Antova v Bokan

There is an old saying that one should not spoil the ship for a ha’penny worth of tar. This judgment concerns the enforceability of a family provision settlement agreement that went awry for want of an interpreter. The agreement is binding and should be enforced. However, in the exercise of its discretion, the Court will stay its orders enforcing that agreement pending the determination of a late claim by the second plaintiff.

By a summons filed on 11 November 2015 the first and second plaintiffs sought provision from the estate of the late Ljubica Dimitrovska (the “deceased”). Without disrespect I shall refer to the other parties by their given names.

The first plaintiff is Radmila Antova, a daughter of the deceased.

The second plaintiff is Vase Antov. Vase is Radmila’s son and a grandson of the deceased.

The defendant is Lidija Bokan. Lidija is also a daughter of the deceased and is the sole beneficiary and executrix of the deceased’s estate.

Vase and Radmila’s native language is Macedonian.

At the hearing before me the plaintiffs were represented by Mr M Sahade of Counsel, although it should be noted that only Vase was the moving party on his motion. The defendant was represented by Mr M J Heath of Counsel.

As is well known to family provision practitioners, the List Judge, Hallen J, regularly conducts what are referred to as judicial settlement conferences. His Honour speaks to the parties in open court in the presence of their lawyers and then leaves the parties to negotiate, if they can, a settlement.

These proceedings were the subject of such a judicial settlement conference. A settlement agreement (the “Agreement”) was apparently reached in circumstances which are more fully set out below.

By notice of motion filed on 29 June 2016, Lidija seeks orders including:

The original of the document referred to in prayer 1 of Lidija’s notice of motion is reproduced as Schedule 1 to this judgment (the “Orders”). To understand what occurred, it is necessary to have regard to the original, including being able to notice the signatures on it and the various changes made to it and initialled by the parties.

By notice of motion filed on 24 January 2017, Vase, supported by Radmila, seeks orders including:

Although it may be thought slightly unorthodox to have included particulars in prayer 1 of the notice of motion, those particulars usefully isolated the issues. By the end of the hearing, Mr Sahade had, if I may say so quite properly, abandoned Particulars 1, 3 and 4. He also accepted that if the Court was against Vase in relation to Particular 2, then the Agreement was binding and his argument fell back to the contention that the Court, in the exercise of its discretion, should not make orders to enforce the Agreement. That entirely appropriate example of responsible advocacy has enabled the Court to deal with the matter promptly by delivery of these ex tempore reasons.

Lidija relied on formal affidavits from her solicitor.

In addition to a solicitor’s affidavit, Vase relied on evidence from himself, Radmila and Mr Boris Petrusev. Mr Petrusev is an experienced court interpreter who interprets from English into Macedonian and vice versa. He was retained by the plaintiffs to interpret for Radmila on the day of the judicial settlement conference.

Vase, Radmila and Mr Petrusev were all cross-examined.

Mr Petrusev was a careful and thoughtful witness. He has no interest in the outcome of the proceedings. I am satisfied he was a truthful witness and I accept his evidence.

Radmila gave her evidence through an interpreter. Her affidavit evidence was relatively straightforward to the effect, putting it broadly, that she did not understand everything that happened at the settlement conference, and that insofar as she signed the Orders and the document referred to in paragraph [33] below, she only did so to signify she had been in attendance at the settlement conference and not to evidence her agreement to the contents of those documents. However, once in the witness box, she took every opportunity to repeat her view as to how unfair the process had been at the settlement conference and how little she had in fact understood. In my view, she was clearly prone, at least, to considerable exaggeration. To the extent it is necessary for me to make any findings based on her evidence, I would only accept her evidence to the extent it was inherently likely, supported by independent evidence or contemporaneous documents, or was otherwise against interest.

Vase was a most unsatisfactory witness. His affidavit evidence included:

Vase commenced giving evidence through an interpreter. It became apparent that he could speak English sufficiently well to enable him “to understand, and to make an adequate reply to, questions” that were put to him (see s 30 of the Evidence Act 1995 (NSW)). I therefore directed him to give his evidence in English unless he genuinely felt that he needed the assistance of the interpreter in order to give precise replies in Macedonian to the questions that he was being asked.

Vase resorted to Macedonian as his responses became more and more heated. In an extraordinary and lengthy outburst, he became increasingly extravagant in his allegations, ultimately asserting that he had been forced by his lawyers to assent to the Agreement and to sign the relevant documents in circumstances where he did not really understand their contents.

