Breen v Lambert & Anor [1991] QSC 232

10 20 30 so 60 ·,<e si,P 199r - l~~"l'li ... ---~ - ... .., ,,..,~ ··-,\t-ot-•-~·--=---~--~0 ·""'·· _., ... ! IN THE SUPREME COURT OF QUEENSLAND CIVIL JURISDICTION BEFORE MR. JUSTICE THOMAS BRISBANE 16 AUGUST 1991 NO. 4547 of 1988 1~ :_ 7' / ;/ ( ; (Copyright in this transcript is vested in the Crown. Copies thereof must not be made or sold without the written authority of the Chief Court Reporter,Court Reporting Bureau.) BETWEEN: 10 BETH BREEN as adrninistratix of the estate / of KEVIN PATRICK BREEN Plain ifOf -and- ARNOLD LAMBERT and RICHARD K.C. WAN Defend nts JUDGMENT HIS HONOUR: In my view the application should be dismissed with costs including reserved costs. I publish my reasons. G 214-Govt, Printer, Old, 1 30 40 50 60 -- 1 of 31 -- IN THE SUPREME COURT OF QUEENSLAND Before Mr. Justice Thomas BETWEEN: BETH BREEN as administratix of the Estate of KEVIN PATRICK BREEN \ Plaintiff AND: ARNOLD LAMBERT and RICHARD K.C. WAN Defendants REASONS FOR JUDGMENT - THOMAS J. Delivered the 16th day of August, 1991. CATCHWORDS: Practice - O. 45 r. 1 - Evidence discovered after judgment - Whether necessary to show reasonable diligence - Power of court to set aside or stay judgment after hearing on merits - Discretion to refuse - Company resolution for allotting share to volunteer - Transaction not completed - Whether allotment effective. Counsel: R.R. Douglas Q. C. with J. Sullivan forapplicant/defendants D.J.S. Jackson Q.C. for respondent/plaintiff Solicitors: Carberry and McGuire for applicant/defendants Feez Ruthning for respondent/plaintiff Hearing dates: 8th and 9th July, 1991. -- 2 of 31 -- IN THE SUPREME COURT OF QUEENSLAND No. 4547 of 1988 BETWEEN: AND: BETH BREEN as administratix of the Estate of KEVIN PATRICK BREEN ARNOLD LAMBERT and RICHARD K.C. WAN REASONS FOR JUDGMENT - THOMAS J. Delivered the 16th day of August, 1991. Plaintiff Defendants This is an application to stay a judgment. It is brought pursuant to 0. 45 r. 1. A mountain of material relating to the trial and to events before and after the trial has been presented, but in the end the issues before me are relatively straightforward, and I commend counsel for focussing upon the principal issues. It is desirable to present a short history of the proceedings before coming to the issues upon which the application is based. In November 1988 Mr. Breen ( "the plaintiff") made an agreement with Mr. Lambert and Mr. Wan ("the defendants") to transfer to the defendants the shares in Hayville Pty. Ltd. Hayville was the company that owned the business of Whittaker's Restaurant. It was controlled by the plaintiff and Mr. Whittaker. The defendants' principal obligation under the agreement was to procure releases of certain guarantees and securities under which the plaintiff was contingently liable in respect of the company's debts and obligations. -- 3 of 31 -- 2 These included a mortgage over his home in favour of the Westpac Banking Corporation. The defendants failed to complete, and the plaintiff immediately brought proceedings for specific performance and for damages. After a ten day trial before Byrne J. in June 1990, judgment was given (on 23rd August, 1990) in favour of the plaintiff for specific performance which inter alia directed that the defendants procure the releases of the plaintiff's securities. Judgment was also given in the plaintiff's favour for $735,611.21 damages for delayed performance, and for costs. The principal points of defence concerned alleged misrepresentations, upon which the learned trial judge found against them. On 3rd September, 1990 the defendants filed an appeal to the Full Court. They then applied for a stay of the judgment pending the appeal. The application came before McPherson J. who on 11 th September, 1990 ordered a stay conditioned upon the defendants paying into court the amount of the judgment ($735,611.21) together with $75,000.00 for costs, upon undertakings of the defendants not to deal with their assets except as prescribed, and to conduct the appeal diligently. The defendants were apparently not minded to take advantage of the stay upon the conditions prescribed by His Honour. They have paid nothing and have not prosecuted the appeal diligently. It may be noted that the present application, which has taken some time to bring on, is based upon grounds that could have been brought forward upon an appeal. -- 4 of 31 -- 3 In view of the failure of the defendants to comply with the specific performance order, the plaintiff attempted to continue running the restaurant. His losses continued. On 17th September, 1990 he committed suicide. After his death his widow continued to run the restaurant and losses continued. home. Eventually the bank dispossessed her and sold the On 19th December, 1990 the defendants filed the present application. It seeks orders that- "1. Execution pursuant to the Judgment granted in this action by the Honourable Mr. Justice Byrne on 9 August 1990 be stayed until further order of this Honourable Court. 2. In the alternative to paragraph 1, that the Order made by the Honourable Mr. Justice McPherson on 11 September 1990 be varied, by the deletion from the order granting a stay of the condition that the Defendants pay into Court the amount of the judgment together with an amount of $75,000.00 on account of costs to abide the event of the appeal in the action." On 20th December, 1990 the Chamber judge, who happened to be Byrne J. adjourned the application, which in due course came on before me at the July civil sittings. On a cross-application on 20th December on behalf of the plaintiff's widow, His Honour ordered that part of the specific performance decree be vacated. The defendants' application for stay is not limited to the pendency of any appeal. It is to be prima facie permanent. Its basis is that after judgment the defendants discovered certain evidence of which they were unaware at trial. It is said that if they had known of it, it would have been presented at the trial and would have resulted in -- 5 of 31 -- 4 judgment in their favour. The defendants disclaim any request for retrial suggesting that if the judgment is stayed it is for the plaintiff to seek a retrial. Counsel for the defendants concedes however that the court has jurisdiction to require a retrial as a condition of the grant of any stay. This seems to imply that O. 45 r. 1 confers upon me a power to set aside the present judgment. However the precise nature of these proceedings will be later discussed. The defendants have chosen the preference to an appeal raising the additional evidence as a ground for present remedy discovery of setting aside in the the judgment, with the consequential possibility of an order for retrial. Through their counsel they rely upon the wording of 0. 