Agricultural & Rural Finance Pty Limited & Anor v John Edward Atkinson & Ors

Agricultural & Rural Finance Pty Limited & Anor v John Edward Atkinson & Ors - [2010] NSWSC 311 - NSWSC 2010 case summary — Zoe

[32]

ii. construed by reference to the surrounding circumstances at the time. The strike out motion 8 The approach taken by the Court has been to commence with the hearing of a strike out motion pursued by the plaintiff pursuant to UCP Pt 14.28(1) that certain paragraphs of the defences and cross claims of the continuing defendants be struck out. The plaintiff's primary position is said to rely upon sub rule 1 (c), namely that the paragraphs amount to an abuse of the process of the Court. The plaintiff also relies upon sub rules 1 (a) and (b). 9 There has not been any judicial consideration as to whether the defendants are entitled to file amended defences and cross-claims in these terms. There was insufficient time prior to the commencement of the trial, originally listed for 6 April 2010, to permit the Court to consider whether or not the defendants should be given leave to file and serve defences in the form ultimately filed on 24 March 2010. For this reason the plaintiff's position with respect to these amended pleadings was protected by the notation at paragraph 5 of the orders of 16 March 2010. The intent and effect of the notation was to recognise that the issue of whether the defendants should be permitted to rely upon the amended pleadings would be determined at the commencement of the trial. 10 The plaintiff contends that paragraphs of the pleadings that are challenged by the motion are inconsistent with and contrary to the findings in the Test Case. The contention is that to permit the pleadings would be to permit a breach of the undertakings given to the Court. 11 The proposition pursued by the plaintiff is that the test case would not have proceeded had it not been for the undertakings given by the defendants. Rather the proceedings would have been heard in the usual manner with all issues being heard together. The proposition is that the hearing of the test case on the terms ordered by the Court was a procedure to the advantageous to all parties in terms of the saving of time and costs. 12 There certainly does not appear to be any doubt but that the purpose of the orders made for the test case was that of obtaining findings in the test case on the common questions which would relieve the parties of the need to re-contest such issues in relation to the proceedings against other defendants. 13 Lest there be any doubt about one matter it is convenient to make clear that the plaintiff does not seek to prevent any defendant from pleading punctual performance. That is their prerogative under the carve-out in the Test Case orders. There is no strike out sought of any punctuality pleadings. Understanding the types of consideration for decision in relation to the notice of motion 14 The Court has been taken to each of the decisions of the Courts at first instance, the Court of appeal and the High Court in excruciatingly close detail. 15 Although the central issue concerns the undertakings noted by the Court, it should be kept in mind that:

[38]

39 The defendant submits that the orders in the present case should be looked at as a freestanding piece of prose, unaffected by any surrounding circumstances, for the purpose of deciding their construction. I reject that submission. In Rogers v Wentworth (New South Wales Court of Appeal, 18 April 1988, unreported); BC8802033 Hope JA (with whom Samuels JA agreed) said, at 18 of BC8802033: "'A consent order must.....be construed in the light of any admissible evidence of surrounding circumstances, but without direct evidence of the parties' intention:' General Accident Fire and Life Assurance Corporation Limited v Inland Revenue Commissioners [1963] 1 WLR 421 at 430 per Plowman J; affirmed [1963] 1 WLR 1207. In In re Frackelton v McQueen; In re a Solicitor [1910] QSR 1 at 6,7, Chubb J said:- "While this judgment stands, it is final and unimpeachable, and cannot, unless it is ambiguous (if even then), be explained or added to by extraneous evidence", and "the Undertaking ... is embodied in the judgment, and that is all we have to look at, and construe....." The other members of the Court did not express any view on this matter, and indeed, notwithstanding what he had said, Chubb J himself seems to have had some regard to the surrounding circumstances. When the matter was being considered by the High Court: Frackelton v Atthow (1909) 10 CLR 522, Isaacs J considered the construction which Chubb J gave to the undertaking, and without discussing any principle of construction, had regard to the surrounding circumstances and came to a different conclusion. There is nothing in this decision which would lead me to any conclusion other than that the statement of principle by Plowman J is correct, and I accept that it is." 40 Mahoney JA said, at 6-7 of BC8802033: "What is here in question is the construction of an order made by consent and embodying a compromise made between the parties. In England the view has been taken that a consent order must be "construed in the light of any admissible evidence of surrounding circumstances, but without direct evidence of the parties' intention", that evidence including "evidence as to the nature of the dispute which was compromised by" the orders: see Halsbury Laws of England , 4th ed, Vol 26, par 527, note I and the case there cited, General Accident Fire & Life Assurance Corporation Limited v IRC [1963] 1 WLR 421 at 430-1; 1207. The dispute in the present case was as to the withdrawal of the second caveat.