Vase’s allegations in the witness box went well beyond anything that was in his affidavit. In resolving the present motions, it is not necessary for me to make any findings about those allegations and I expressly refrain from doing so. However, insofar as any factual finding depends upon his evidence, I do not accept it unless it was inherently likely, supported by independent evidence or contemporaneous documents, or was otherwise against interest.

I shall now set out the Court's findings of fact. They are either uncontroversial or have been established to my actual satisfaction on the balance of probabilities.

By his affidavit of 2 November 2016, Vase made the following admission against interest concerning the gift contract which I accept:

The "gift contract" (to which I shall refer as such) was in the following terms in English translation:

The deceased died on 17 November 2014 aged 85 years.

These proceedings were commenced on 11 November 2015.

The proceedings came on for a judicial settlement conference before Hallen J on the morning of 23 March 2016. On that occasion Mr Heath appeared for Lidija, instructed by Ms J Hutton, Solicitor. Radmila and Vase were represented by Ms M Pringle of Counsel instructed by Ms R Medcalf, Solicitor. Since the events of that day, Vase and Radmila have changed counsel and solicitors more than once.

Mr Petrusev met the plaintiffs and their lawyers at Ms Pringle's chambers around 9am on 23 March 2016. Mr Petrusev provided interpreting services to Radmila (some of his interpretations being overheard by Vase) throughout the court appearance and negotiation process up to around 12.30pm when Mr Petrusev had to leave to attend to another appointment.

After hearing Hallen J's opening remarks, the parties entered into negotiations. Offers and counteroffers were made between the lawyers.

While Mr Petrusev was present, I am satisfied that those offers and any instructions given by Radmila and Vase were interpreted by Mr Petrusev to Radmila. Vase also overheard those interpretations to an extent I am not able to determine. Vase communicated with his lawyers in English but also had the benefit of so much of Mr Petrusev's translations as he heard.

It is necessary at this point to make reference to what must necessarily be extensive extracts of the Court transcript of what occurred on 23 March 2016 when the parties returned to Court to report on progress to Hallen J. Those extracts are set out in Schedule 2 to this judgment.

Prior to or contemporaneously with the preparation of the Orders, Vase and Radmila signed a handwritten document prepared by one of their lawyers in these terms:

I accept this affidavit evidence of Mr Petrusev:

On the basis of the notation on the bottom of the document set out in paragraph [33] above, Mr Petrusev's evidence referred to in paragraph [34] above, and Ms Pringle's answer to Hallen J about interpretation set out in Schedule 2 (“possibly not”), I find that the document referred to in paragraph [33] above was not translated to Radmila but that one or both of her lawyers sought to explain it to her in English.

The Orders were prepared and signed by the parties and their solicitors. There was some further negotiation about costs which resulted in handwritten amendments initialled by the parties and their solicitors.

On the basis of Mr Petrusev's evidence referred to in paragraph [34] above and Ms Pringle's answer to Hallen J referred to in Schedule 2 (“possibly not”), I find that the Orders were not translated to Radmila but that one or both of her lawyers sought to explain them to her in English.

I also am satisfied that Vase was present during the explanations referred to in paragraphs [35] and [37] above. Before he became strident in his denials of understanding, he admitted under cross-examination that he at least understood what was going on in Court and during the negotiations in general terms even if he did not understand the fine detail. That conclusion accords with my own assessment of his capacity to understand English based on observing him answer questions in English as he gave evidence in the witness box.

As is apparent from the transcript set out in Schedule 2, the Orders were provided to Hallen J. His Honour read the papers over the luncheon adjournment. He pronounced (i.e. made) but did not enter the orders in the Orders that he could make. It is clear that his Honour intended to make the balance of the Orders (relating to the release referred to in Order 8 of the Orders) and then enter all of the Orders upon receipt of an affidavit going to the matters set out in s 95(4) of the Succession Act 2006 (NSW) (the "Act") (see paragraph [50] below).

The parties left Court in the expectation that such an affidavit would be forthcoming for Radmila in the very near future. Mr Sahade accepted that if an interpreter had been present after the luncheon adjournment, the Orders would have been made there and then as a result of Radmila giving the necessary evidence for the purposes of s 95(4) of the Act in the witness box.

The expected affidavit never came. The parties fell into dispute about the Agreement.

On 31 May 2016 (confirmed by letter from her solicitors on 30 June 2016), Lidija informed the Court that she was prepared to give effect to the Agreement without receiving the benefit of Order 8 of the Orders.

On 3 June 2016 the plaintiffs' new solicitors wrote to the defendant's solicitors:

On 28 June 2016 the defendant's solicitors replied:

Lidija filed her notice of motion seeking enforcement of the Agreement on 29 June 2016.

Perhaps somewhat unusually from a procedural point of view, on 14 September 2016 Vase filed a statement of claim based upon the gift contract. That statement of claim seeks the following orders:

On 21 October 2016 Lidija filed her defence to Vase's statement of claim.

On 2 November 2016 Vase filed a reply to Lidija's defence.

On 24 January 2017 Vase filed his notice of motion which, with Lidija’s notice of motion, is the subject of these reasons.

The following two provisions of the Act are relevant:

It will be recalled that Particular (ii) in paragraph 1 of Vase's notice of motion states:

Mr Sahade supported that particular as follows.

Order 8 of the Orders was for an order pursuant to s 95 of the Act that “the agreement by [Radmila] to release her rights to make any further application in relation to the state or notional estate of the deceased be approved.” Mr Sahade drew attention to the decision of the Court of Appeal in Pavlovic v Universal Music Australia Pty Limited (2015) 90 NSWLR 605; [2015] NSWCA 313, which he submitted stood for these propositions:

The well-known passage in Masters v Cameron (1954) 91 CLR 353; [1954] HCA 72 at 360 is:

Mr Sahade submitted that the requirement for the release and affidavit arising from Order 8 in the Orders, and Mr Heath's affirmative answer to Hallen J’s enquiry whether the release was “essential”, demonstrate that the parties did not intend to be bound by the Agreement until the release and affidavit to satisfy s 95 had been provided. Until those things happened, it was submitted that the Agreement was not binding upon the parties. He contended that the need for an affidavit for the purposes of s 95 of the Act put the Agreement into the second category identified in Masters v Cameron.

Alternatively, Mr Sahade submitted that when what occurred in front of Hallen J was taken into account, it was apparent that the parties had agreed that the Orders would be held in "escrow" to the extent that, if Radmila subsequently decided to give the release and the affidavit (things which she was not, on this view, bound to do), the Orders would be given effect.

I do not accept those contentions, in large part, but not completely, for the reasons advanced by Mr Heath. I will set out my conclusions in what follows.

It is first necessary to identify the Agreement. In my view it is not just the Orders. The Court finds that on 23 March 2016 the parties by themselves and by their solicitors and counsel agreed to compromise the proceedings by asking this Court to make, and by each party consenting to, the Orders. This gave rise to an implied obligation in each party to do all that was reasonably necessary to give the other the benefit of the Agreement: see, for example, Secured Income Real Estate (Australia) Ltd v St Martins Investments Pty Ltd (1979) 144 CLR 596; [1979] HCA 51 at [24]–[30] per Mason J, as his Honour then was, and with whom all other members of the Court agreed.

In the case of Order 8, this implied obligation required Radmila to give the release and provide the evidence to enable the Court to determine whether or not to make the order under s 95 of the Act.

All of the objective circumstances point to the parties intending to be immediately bound. None of the categories of Masters v Cameron, including the so-called fourth category (see Baulkham Hills Private Hospital Pty Ltd v GR Securities Pty Ltd (1986) 40 NSWLR 622 at 628), are relevant. Radmila and Vase admitted they understood the purpose of the day was to settle the case if possible. It is apparent from the transcript of what occurred before Hallen J that an immediate settlement of the proceedings was the mutual intention of the parties. A formal document — the Orders — was solemnly entered into and signed. The parties presented the Orders to the Court so they could be made. The whole pattern of events before Hallen J as disclosed in the transcript after the luncheon adjournment is a series of outward manifestations that the parties regarded themselves as bound by the Agreement and that they had embarked upon performance of the Agreement but were delayed in completing it by the lack of evidence for the purposes of s 95(4) of the Act.

The Court will not lightly conclude, in the absence of clear language, that parties do not intend to be immediately bound by a settlement agreement reached at mediation: see, for example, Jingalong Pty Limited v Todd [2015] NSWCA 7 at [78] per Sackville AJA; Meagher and Leeming JJA agreeing.

The fact that the agreement involves the Court making orders such as those approving the release does not mean that there is any less an immediately binding agreement: Morrison v Abbott [2012] NSWSC 320 at [86] per Hallen AsJ (as his Honour then was).

Nothing in the language of Order 8 specifically, or the Orders generally, supports the contention that Order 8 demonstrates a lack of intention to be immediately bound. Nor does the plain language of the Orders support the conclusion that Order 8 is a condition precedent to the Agreement coming into existence. If there were any doubt about it, the Court would, in any event, prefer a construction that it was a condition precedent to performance rather than to the Agreement itself coming into existence: Perri v Coolangatta Investments Pty Ltd (1982) 149 CLR 537; [1982] HCA 29 at [16]–[17] per Mason J (as his Honour then was).