45 r. 1 submitting that the rule is "peculiar to Queensland" and that it avoids the application of principles that apply upon appeal to the setting aside of judgments on the basis of "fresh evidence". In such proceedings it must of course be shown that the evidence could not have been obtained with reasonable diligence for use at the trial, that the evidence must be such that, if given, it would probably have an important influence on the result of the case, and it must be apparently credible though it need not be incontrovertible (Fredericks v. May (1973) 47 A.L.J.R. 362, 368; Hawkins v. Pender Brothers Pty. Ltd. (1991) 1 Qd.R. 135, 137). The evidence said to have been discovered after judgment concerns the ownership of the shares in Hayville Pty. Ltd. ( "the company") . The plaintiff's obligation under the contract was to transfer or cause to be transferred to the -- 6 of 31 -- 5 defendants all the shares in that company. There is no doubt that at all material times the plaintiff and the other person with whom he ran the business (Mr. Whittaker) believed that all the allotted shares in the company were owned by them. There can be no doubt as to Mr. Whittaker's co-operation with the plaintiff in the effecting of the agreement and his willingness to transfer to the defendants all shares which he owned or over which he had control. The evidence now produced by the defendants is designed to support the proposition that at material times one share was owned by Ms. Ledwidge (with whom Mr. Whittaker had a de facto relationship) that another share was owned by her as trustee for the Whittaker family trust, and that Mrs. Breen also owned a share. The defendants allege that Ms. Ledwidge would not have been willing to have transferred her share to the defendants at the material time. The pleadings show that the plaintiff alleged that he was at all material times ready, willing and able to complete the agreement. Although not the subject of a specific denial, this allegation was placed in issue by a non-admission in para. 2 of the defence. The issues upon which the trial was actually fought were mainly those relating to representations and their truth or defendants' satisfaction in relation thereto, and damages. After judgment was given for the plaintiff the defendants retained solicitors to avoid the consequences of the judgment. The circumstances leading to the discovery of the additional evidence are a little curious, in that Mr. Carberry was -- 7 of 31 -- 6 instructed or decided to "start from the judgment and work back". He observed that - "Reading the judgment of Mr. Justice Byrne, the fact that the contract was for the sale of the entire share capital of the company obviously ranked pretty highly in his mind. So, in working backwards, on or about 7th November, 1990 my clients brought to me a file of Short, Punch and Greatorix". That file excited interest in the possibility that Mr. Breen and Mr. Whittaker might not have been the owners of all the shares in Hayville. It is one thing to rake through a judgment with a fine-tooth comb with a view to finding a ground for appeal, but it is something else to start a search for fresh evidence on the points on which a judgment is found to turn. I do not imply impropriety in so doing, but if there is to be a new technique of inquiry designed to turn up "fresh evidence" courts ought at least to be alive to what is happening. It is a course of conduct calculated to come into conflict with the principle of public policy that it is in the interests of society that there be an end to litigation. It is expressly directed towards finding something capable of setting the original proceedings at nought and giving the unsuccessful party a second run. It will commonly not be difficult, with the hindsight of a trial, to uncover something in relation to an issue which would not in the ordinary course of preparation before the trial have been regarded as significant or as justifying the creation of a further issue. With hindsight something not formerly regarded as justifying in depth attention may take on a new attraction. It may also be noted that the file that the defendant (Mr. Wan) brought to Mr. Carberry after the trial was that .of -- 8 of 31 -- 7 Short, Punch and Greatorix, the plaintiff's solicitor. The defendant Wan produced it when Mr. Carberry asked him to go through his records and "find out anything that is relating to Whittaker's Restaurant". He looked through his office (which does not contain any great volume of records), found the file and brought it to Mr. Carberry. In fact he had had possession of that file at all material times since November or December 1988. He certainly had it when his solicitor asked him, for the purposes of discovery before trial, to do exactly the same thing as Mr. Carberry asked him to do after judgment. He says that he did not then know that he had the file; that it must have come into his possession at the end of 1988 when employees brought various records of restaurant accounts into his office for assessment; that the restaurant accounts were duly returned to the restaurant but that this file, which unaccountably was with such documents, must have been left behind in his office. He did not locate it when his solicitor asked him to search for all relevant documents for the purposes of discovery before trial; but he did find it when Mr. Carberry asked him to make such a search after trial. The relevance of that particular file is that it contains a sheet in the solicitor's handwriting showing