavit made on 13 March 2021 referred to documents relating to an adoption having been signed, I do not accept that this, when taken with the deceased’s Will, the allegation of the Plaintiff that he was a son of the deceased, the deceased’s Death Certificate, and the Notice of Eligible Persons, prevented each party from having a positive state of mind that the Plaintiff was in fact the deceased’s child.

The fact that neither party investigated the possibility of the Plaintiff’s adoption, despite having the opportunity to do so, does not preclude the parties from having formed a positive state of mind that the Plaintiff was the son of the deceased. In my view, this they did.

It seems to me that there was no settlement or compromise because of the mistake or misapprehension in relation to the status of the Plaintiff as an eligible person. Both parties were mistaken about a fundamental matter underlying the settlement or compromise, namely the status of the Plaintiff, a fact that went to the root of the settlement or compromise.

Furthermore, assuming in favour of the Defendant, and without deciding that Denning LJ’s statement of principle in Solle v Butcher represents the law in Australia unless and until the High Court decides otherwise, the common misapprehension concerning the status of the Plaintiff as an eligible person attracts the exercise of the Court’s jurisdiction in the interests of justice.

Even if I am wrong in reaching this conclusion, any settlement or compromise reached requires orders to give effect to it. As a matter of discretion, I would refuse to make orders that reflect any compromise that was reached between the parties.

I shall allow the parties to consider these reasons. Subject to any party seeking a different costs order within 7 days of the delivery of these reasons, the orders of the Court are that: