Bendigo and Adelaide Bank Ltd v Williamson & Anor

Facts

1. On 19 August 2010, the Bank commenced these proceedings against Mr Williamson and Great Southern Finance Pty Ltd (in liquidation) (receivers and managers appointed) in the Supreme Court of Victoria. I gratefully adopt the summary of the procedural history of this matter since by Ward CJ in Eq in Bendigo and Adelaide Bank Ltd v Williamson [2017] NSWSC 939.
2. Relevantly, the Bank claimed monies and interest due under a loan agreement entered into by Mr Williamson in connection with an investment made by him in a managed investment scheme, referred to as the Great Southern Plantations 2004 Project Managed Investment Scheme. The loan was for $282,000. The Bank acquired its interest in various loans made under that scheme following the assignment of those loans by Great Southern Finance Pty Ltd to Adelaide Bank Ltd in April 2009 and the subsequent transfer of Adelaide Bank Ltd's rights to the Bank as approved under the Financial Sector (Business Transfer and Group Restructure) Act 1999 (Cth). The Bank claimed that Mr Williamson defaulted on the loan from around June 2009, and failed to comply with demands for repayment of the loan. Mr Williamson filed a Counter Claim.
3. There were in fact a large number of proceedings in the Supreme Court of Victoria concerning the Great Southern Plantations 2004 Project Managed Investment Scheme: there were 16 group proceedings under Part 4A of the Supreme Court Act 1986 (Vic) and eight separate proceedings which were not group proceedings but which raised issues in common with some or all of the group proceedings and were heard together with them for the purpose of determining issues common to all of the proceedings.
4. On 7 June 2013, Croft J stayed the Bank's proceedings against Mr Williamson until one of the group proceedings, Proceeding No SCI 2011 06344 (the Kenny Proceeding), had been determined. These proceedings were stayed on Mr Williamson's undertaking to be bound by any findings of fact and law in the Kenny Proceeding.
5. On 11 December 2014, Croft J approved a settlement in proceedings concerning the management investment scheme, including the Kenny Proceeding. Notwithstanding the settlement, Croft J published the reasons for judgment which his Honour would have given if the settlement had not been reached: Clarke and Ors v Great Southern Finance Pty Ltd [2014] VSC 516.
6. On 27 July 2015, the Bank's then solicitors Allens Linklaters sent a "without prejudice except as to costs" letter to Mr Williamson's solicitors, suggesting that Croft J's judgment in Clarke v Great Southern Finance Pty Ltd indicated that Mr Williamson's Counter Claim was doomed to fail and inviting him to consent to orders dismissing the Counter Claim with no order as to costs. More precisely, the letter stated: In those reason for judgment, his Honour found that the claims advanced by Mr Kenny (and other counterclaimants) concerning the Great Southern Plantations 2004 Project completely and comprehensively failed. His Honour further concluded, at [2149], in respect of the allegations made against our clients by investors in the Great Southern Plantations 2004 Project: For the preceding reasons with respect to claims of this nature in this context, there is no basis for the Court to make the orders sought by the plaintiffs against the BEN Parties. The statutory provisions upon which the plaintiffs rely do not permit the Court to make orders against persons, such as the BEN parties, who are "innocent third parties" not involved in any of the conduct complained of by the plaintiffs. Even if there were a basis for the Court to make the orders sought against the BEN Parties, the statutory provisions upon which the plaintiffs rely are discretionary in nature. For the reasons indicated previously, the Court should not, in the present context, in the exercise of its discretion, make any orders against the BEN Parties or any order against GSF in respect of the Loan Deeds assigned to the BEN Parties. It follows that even if the plaintiffs did establish that the 2004 Plantation Scheme PDS were defective within the meaning of the Corporations Act, or that GSF or GSMAL engaged in some other conduct in contravention of the Corporations Act or the ASIC Act, all of which the defendants deny, there is no basis for the Court to order the relief sought by the plaintiffs against the BEN Parties.
7. On 3 August 2015, Mr Williamson commenced proceedings against the Bank and Elders Rural Services Australia Ltd for alleged fraud in relation to the settlement of the purchase of a property called "Reevesdale" at Bungonia near Goulburn, seeking punitive damages of some $5 million. Mr Williamson says he was "advised to narrow it down to just Elders" and pressed his claim only against Elders. This is referred to by the parties as the Elders proceeding.
8. On 29 January 2016, Croft J lifted the stay in these proceedings. In March 2016 and in February 2017, the Bank filed motions for summary judgment, the latter in the sum of $669,048.51 being the amount owing as at 21 February 2017 plus interest and costs. Neither motion was substantively determined by the court.