initial instructions for a different share structure and allocation to that acted on by all parties including the plaintiff. It showed Ms. Ledwidge and Mrs. Breen as the holders of one share each. This caused Mr. Carberry to make further inquiries ultimately leading to his close examination of the company's share register. It contains evidence suggesting that at an -- 9 of 31 -- 8 early stage in the life of the company there had been an allocation of shares to Ms. Ledwidge and Mrs. Breen as well as to Mr. Whittaker and Mr. Breen. On later instructions a further meeting had occurred purporting to change the share allocation so that the only shareholders were Mr. Breen and Mr. Whittaker, but such attempt may have been ineffectual at law. This will be considered in greater depth later, but for the present it is enough to note that the defendants contend that at material times Ms. Ledwidge was a shareholder. The company (Hayville Pty. Ltd.) was formed in 1987 by a company carrying on the business of an incorporator of shelf companies for sale ( "Inco") . The proprietors of Inca had incorporated Hayville in September 1987, and in October 1987 they were instructed by Steindls (solicitors at the Gold Coast) to supply a company with designated directors and to issue certain shares (in two classes) to Mr. and Mrs. Breen, Keith Whit taker and Frances Ledwidge. The proprietors, who were the original shareholders held a directors' meeting on 12th October, and in accordance with their instructions from Steindls transferred their Mr. Whittaker and resolved to two allot original shares to five ordinary shares, namely one to Mrs. Breen, one to Mr. Breen, one to Mr. and Mrs. Breen jointly, one to Ms. Ledwidge and one to Ms. Ledwidge as trustee for the Whittaker family trust. They also appointed new directors namely Mr. Breen, Mr. Whittaker, Mrs. Breen and Ms. Ledwidge. Subsequently on 11 th December, 1987 Steindls wrote to Inco advising "that we wish you to amend our previous instructions" to the effect that the -- 10 of 31 -- 9 directors would be Mr. Breen and Mr. Whittaker, the secretaries would be Mrs. Breen and Ms. Ledwidge and that the shareholders would be Mr. Breen and Mr. Whittaker. The proprietors of Inca then held another meeting, made the various minutes and raised the appropriate documents designed to produce that result. This was the result upon which all parties thereafter acted and which they assumed to be the legal reality. On Ms. Ledwidge' s evidence "it was mainly the boys that got together to form this company". She was at one stage told that she was going to be a shareholder and director and was willing for this to happen. She contributed no capital to the business and made no payment for any share. Mrs . Breen was under the same impression in relation to herself during the early stages when Mr. Breen and Mr. Whittaker contemplated this four-way control of the company. This was no doubt the position when the initial instructions were given to Steindls which in turn were given to Inco in October 1987. It should be noted that this activity was of a preliminary nature, and occurred well before the commencement of any relevant business. The restaurant did not open until February 1988. The amended instructions under which Mr. Breen and Mr. Whittaker were to be the only shareholders and profit-sharers were given before 11th December, 1987 when Steindls instructed Inco of the altered requirements with which Inca in due course purported to comply. The main reason why Mr. Breen decided to change the initial proposal was not particularly meritorious, being based upon his perception that Mr. Whittaker had twice -- 11 of 31 -- 10 previously been married and that Ms. Ledwidge was not legally married to him. Mr. Whit taker relayed this to Ms. Ledwidge who resented the reason given. She retained a preference for the original suggestion of a four-way interest, but did nothing to insist upon adherence to it. She played no part in . the planning of the business structure, and as far as the evidence shows, entitlement. Mrs. did not insist upon Breen certainly had no a profit-share objection to the changed arrangement. As I interpret the evidence Ms. Ledwidge had an objection to the reason for the change, but did not insist upon any rights, or seek to prevent Mr. Whittaker and Mr. Breen in proceeding to create and run the business as they proposed. In the event Ms. Ledwidge made no contribution to the capital and made no payment for any share. When the restaurant opened she accepted employment at a salary. Under the new arrangement she accepted the position of company secretary and acted as such. Indeed she signed the notices of a further company meeting in relation to the shares of the company, clearly showing that the only shareholders were Mr. Breen and Mr. Whittaker. Ms. Ledwidge also gave evidence that she had not been involved in the initial discussions concerning the four-way allocation of shares, and had merely been told about it by Mr. Whittaker. The defendants seek to blame Mr. Bartley, the solicitor for the plaintiff at material times during the conduct of the action, for failing to discover certain parts of the files of -- 12 of 31 -- 1 1 Short, Punch and Greatorix which afford some evidence of the early attempt or the allotment of shares to Ms. Ledwidge and Mrs. Breen. They contend that if all relevant parts of Short Punch and Greatorix's file number 26928/6 had been discovered, they would have been alerted to the possibility that the plaintiff might not have been able to transfer all the shares, that they would have litigated that question and succeeded upon it. The evidence before me shows that this file was initially discovered as item 326 in the plaintiff's affidavit of discovery, but it was not produced upon the initial inspection. At a later time Mr. Bartley, who had perused the file caused a supplementary affidavit of discovery to be made in which those parts of the file which Mr. Bartley regarded as relevant. Parts which were not disclosed include eight documents (listed in ex. 10) which would have facilitated the present line of inquiry, if the defendants or their solicitors