Mr Heath's statement that his client “needed” the release, in answer to Hallen’s query whether it was “essential”, is not to be understood as accepting it was "essential" in its strict legal sense, where such a characterisation is relevant to rights on breach or whether a term can be severed. It was no more than telling Hallen J that his instructions were that Lidija wanted what she had bargained for. In any event, an exchange between bench and bar about whether or not a term is essential in the technical sense does not make it so. That is a matter to be objectively determined on the proper construction of the agreement in question.

The Court finds that the parties were bound by the Agreement on and from 23 March 2016 and that the Agreement remains on foot. The fact that Hallen J was waiting for an affidavit from Radmila does not mean the Orders were being held in “escrow”. Lidija is entitled to waive compliance with Order 8 and its attendant implied obligation on Radmila because it is a provision for the benefit of the deceased’s estate. If further legal analysis is required, the letter of 3 June 2016 (see paragraph [43] above) is a repudiation of the Agreement. By her solicitor's letter of 28 June 2016 (see paragraph [44] above) Lidija has accepted that repudiation but has sought enforcement of the Agreement, as she is entitled to do.

Mr Sahade relied on the general discretion of the Court to decline to enforce settlement agreements (see Bartlett v Coomber [2008] NSWCA 100 at [28] and [55]–[58] per Mason P and [73] per Hodgson JA) and the Court's discretion under s 98 of the Act (see paragraph [55] above). He submitted that two matters warranted the Court not enforcing the Agreement by making and entering the Orders:

The first reason advanced by Mr Sahade requires the Court accepting, even in general terms, Radmila’s and Vase's assertions of inappropriate pressure being applied to them in connection with making the Agreement and their lack of understanding of it. It is neither necessary nor appropriate for the Court to make findings about those matters.

It is not necessary for at least two reasons. First, as is explained in paragraph [73] to [75] below, the Court accepts the second reason advanced by Mr Sahade. Second, it is not necessary for the Court to investigate the level of assent or understanding which Vase and Radmila brought to the Agreement because their solicitor and counsel clearly had both implied and ostensible authority to enter into the Agreement on their behalf. An agreement made between legal representatives to settle litigation in those circumstances is sufficient to bind their clients unless one side had notice that the ostensible authority of the other side's lawyers had been limited or withdrawn by reason of express instructions given by their clients: Donnellan v Watson (1990) 21 NSWLR 335 at 342 per Handley JA.

Nor is it appropriate for the Court to make findings on these matters in an application of this kind because they are serious matters which have not been fully explored. There has been no evidence from the lawyers involved and the issues could, conceivably, be ventilated in later proceedings between Radmila and Vase and their former legal representatives, should they choose to bring such proceedings. In making that observation I am not to be taken as expressing any view as to whether such proceedings should be brought or whether they would have any prospects of success.

For these reasons I expressly decline to make any findings about the serious allegations made by Radmila and Vase concerning the level of their understanding of the Agreement and their allegations about the conduct of their lawyers.

The second ground raised by Mr Sahade, relying upon the claims made by Vase in his statement of claim, gives rise to a different consideration. A defence and a reply have been filed so it would appear that the issues in relation to that claim have now been defined. If he enjoys complete success in the statement of claim, Vase will be beneficially entitled to the sole asset of the deceased’s estate, being her former home.

However, it is extraordinary that Vase has raised that claim so late in the proceedings, given that by his own admission he has known about the basis for that claim — the gift contract — since 2009. Vase is asking the Court for a substantial indulgence. Without explanation of the reasons for the delay or his silence about the gift contract at the judicial settlement conference, he asks the Court for the opportunity to agitate his claim to the sole asset of the estate where it is clear that, after a formal and considered procedure, the parties otherwise entered into a settlement of these proceedings.

But for the presence of the claim asserted in Vase’s statement of claim, the Court would have no hesitation to complete the process begun by Hallen J of making, and then entering, orders which would give effect to the Orders. Lidija is entitled to the benefit of the Agreement which the Court has found is, and always has been, binding upon the parties.

On the other hand, Vase has pleaded a claim that in practical terms would render the Agreement nugatory.

Whether it is the general discretion of the Court in relation to giving effect to settlement agreements or the Court’s powers under s 98 that is invoked, I have come to the view that when those two considerations are weighed against each other, justice requires that the Court should make and enter the Orders to give effect to the Agreement. However, in the exercise of those same discretions, justice also requires that the orders which the Court makes must be on terms that their effect is stayed pending resolution of Vase’s claim.

I will hear the parties as to the form of the orders to be made to give effect to these reasons and as to costs.