9. On 27 April 2017, Mr Williamson filed Notices of Discontinuance against the defendants to the Counter Claim and discontinued the Counter Claim, and Croft J transferred these proceedings to the Supreme Court of New South Wales. Whether Mr Williamson discontinued the Counter Claim by reason of Allens Linklater's letter of 27 July 2015 or otherwise is not known, nor does it matter for present purposes.
10. On 9 May 2017, Mr Williamson's solicitors ceased to act for him and he has appeared in this court in person. Mr Williamson is a retired solicitor.
11. The Bank promptly filed another application for summary judgment on the grounds that Mr Williamson's defence had no prospect of success. On 17 July 2017, Ward CJ in Eq dismissed the application for summary judgment without prejudice to the Bank's ability to make a further application in the future, directed Mr Williamson to amend a proposed amended defence and referred the parties to a court annexed mediation: Bendigo and Adelaide Bank Ltd v Williamson [2017] NSWSC 939.
12. On 18 August 2017, the Bank and Mr Williamson agreed to settle the proceedings at a mediation. The Settlement Agreement, signed by the Bank and Mr Williamson, provided: The plaintiff and the defendant have agreed to settle the litigation between them in Supreme Court of New South Wales proceeding No. 2017/001156318 on the following terms: 1. The defendant will pay the plaintiff $400,000 (Settlement Sum) in full and final settlement of the proceedings (inclusive of interest and costs). 2. The defendant agrees and undertakes to pay the Settlement Sum by the earlier of: a. 30 days after judgment is delivered (or the proceeding is settled or discontinued) in the defendant's claim in the Supreme Court of New South Wales in proceeding Hugh Francis Arthur Williamson v Elders Rural Services Australia Limited No. 2015/00226349 (Elders proceeding); b. The defendant becomes bankrupt or enters into a composition with his creditors; and c. 30 September 2018. 3. Interest will not accrue on the settlement sum until it becomes payable in accordance with clause 2, at which time interest will accrue at the rate applicable to unpaid judgments in New South Wales in accordance with section 101 of the Civil Procedure Act 2005 (NSW). 4. For the avoidance of doubt, the defendant acknowledges and agrees that the Settlement Sum is payable in accordance with paragraph 2 regardless of the outcome of the Elders proceeding and whether or not judgment has been delivered in that proceeding (or the proceedings has settled or been discontinued) by 30 September 2018. 5. The plaintiff and the defendant release each other from all claims however described arising out of or in connection with the proceedings between them, including without limitation any claims arising out of Supreme Court of Victoria proceeding No. S CI 20100 4567. 6. This agreement may be produced to the Court and, if the Settlement Sum is not paid strictly in accordance with clause 2, the defendant consents to the entry of judgment against him in accordance with this agreement for the Settlement Sum and any costs incurred by the plaintiff after the date of this agreement in obtaining judgment. 7. The parties agree to keep the terms of this agreement confidential and not disclose them except as necessary to enforce the agreement, or to their legal advisers or as required by law. "Elders proceeding" was a reference to the proceedings which Mr Williamson had commenced in August 2015 which I have described above.
13. On 23 August 2017, Ward CJ in Eq noted that the matter had settled and stood the proceedings over.
14. In November 2017, the Elders proceeding were heard by Johnson J who reserved his judgment. His Honour's judgment has not been handed down.
15. In February 2018 and April 2018, Ward CJ in Eq stood these proceedings over, ultimately to the Registrar's List on 2 October 2018, to allow for payment to be made by 30 September 2018 as had been agreed by the parties.
16. On 25 September 2018, Mr Williamson emailed the Bank's solicitor seeking further time to permit Johnson J to publish his decision in the Elders proceeding and thus to enable Mr Williamson to pay the Settlement Sum. Mr Williamson indicated that, if the Bank was not amenable to his request then, "I will take action which will make it quite impossible to enter any judgment."
17. On 27 September 2018, Mr Williamson filed a Statement of Claim in the District Court of New South Wales against the Bank, being proceedings 2018/295495. Mr Williamson claimed to have been misled and deceived by the Bank's barrister at the mediation. In particular, Mr Williamson says that he sought reassurances from the Bank's barrister than the monies the subject of the loan had in fact been advanced and, based on the assurance of the barrister, agreed to settle the proceedings. Mr Williamson pleads that the reassurance was incorrect as demonstrated by Bendigo and Adelaide Bank Ltd v Howard [2018] NSWSC 383, a judgment of Davies J delivered seven months after the mediation. Mr Williamson sought an order from the court to set aside the settlement under section 52 of the Trade Practices Act 1974, although I note that this Act was replaced by the Australian Consumer Law in 2011.