had then been minded to follow it up. The company register was also in Mr. Bartley's possession although he did not act for the company as such and it was not a party to the litigation. He did not make discovery of the register as he did not regard it as relevant. In fact an ordinary perusal of the register as such would tend to have revealed the position as the parties always understood it to be. In the actual register there appeared the resolutions and documents resulting from the instructions given by Steindls in December 1987. The earlier minutes and documents resulting from the earlier instructions were merely clipped to the register, the -- 13 of 31 -- 12 top document of which bore the notation "all these documents cancelled". It was only when Mr. Carberry perused these documents upon his current search for some basis upon which to upset the judgment that evidence was revealed capable of suggesting that Ms. Ledwidge may have been a lawful shareholder and that the subsequent allocations shown in the formal part of the register may have been invalid. It has not been suggested that Mr. Bartley acted at any stage in other than a bona f ide manner. It was submitted however that, having regard to the non-admission of the readiness, willingness and ability of the plaintiff, the omitted parts of item 326 and the company register were relevant, either of their own force, or as documents that would lead to a train of inquiry which would advance the defendants' case or damage that of their adversary (Mulley v. Manifold (1959) 103 C.L.R. 341, 345). Mr. Jackson Q.C. for the plaintiff submitted that there was in any event no obligation upon the plaintiff to discover or produce the register of a company not a party to the litigation notwithstanding that it was in the possession of his solicitor (Alfred Crompton Amusement Machines Ltd. v. Customs and Excise Commissioners No. 2 (1974) A.C. 405, 429; Turner v. Davies (1981) 2 N.S.W.L.R. 324, 325, 326). Without discussing this issue, and notwithstanding the unsettled controversy that exists on this point, I am prepared to act on the footing ( contrary to the plaintiff's submission) that if relevant, such a document in the solicitor's possession should be discovered notwithstanding that it was the property of the -- 14 of 31 -- 13 company. I am therefore prepared to act on the footing that the defendants have shown that there were documents in the possession or power of the plaintiff relevant to issues in the litigation which were not discovered by the plaintiff, namely parts of the file of Short, Punch and Greatorix suggesting that Ms. Ledwidge may be a shareholder, and documents clipped to the company register to similar effect. It is however a little difficult to see how the defendants may justly complain of this as a deprivation when one of them (Mr. Wan) had the physical possession of one of the plaintiff's files which contained the same sort of information. On this aspect Mr. Wan gave evidence that he did not know that he had the file at any material time until after judgment. In cross-examination he agreed that there had been an occasion in November 1988 when Mr. Breen had handed to him a file which Mr. Breen had brought from his solicitor's office at the Gold Coast concerning outstanding matters relating to the lease of the relevant business premises. Such file included reference to possible objections to attempts by "Mollys on the Mall" to obtain a liquor licence. The file which was in Mr. Wan' s possession certainly related to the restaurant lease and to potential objections in relation to "Mollys on the Mall". Mr. Wan however denied that this was the same file that Mr. Breen had handed to him. Of course Mr. Breen cannot be called to give evidence and the current issues were only raised after his death. It is therefore not a situation in which there is contesting evidence to be evaluated. However the inherent probabilities, and in -- 15 of 31 -- 14 particular the inherent improbability of a solicitor's file unrelated to accounts of the restaurant having found its way into the hands of a prospective purchaser such as Mr. Wan in the manner described, lead me to suspend belief in relation to Mr. Wan's evidence on this score. I accept that it was in his office at all material times including the time of discovery of documents; that he produced it to his solicitors for the first time in November 1990, after judgment; and that the request made by Mr. Carberry which resulted in its production was no more specific than the request from his solicitor at the time of discovery before trial when he failed to produce it. I am satisfied that at the time of discovery before trial Mr. Wan did not properly discharge his duty of due search for relevant documents. I am unable to conclude that Mr. Bartley was any more remiss than Mr. Wan in failing to produce documents at the time of discovery relevant to the question of Ms. Ledwidge being a shareholder. If Mr. Wan had made proper discovery in the sense of making proper search for relevant documents, the "line of inquiry" now said to have been denied to them by reason of Mr. Bartley' s error would have been available to them before trial. I am also quite satisfied that if the defendants had been prepared to complete the contract on the due date ( 7th December, 1988) Ms. Ledwidge, assuming that she was a shareholder, would have done whatever was necessary to enable the contract to be completed. There was no rift between Mr. Whit taker and Ms. Ledwidge. In the belief that he and Mr. Breen were the only shareholders Mr. Whittaker had bound -- 16 of 31 -- 15 himself to enable Mr. Breen to transfer Mr. Whittaker's shares to enable Mr. Breen' s transaction to be completed (ex. 9) . Ms. Ledwidge knew at least by 23rd May, 1988 that the men were the only shareholders, because as company secretary she signed the notice of meeting to enable a variation to be made to the article concerning the entitlements of "A" and "B" class shareholders, in which the sole shareholders were shown as Mr. Whittaker and Mr. Breen. I am satisfied that any reservation she had about the matter was one of personal resentment and not