[54]

"I undertake to be bound by the findings of the Gardiner Test Case." (emphasis added) 26 It is clear from the introductory words to the judgment/order of 29 July 2005 and paragraph 1 (Green Tab 7) that the common questions in all of the cases, the subject of the undertakings, were those referred to in paragraphs (a) and (b) of the order namely, the issues raised by the claim against Mr Gardiner and the cross-claim. 27 It is notable that paragraph 1 does not refer to the defence filed by Bruce Gardiner. The common issue under paragraph 1(a) was the claim by ARF, namely, that each of the defendants is liable under the loan agreements. 28 It was clearly assumed that the defendants would file defences in the same terms as Mr Gardiner. This is was what occurred after Young J gave judgment on 29 March 2006. 29 On a proper construction of the Orders of 29 July 2005, the "common questions" and "all issues arising from... the Gardiner Test Case" were all issues other than those identified in paragraphs 2, 3 and 4. 30 Unless a defendant was able to come within the exception, or "carve out", of paragraphs 2, 3 or 4 the outcome of the Test Case would determine the outcome of the claim against him, her or it. 31 As the plaintiff has contended a comparison of the Gardiner pleadings with the defence and cross claim of the Clayton Utz defendants establishes that the pleadings are almost identical. There are some minor differences in dates. Some defendants subscribed in relation to the first prospectus and others in relation to the second prospectus. Some subscribed in respect of both. There are some minor differences in relation to the particulars of events relied upon. Some defences rely upon representations by other defendants. As the plaintiff has contended this does not affect the substance of the defence which was that the plaintiff was estopped from asserting that the proper construction of the Indemnity Agreement was other than in accordance with the representation pleaded (at [26] and [30] in the Test Case. 32 The relevant pleading was in the following terms:

[139]

"Any failure to pay the amount of $29,400.00 due to ARF by 31 October 1998 was due to the failure of OAL to carry out the instructions of the defendant by that date." 68 What is pleaded is irrelevant to the issue of whether the payments were punctually paid, except to the extent that the pleading as particularised assumes that the payments were not punctually made. 69 For the reasons earlier stated, this pleading is directly contrary to the ratio of the High Court's decision. Postal rule 70 The active defendants have contended that importance lies in the fact that Mr Gardiner did not plead the postal rule defence. That however misses the point. It was determined against him that time is of the essence of the loan agreements in the Court of Appeal (Spigelman CJ dissenting) and in the High Court (unanimously) (first finding). 71 Furthermore, the High Court (upholding Handley JA in dissent) held that the due date for payment cannot be postponed unless there is a variation of the loan agreement supported by consideration or an estoppel based on detrimental reliance on conduct by ARF prior to the due date (second finding). 72 I accept that to permit the defendants to now plead a common law rule that allegedly treats posting of a cheque as performance of an obligation to pay by the due date involves a collateral attack on these two findings. 73 It also involves a breach of the undertaking to be bound by these two findings. 74 Paragraph 25 of the May 2010 defence of Maria Russo is an example of the pleading of the so-called "postal rule". 75 Again, the defence presupposes that the cheque was not received by ARF on or before the due date, but was posted on or prior to the due date. 76 The "postal rule" is concerned with determining who bears the risk of a cheque lost in transit. It is not a rule about deemed time of payment for the purposes of a loan contract which makes time of the essence. 77 It will be observed that in pleading the postal rule at paragraph 25, Ms Russo does not allege any variation of the terms of the Loan Agreement or any estoppel. The contention is that, by reason of her receipt of ARF's letter of 18 June 1998 inviting her to make her payment by posting a cheque to it, the mere act of posting the cheque amounted to payment under clauses 3.3(a) and 4.1 of the Loan Agreement. 78 It is clear from the authorities in relation to the postal rule that it is a rule based upon agreement or contract. See, for example, Thairlwall v Great Northern Railway (1910) 2 KB 509 where, at 515, Bray J said in relation to the principle laid down in Norman v Ricketts:

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Judgment (150 paragraphs)

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Cases Cited (8)