Caltex (Overseas) Ltd v Dent [1978] PGLawRp 555; [1978] PNGLR 411 (2 November 1978)

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PRACTICE AND PROCEDURE - Interlocutory proceedings - Compromise - Effect of compromise - Compromise out of court - Amount of claim settled and paid - Costs not settled and not paid - No power to enforce - Compromise superseding cause of action.

The plaintiff brought an action to recover K1434, from the defendant. After entry for trial the matter was settled out of court on the basis that the plaintiff accept the sum of K838.84 in satisfaction of its claim, plus costs. The sum of K838.84 having been paid, and no agreement having been reached as to costs, the plaintiff made application to the Court for an order �that judgment be entered for the plaintiff in the sum of $838.84 and costs�.

The agreement compromising the action had superseded the original cause of action, and there being no provision in the Rules of Court for judgment to be entered in the particular circumstances, the Court had no jurisdiction to make an order and the application should be dismissed.

This was an application by notice of motion seeking an order �that judgment be entered for the plaintiff in the sum of K838.84 and costs�. Facts giving use to the application are outlined in the reasons for judgment hereunder.

SALDAHNA J: The plaintiff brought an action to recover K1,434.40 from the defendant. The sum of K1,434.40 consisted of two amounts; an amount of K595.56 as interest at the rate of 5% per annum on a judgment debt which had been satisfied but upon which the plaintiff alleged interest had not been paid, and an amount of K838.84 being rental on a service station alleged to have been occupied by the defendant pursuant to an agreement between the plaintiff and the defendant.

The defendant filed a defence denying he owed the plaintiff anything at all. As to the sum of K595.56 he said that judgment had been obtained not by the plaintiff but by Caltex Oil (Australia) Pty. Ltd. and that in any case the judgment was fully satisfied by the writ of fieri facias issued by the judgment creditor, and, that no interest had been claimed. He agreed that he had entered into a licence agreement with the plaintiff but denied being indebted to the plaintiff under the terms of the agreement.

The plaintiff�s solicitors entered the action for trial on 18th October, 1977.

On 14th February, 1977 defendant�s solicitors wrote a letter to plaintiff�s solicitors in the following terms:

�You will shortly receive notice from us to the effect that we are making application to amend the Defence to admit the sum due under the licence agreement and to seek leave to pay the sum of K838.84 into Court.

Our client will maintain the position that the claim for interest is illfounded in law and cannot succeed.�

�We refer to your letter of 14th February, 1978 and our discussion of this matter with Mr. Lay on 15th February, 1978. We confirm that it was agreed on behalf of our respective clients at that time that the plaintiff would accept the sum of K838.84 in satisfaction of its claim plus costs. We consider this a more satisfactory means of concluding the matter than to have the expense incurred of an application to obtain leave to pay money into Court and any other appearance on the hearing. That being the case we enclose terms of settlement and we would ask that you endorse your consent thereon and return the document to us so that we may attend to having the matter mentioned shortly. We concur that the most convenient time for that would be on a Motions day.

In view of the fact that this matter was prepared for trial, entered for trial and that nothing further remained to be done other than obtain a fixed time during February, 1978 we assess our costs in the sum of K575.00.

We would appreciate it if you would take up the matter of costs with your client at the earliest opportunity so that the matter may be finally resolved.�

There was a final letter dated 27th February, 1978 from defendant�s solicitors to plaintiff�s solicitors in the following terms:

�Thank you for your letter of 17th February, 1978 and the enclosed Terms of Settlement which we have retained. We regret that our instructions do not go so far as to consent to an order for costs of the action. We are seeking instructions in those terms and we have recommended your costs. However, if you wish to proceed the judgment immediately you will have to do so by the same procedure which you have adopted with our client Djaul Lumber Development Pty. Ltd.�

By notice of motion dated 22nd August, 1978 plaintiff�s solicitors asked for an order �that judgment be entered for the plaintiff in the sum of K838.84 and costs�. The application was supported by an affidavit sworn by Mr. G. Evans. After setting out the history of the action he said in par. 8:

�I am instructed to enter Judgment on the basis that the defendant has admitted and paid the debt, a part thereof and that thereafter the plaintiff must have Judgment and costs to follow the event pursuant to the Rules of this Honourable Court.�

The application was made ex parte. At the hearing Mr. Evans appeared for the applicant. He said that the defendant, by his solicitors, had proposed to pay the sum he admitted owing into court and in order to save costs and avoid delay he had agreed that instead of the money being paid into court it should be paid directly to plaintiff and that this was done. He said that was the end of the claim and upon the evidence of the sworn affidavit the plaintiff was entitled to have judgment entered in his favour and for an order for costs.

There are circumstances in which a plaintiff can ask for judgment to be entered in his favour, as for instance in default of appearance (O. XV), on leave to sign summary judgment (O. XVII), in default of pleadings (O. XXXI) and when admissions of fact have been made in the pleadings or otherwise (O. XXXVI, r. 5). However, I can find no provision for judgment to be entered in the circumstances alleged by the applicant.

In view of Mr. Evans� statement in his affidavit that �the Plaintiff must have judgment and costs to follow the event pursuant to the Rules of this Honourable Court� I asked him if he could cite any rule or other authority in support of his contention. He said he could not.

There is authority for the contrary view. It is the case of Green v. Rozen and Others[dcv]¹, the headnote of which reads as follows:

�The plaintiff brought an action to recover �500 money lent by him to the defendants jointly, and a further sum of �50, alleged to be due from the first defendant as consideration for making the loan to the three defendants jointly. When the action came on for hearing on 11th January, 1955, counsel informed the court that the action had been settled and what the terms of settlement were. By the agreed terms, which were set out on the backs of counsels� briefs and signed by counsel for both parties, the defendants were to pay to the plaintiff a sum of �450 by instalments, on the dates stated, and the taxed or agreed costs with the final instalment, and, if any instalment was in arrear, the whole debt and costs became due and payable at once. On the front of the briefs was written: �Before ..., J By consent, all proceedings stayed on terms indorsed on briefs. Liberty to either side to apply.� The court was not asked to make any order whatever, and no order was made staying all further proceedings. The defendants having failed to pay the last instalment and the costs, the plaintiff made an application in the original action asking for judgment for the amount of the final instalment and an order for the costs.

Held: the application must be refused because, the court having made no order in the action, the agreement compromising the action between the parties completely superseded the original cause of action and the court had no further jurisdiction in respect of that cause of action.

Per Curiam: the plaintiff�s only remedy was to bring an action on the agreement of compromise.�

Had the defendant been allowed to pay the money into court as he had proposed to do the plaintiff could have accepted the money and obtained his costs: see O. XXVI, r. 6(a).

The correspondence cited above shows clearly that the action had been settled out of court but the question of costs had not been settled. Having settled the action the plaintiff should have gone on to obtain a settlement of the costs, and, if the costs had not been paid, to have sought to make the payment of costs an order of the court by consent. But now the agreement compromising the action has completely superseded the original cause of action and I have no further jurisdiction in respect of that cause.

For this predicament the plaintiff�s solicitors have themselves to thank, for presuming to prefer their own procedure to the procedure provided for by the rules of the court.

[dcv] ~~[1955] 2 All E.R. 797.~~

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Papua New Guinea Law Reports

Caltex (Overseas) Ltd v Dent [1978] PGLawRp 555; [1978] PNGLR 411 (2 November 1978)

Papua New Guinea Law Reports - 1978