of legal claim. Both she and Mr. Whittaker were anxious to assist Mr. Breen out of the business, and it is significant that both she and Mr. Whittaker were staying in the venture with the defendants. Exhibit 4 (minutes of a meeting of 19th November, 1988) shows that there was a purported directors meeting of Hayville Pty. Ltd. on 19th November attended by the defendants and Mr. Whittaker, on the assumption that the defendants were intending to complete the transaction with Mr. Breen. Further allocations of shares were agreed to, including shares to Ms. Ledwidge as trustee for the Whittaker's Restaurant Trust. Further, it was resolved that Mr. Whittaker would undertake to remain as general manager for the company for a period of a minimum of five years, with a restraint clause applying if he terminated his employment within that period. During cross-examination Ms. Ledwidge expressly conceded that at the time when the defendants were intending to buy the company she would happily have transferred to them any shares -- 17 of 31 -- owned by her. following:- 16 The questions and answers included the "If Mr. Breen had said, 'Look, there may be a problem with the shareholding in the company, will you transfer?'-- I would have happily done it. In accordance with Mr. Breen' s directions?-- Yes, happily done it if he had asked me. Quite frankly, I had forgotten all about the shares by that stage until it was brought up 18 months or so ago. I had forgotten all about them." I do not regard the position as significantly altered by her response to the somewhat leading questions in re-examination:- "You are aware of the fact, you told us a moment ago, that you were a guarantor of the lease, and a personal guarantor?-- In return for the transfer of the shares what wouldyou have wanted done with that provision - the guarantee?-- My name taken off it, naturally." This refers to a guarantee of the company's lease, which had been signed, inter alia, by Mrs. Breen and Ms. Ledwidge. In point of fact that lease was renegotiated, without any apparent difficulty very soon afterwards, and Ms. Ledwidge was thereby relieved of any continuing obligations under the guarantee. When the new lease was agreed, the lessor was content with guarantees from only Mr. and Mrs. Breen. There is therefore no reason to believe any difficulty would have been occasioned in obtaining Ms. Ledwidge's release in December. The agreement for the fresh lease was made in January 1989. I am not satisfied that the existence of this obligation would have been permitted to stand in the way of the completion of a transaction that was seen to be for the substantial benefit of all persons then involved in the business, namely the Breens, Mr. Whittaker and Ms. Ledwidge. -- 18 of 31 -- 17 The statement in the re-examination that she would have "wanted" her name off the guarantee was an understandable and almost inevitable response but it expresses desire rather than insistence. It was not suggested that she would have insisted upon it, and such a suggestion is improbable having regard to the facilitative attitude held by her in relation to the proposed sale. I am satisfied that Ms. Ledwidge would have co-operated in the transfer of any share owned by her, whether or not her guarantee was then released. What do the defendants need to show in order to obtain a stay of this judgment obtained after a substantial trial on the merits? Order 45 states:- "[45.1] Matters arising after judgment or order 1 When facts arise after the giving of a judgment or making of an order which entitle the person against whom the judgment or order is given or made to be relieved from it, or when facts are discovered after the giving of a judgment or making of an order which, if discovered in time, would have entitled the party against whom the judgment or order is given or made to a judgment or decision in his favour, or to a different judgment or order, he may apply to the Court or a Judge for a stay of execution or other appropriate relief; and the Court or a Judge may grant such relief, and for that purpose may direct such proceedings to be taken, an.d such questions or issue of fact to be tried or determined, and such inquiries to be made, as may be just. [45.2] Entry of satisfaction 2 Any party against whom a judgment is given may apply to the Court or a Judge for an order directing entry of satisfaction of the judgment to be made, and the Court may make such order accordingly. [45.3] Procedure under this order exclusive -- 19 of 31 -- 18 3 No proceedings shall be taken for the purposeof obtaining relief from judgments or orders on the ground of facts arising or discovered after the judgment or order, except as by this Orderprovided." Mr. R. Douglas (for the defendants) submitted that the principles developed by the courts in relation to setting aside judgments and granting new trials on the basis of "fresh evidence" do not apply to an application of this kind. He drew a distinction between the present application and an appeal to which O. 70 r. 10 applies. Whilst the distinction is obvious enough, each power is discretionary, and there would seem to be as good a reason for caution in exercising a power based upon post-judgment discovery of evidence under O. 45 as under o. 70. The initial problem is to determine whether, on an application under 0. 