Whyatt CJ:

The facts and arguments sufficiently appear from the judgment.

This motion by the plaintiffs, Yee Chang & Co. Ltd. against the defendants, the Koninklijke Paketvaart Maatschappij, for judgment for the sum of $5,379.21 and costs raises important questions relating to the enforcement of a compromise in a pending suit and to the duty of solicitors, as officers of the Court, to conduct litigation with due propriety.

On 20 August 1957 the plaintiffs issued a writ against the defendants claiming damages for breach of contract in and about the carriage of bales of rubber by two of their vessels, the SS Camphuys and the SS Van Riemsdijk. On 18 December 1957 the plaintiffs delivered a statement of claim in which they quantified their damage at $11,953.80 and on 11 January 1958 the defendants delivered a defence denying liability for the whole amount of the claim. However on 6 March 1958 the defendants' solicitors enquired from the plaintiffs' solicitors whether the plaintiffs would be prepared to accept 300f their claim in settlement, each side paying its own costs. The plaintiffs' solicitors wrote to the defendants' solicitors on 10 March, stating that their clients did not consider the offer was a reasonable one and that they were not prepared to accept anything less than 800f the amount claimed. The letter concluded with this paragraph which in view of subsequent happenings, is of great importance:

In order that we may be quite clear on the point would you kindly confirm that your offer of settlement relates to the full amount of our clients' claim as set out in their statement of claim?

On 28 March the defendants' solicitors replied stating that their clients were not prepared to settle for 800f the amount claimed. This letter also had a concluding paragraph which is of great importance: it reads as follows:

In an effort to settle this matter we have obtained instructions to offer you 450f your clients' claim, each side to pay its own costs, that is to say, 450f the sum of $11,953.80.

On 2 May, the plaintiffs' solicitors replied to the defendants' solicitors as follows:

We ... now have our clients' instructions to accept your clients' offer of 450f our clients' claim, each side to pay its own costs, that is to say 450f the sum of $11,953.80. We should be obliged if you could let us have your cheque for this sum at your earliest convenience.

Thus on 2 May 1958 the solicitors for the parties with the full authority of their clients, reached a clear-cut agreement to settle this claim for 450f $11,953.80, that is, for the sum of $5,379.21.

It might be thought therefore that the parties and their respective solicitors had reached a point where it could safely be said that all differences arising in the litigation had been settled. But I regret to say that it turned out to be quite otherwise. Within a few days of the settlement, namely, on 7 May the defendants' solicitors wrote to the plaintiffs' solicitors a letter which began with these words, "We thank you for your letter informing us that your clients are now prepared to settle on the 45% basis." The expression "settle on the 45% basis" was a new turn of phrase; previously the expression used by the solicitors on both sides had been "450f the claim, that is to say, 450f the sum of $11,953.80." The reason for adopting the new expression is apparent from the next sentence in the letter which reads: "However our clients point out that according to their records the claim of $11,953.80 is not correct." The letter then gave reasons why the defendants considered the figure should be $7,446.40 instead of $11,953.80 and concluded, "Consequently in view of the above, our clients are only prepared to base a claim on the sum of $7,446.40. On receipt of your confirmation that the key sum is $7,446.40 our clients will furnish us with a cheque for 450f that sum in your favour in settlement." Thus, astonishing as it may seem, five days after the solicitors for the de