45 r. 1, where the belief is based upon evidence existing but not discovered before trial, the court should apply the familiar tests that it applies in such a situation when an appeal is brought from the judgment. It is true, as Mr. Douglas submits, that the defendants are not attempting to set aside the judgment, although as it seems to me, the necessary premise underlying application is that the judgment is an unjust one. their Some reliance was placed upon Woods v. Sheriff of Queensland (1895) 6 Q.L.J. 163, 164-165. That case was concerned with O. XLI r. 22 of the Judicature Act Rules, introduced by the schedule to the Judicature Act 1876, which may be regarded as a precursor of the present O. 45 r. 1 • In that case Griffith C.J. stated briefly the exceptions then recognised to -- 20 of 31 -- 19 the rule of finality of judgments (given after both sides have been heard) before the Judicature Acts. "At common law, if after final judgment had been given in an action new facts arose entitling the defendant to be relieved from execution upon the judgment, he could obtain that relief by a proceeding called a writ of audita querela. Similar relief was given in chancery by a Bill in the nature of a Bill of Review" ( p. 164) . Order XLI r. 22 states:- "22. No proceeding by audita guerela shall hereafter be used but any party against whom judgment has been given may apply to the court or a judge for a stay of execution or other relief against such judgment upon the ground of facts which · have arisen or been discovered too late to be pleaded and the court or judge may give such relief and upon such terms as may be just." With respect to that rule (and O. LVII r. Griffith C.J. observed - and "Thus, although the mode of procedure is altered,full power is retained to relieve a party from the effect of a judgment which, though just when pronounced, ought not to be carried into execution." ''There is therefore no question of reversing or burying or rehearing the original decision or order. II 11 ) In K.G.K. Constructions v. East Coast Earthmoving (1985) 2 Qd.R. 13, McPherson J. (with whom Campbell C.J. and Sheahan J. agreed) supposed that 0. 45 may have been framed by Sir Samuel Griffith with difficulties of the kind faced by Mr. Woods in Woods v. Sheriff of Queensland (above) and that 0. 45 was intended "as a statutory confirmation and perhaps enlargement of the jurisdiction that was there held to exist apart from statute" (p. 20). The ratio of K.G.K. Constructions v. East Coast Earthmoving would seem to be that -- 21 of 31 -- 20 the court ( whether constituted by a judge or by the Full Court) may under O. 45 take into account facts that have arisen after the making of the order in question, and if the circumstances are appropriate, grant relief to the extent of setting aside the order in question. The decision raises a number of problems, arising involved appeals from two in part separate from the fact that judgments, and it the difficulty in identifying which further facts were discovered after the respective judgments. Those occurring after the judgment of D.M. Campbell J. are discernible, but it is not so easy to identify any further evidence after the second judgment. The court indicated that it could have allowed the appeal relying on the power of an appellate court to consider further evidence of events subsequent to the making of each order (K.G.K. Constructions v. East Coast Earthmoving (above) p. 1 8 11. 1-1 0), but seems to have preferred to rest its decision upon O. 45 r. 1. As I read the judgment the court was primarily concerned with events which occurred after the first judgment against which an appeal was brought and that once the first judgment fell the basis for the second judgment disappeared. However, on any reading of K.G.K. the court was not concerned with an issue such as arises here namely the use that the court should make of evidence ante-dating the application in question. It is I think instructive to examine the pre-Judicature Act practice of the courts, the extent to which this was affected by the Judicature Acts, and the effect of subsequent -- 22 of 31 -- 21 rules. The chancery practice is described in Daniells Chancery Practice (1901) Vol. 2, p. 1286 - "Under the former practice no action of review, or supplemental or new action in the nature of anaction of review, grounded upon new matter discovered after the judgment, could be brought without the special leave of the Court first obtained for that purpose (Cons. O. XXXI.11; Laming v. Gee, 10 C.D. 715; and see Gould v. Tancred, 2 Atk. 533; Houghton v. West, 2 Bro. P.C. ed. Toml.88; Moore v. M., 2 Ves. S. 596; Davis v. Bluck, 6 Beav. 393, 398.). The new matter need notnecessarily be evidence upon matters in issue in theoriginal action; although, if the pleadings were properly framed, it would rarely happen that it would not be, in some degree, evidence of such matters then in issue (Ld. Red. 85; and see Younq v. Keighly, 16 Ves. 348; Partridge v. Usborne, 5 Russ. 195, 231; Barne v. Offer, 5 Russ. 225, n.) The application for leave to bring the action might be made by petition, motion, or summons in the former action, but was usually made by motion (But see Flacke v. Scottish Imperial Ins. Co., 35 W.R. 794, where the application was made by summons; and see Re Scott and Alvarez (1895) 1 Ch. p. 610). Upon the application the Court had to be satisfied that the new matter had come to the knowledge of the applicant and his agents for the first time since the period at which he could have made use of it in the action, and that it could not, by reasonable diligence, have been discovered sooner ... ; and that it was of such a character that, if brought forward in the action, it would probably have altered the judgment (Hosking v. Terry, 15 Moore, P.C. 493; and see Patterson v. Slaughter, Amb. 293; Ld. Portsmouth v. Ld. Effingham, 1 Ves. S. 430; Willan v. W., 16 Ves. 73, 87; Young v. Keighly, 16 Ves. 348; Ord v. Noel, 6 Mad. 127; Partridge v. Usborne, 5 Russ. 195, 231; Davis v. Bluck, 6 Beav. 393, 399; Toulmin v. Copland, 4 Ha. 41; Hungate v. Gascoyne, 2 Phil. 25; Re Smyth, 11 W.R. 850; Thomas v. Rawlings, 34 Beav.50; 13 W.R. 248; Morrall v. Pritchard, 14 W.R. 172; Wason v. Westminster Improvement Commrs., 4 L.T. 80; Michael v. Fripp, 18 W.R. 423; Land Credit Co. of Ireland v. Ld. Fermoy, 5 Ch. 763; ib. 768, n(1); and see Re Scott & Alvarez (1895) 1 Ch. 596." The practice relating to rehearing in chancery was abolished by the Judicature Acts (see Re St. Nazaire Co. (1879) 12 Ch.D. 88, 97). -- 23 of 31 -- 22 Of that practice Jessel M.R. remarked - "Then it was said that under the old practice the Court of Chancery, that is, the Judges of the Court of Chancery, the Lord Chancellor, the Master of the Rolls, and the Vice-Chancellor could rehear not only their own decrees, but the decrees of their predecessors, that is, those whom they succeeded. No doubt it was so, but does that jurisdiction continue? If it does, the most extraordinary results will follow. The power to rehear was confined by General Orders. The time allowed had been twenty years, but at last it came down to five years, and the power to appeal given by the new rules is only for one year; therefore if such a power were considered to remain vested in the Judges of the High Court it would follow that after the lapse of one year you could not appeal at all, but you might at any time within five years present your petition of rehearing to the Judge himself, and then, if he refused it on the ground that he thought he was right before, which would be the most probable result, you could then appeal to the Appeal Court, and thereby get five or six years for appealing instead of one. That would be so remarkable a result that hardly any one could believe that such was the true construction of the Act or Parliament or the Rules." Clearly then the principles protecting the finality of judgments and the refusal by courts to interfere by reason of evidence available but undiscovered before action unless such evidence could not by reasonable diligence have been discovered in time, and other related principles, are of long-standing. They are based upon the requirements of public policy which include the desirability of there being an end to litigation. Jessel M.R.'s remarks show that these principles were not swept away by the Judicature Act. Nor have they have been undermined by the rules introduced by the Judicature Act (see the schedule to the Judicature Act 1876, including 0. XLII r. 22). The same may be said with respect to the abolition of the common law writs of audita querela (see Holdsworth - A History of English Law - 6th ed. pp. 224-6). -- 24 of 31 -- 23 The abolition of the writs by O. LVII r. 11 in 1876 was accompanied by recognition of the court's power to relieve against judgments on the ground of discovery of further facts, as Griffith C.J. observed in Woods v. Sheriff of Queensland, (above p. 165). The similarity between those rules and O. 45 r. 1 as introduced in the Rules of the Supreme Court 1900 (at least in the operative part that deals with the discovery of facts after judgment) and the general discretion entrusted to the court in such a situation is significant. It seems to me that 0. 45 r. 1 gives a very wide power, even to a judge in chambers, with respect to relieving applicants from the effects of final orders after there has been a trial on the merits. It is surprising that such a power is reposed in a chamber judge when one has regard to s. 8 of the Judicature Act 1876 which requires "every motion for a new trial after verdict shall be heard before the Full Court". Plainly 0. 45 r. 1 grants the power to grant "a stay of execution or other appropriate relief". I have difficulty in concluding that that rule grants to a chamber judge the power to set aside a judgment regular!¥ obtained after a trial upon the merits, and would be inclined to construe the reference to "other appropriate relief" as falling short of the very special power of setting aside such judgments, which, generally speaking, is limited to the powers conferred upon Appeal Courts, and the setting aside of judgments for fraud ( Goldring v. National Mutual Life Association of Australasia Ltd. (1916) 22 C.L.R. 336, 339; A.M.I.E.U. v. Mudginberri (1986) 65 A.L.R. 683, 688). However I think I am bound by the -- 25 of 31 -- 24 expression of opinion in K.G.K. Constructions v. East Coast Earthmoving (above) to take the view that the power includes that of setting aside judgments. that assumption. I shall therefore act on The power is however one that is not likely to be exercised, or to be used without regard to factors which have traditionally concerned the minds of judges. I acknowledge the breadth of the power, but consider that an appropriate exercise of discretion requires account to be taken of factors of the kind that influence courts of appeal in deciding whether or not to interfere with a judgment when it is alleged that relevant evidence exists which was available but not discovered before trial. The principles applied in such cases are expressed in Fredericks v. May (1973) 47 A.L.J.R. 362, 368; Clarke v. Japan Machines Australia Pty. Ltd. ( 1984) 1 Qd.R. 404, 408; Hawkins v. Pender Bros. Pty. Ltd. (1991) 1 Qd . R . 1 3 5 , 1 3 7 ) . Although the application is couched in terms of an application for stay, or for "other relief" it is in substance the invalidation of a judgment and such applications always require careful scrutiny. I agree with the following general observation made in A. M. I.E. U. v. Mudginberri (above) at p. 691 . "The principle that there must be an end to litigation is a powerful one. Courts should not be ready to permit unsuccessful parties to attempt to overturn judgments by raising new considerations. For that reason, it is essential that a party seeking to overturn a judgment demonstrates that he or she does so only upon the footing of matters discovered since the judgment was entered. Plainly, such evidence must be weighty ... " -- 26 of 31 -- 25 It is generally considered that there is no inherent power to set aside a judgment by reason of changed circumstances (Gamser v. Nominal Defendant (1977) 136 C.L.R. 145; Wentworth v. Attorney-General (N.S.W.) (1984) 154 C.L.R. 518, 526.) There are of course exceptions (Bailey v. Marinoff (1971) 125 C.L.R. 529, 531, 539; Wentworth (above) p. 526), but it is not necessary to discuss these further. If this application revealed a sufficient basis to "entitle" the unsuccessful defendants discretion to to a different judgment, stay execution of the there is judgment. plainly a If the non-discovery of such evidence occurred despite due diligence by the defendants and their advisers I should not in such a case hesitate to exercise the discretion in their favour. However, even assuming sufficient cogency · in the information which they blame the plaintiff's solicitor for failing to discover, or in the information to which it may have led the defendants, it would by no means follow that the discretion should be exercised in their favour when such information was also in Mr. Wan' s own keeping and could have been ascertained by him · with reasonable diligence. Where there are faults both ways in the matter of discovering the relevant line of enquiry, there is a balancing exercise of some difficulty. It was not submitted that different results might ensue as between the two defendants, Mr. Lambert and Mr. Wan, on the footing that Mr. Wan' s failure to make proper search for documents has nothing to do with the position as between the plaintiff and the defendant Lambert. Such a point would be arguable in Mr. Lambert's favour, and it may be that -- 27 of 31 -- 26 if this discretionary factor were the only basis for refusal, a stay might be granted to Mr. Lambert but not to Mr. Wan. However on the view I take of the case it is not necessary to pursue this point further. The ultimate question is whether I am satisfied that the present judgment ought not to be enforced. It may be seriously doubted whether the discovery of the additional parts of the file of Short Punch and Greatorix and of the company register would, without the benefit of the hindsight which the applicants now have, have led them to pursue the present point and have made it a serious point at the trial. I shall however for the purposes of argument assume in their favour that they would have been prepared to run any point of defence which seemed open. I have concluded that the application must fail. The main reasons for this may now be summarised. 1. The evidence does not satisfy me that Ms. Ledwidge ever became a shareholder or the holder of a right of disposition of a share in the company. Ms. Ledwidge at no stage applied for a share. Although there was a resolution to allot a share to her on 12th October, 1987 no such shares were in fact issued to the allot tees. The evidence is very sketchy in relation to the instructions given by Mr. Whittaker at the time, but his initial intention to benefit her suggests that she was at best in the position of an intended donee. She was not in communication with anyone other than Mr. Whittaker at this time, and she was at all material times a volunteer. She -- 28 of 31 -- 27 never obtained the control of any share that was allotted (cf. Central Piggery Co. Ltd. v. McNicoll and Hurst (1949) 78 C.L.R. 594, 598, 599-600; cf. Maddocks v. D.J.E. Constructions Pty. Ltd. (1982) 148 C.L.R. 104, 119). The evidence supporting the conclusion that the proposed transaction in favour of Ms. Ledwidge was not completed or effective includes the following: (a) In contrast to the share certificates for the two existing shares transferred by the original proprietors to Whittaker and Breen, the share certificates for the new shares (including the relevant one for Ms. Ledwidge) were not signed or sealed. (b) The company received no payment for the shares resolved to be allotted. The original proprietors left this to be attended to by the incoming directors. ( c) There were no signed applications for the shares by the allottees. (d) The resolution to divide the share capital on the assumption of seven issued shares was not passed at the meeting of 12th October. That was left for future action. (e) The return of allotment of the five new shares was left unsigned by the original proprietors. (f) The particulars and changes in particulars of the register of the directors and secretaries was not signed. (g) No communication of the allotment was made to the allottees. -- 29 of 31 -- 28 If the relevant shares were not issued, after that date the true position was that there were only two issued shares both of which had been transferred to Whittaker. Various possibilities are open upon the limited evidence that has been placed before me. The evidence suggesting that Ms. Ledwidge at any stage became a shareholder is to say the least far from cogent. Of course if the only share capital issued in the company consisted of the two issued shares both of which had been transferred to Whittaker, Breen (with Whittaker's co-operation) was clearly in a position to transfer all issued shares to the purchasers at the material time. On the basis that Whittaker was in control of the company after the initial transfer, he had the authority to instruct his solicitor as he did in December, to effect the desired issue of shares. His subsequent actions including the return of information to the Corporate Affairs Office may be regarded as a ratification of that position. Certainly that was the position which all relevant parties believed to the legal situation at all material times and it was a situation upon which they all acted. 2. I am satisfied that even if Ms. Ledwidge at the time of sale had been a shareholder she would have co-operated with Mr. Whittaker and Mr. Breen and in particular that she would have complied with any request to transfer her share in order to allow the sale to proceed. Even if the applicants can show a probability of legal entitlement on the part of Ms. Ledwidge to a share, I am not -- 30 of 31 -- 29 satisfied that there is any reasonable prospect on the part of the applicants successfully disproving the readiness, willingness and ability (otherwise proven) of the plaintiff to complete at the material time. been postponed in any event by breach by the defendants. The material time may have reason of the anticipatory My reasons for conclusion number 2 have already been stated, and it is unnecessary to say more on this point. 3. The circumstances do not persuade me that my discretion to stay the judgment (assuming the other requirements of 0. 45 r. 1 are satisfied) ought to be exercised in favour of the defendants so as to deprive the plaintiff of the benefit of this judgment. The circumstances concerning non-discovery of the information that might have led to the litigating of such a matter are fairly evenly balanced, in that both sides were guilty of some failure in the discovery process. However I am not satisfied that the evidence now sought to be relied upon could not with the exercise of due diligence have been discovered before trial. In the circumstances I would not exercise my discretion, assuming I have one, in favour of the defendants. The application should be dismissed with costs. -- 31 of 31 --