18. Mr Williamson served the Statement of Claim on the Bank's solicitor and told the solicitor that he did not have the funds to pay the Settlement Sum. Further emails ensued. Mr Williamson made plain that he did not presently have the funds to pay the Settlement Sum but anticipated having the funds when Johnson J handed down his judgment. Mr Williamson proposed that the Bank await the outcome of the Elders proceeding or, in the event that Mr Williamson was unsuccessful before Johnson J, the outcome of an appeal which he indicated he would bring. If the Bank agreed to his proposal, then Mr Williamson offered not to prosecute the District Court proceedings. The Bank was unmoved and indicated that it intended to press for entry of judgment on 2 October 2018 and to enforce the judgment without further delay.
19. The Settlement Agreement required Mr Williamson to pay the Settlement Sum to the Bank by, at the latest, 30 September 2018. Mr Williamson did not do so.
20. On 2 October 2018, the matter was listed before Registrar Walton for directions. Mr Williamson gave evidence that, by reason of something said by Registrar Walton, he understood that judgment had been awarded in his favour in the Elders proceeding. The Registrar's comment, according to Mr Williamson was, "Why not wait: the judgment will enable him to pay". It seems to me, by this comment, the Registrar was simply enquiring of the Bank whether it was prepared to defer enforcing judgment until the outcome of the Elders proceeding rather than giving any indication as to what the outcome of those proceedings was going to be. Clearly enough, Johnson J has not given his judgment and therefore no-one knows what that judgment will be until his Honour has done so.

Law

1. Although the Bank did not identify the power of the court to make the orders sought, the court has power to make orders to give effect to any agreement or arrangement arising out of a mediation, including hearing evidence as to the fact that an agreement or arrangement has been reached and as to the substance of the agreement or arrangement: section 29, Civil Procedure Act 2005; see for example Grant v Grant [2012] NSWSC 725 at [41]; Edwards v Trapman [2014] NSWSC 1089.
2. Under section 73 of the Civil Procedure Act, the court: (a) has and may exercise jurisdiction to determine any question in dispute between the parties to the proceedings as to whether, and on what terms, the proceedings have been compromised or settled between them, and (b) may make such orders as it considers appropriate to give effect to any such determination.
3. The Court's powers under section 73 have been considered by the Court of Appeal in Grave v Blazevic Holdings Pty Ltd [2012] NSWCA 329 per Campbell JA at [3]-[5]; Jingalong Pty Ltd v Todds [2015] NSWCA 7 at [62] per Sackar AJA with whom Meagher and Leeming JJA agreed. More recently, in Gorczynski v Bendigo and Adelaide Bank Limited [2016] NSWCA 170, Basten JA noted that section 73 confers power on the court to deal with settlements in the proceedings to which they relate. At [6]-[7]: Accepting that to be the primary purpose of the provision, it is nevertheless expressed in broad terms as to the scope of the power conferred, terms which should not be read down by implied constraints, The Owners of the Ship "Shin Kobe Maru" v Empire Shipping Company Inc [1994] HCA 54. Rather, the breadth of the power as it operates in the Supreme Court is confirmed when it is read in the context of other powers conferred on the court. Thus, s 56 of the Civil Procedure Act, to which the primary judge referred, states that the court must give effect to the overriding purpose of facilitating "the just, quick and cheap resolution of the real issues in the proceedings"…. The court also has power to grant any remedy to which the party appears to be entitled, so that, as far as possible, all matters in controversy may be completely and finally determined, pursuant to s 63 of the Supreme Court Act 1970 (NSW). That may include relief which has not been sought in express terms. To similar effect, s 90 of the Civil Procedure Act provides that the court is "at or after a trial, or otherwise,…to give such judgment or make such order as the nature of the case requires:. The breadth of these powers is consistent with the general jurisdiction of the Supreme Court, being that which may be necessary for the administration of justice.
4. Mr Williamson, by his affidavit and his oral submissions, put forward three reasons why the Bank's motion for judgment should fail.
5. First, judgment in the Elders proceeding is imminent and he expects that he will be awarded ample damages to enable him to pay the Settlement Sum. Second, the Bank's insistence on enforcing its judgment is an attempt by the Bank to help Elders, which Mr Williamson says the Bank owns, by effectively depriving Mr Williamson of a judgment in his favour in the Elders proceeding. Mr Williamson pointed to the without prejudice letter from Allens Linklaters of 27 July 2015 as evidence of a previous attempt by the Bank to act in this manner, although the letter does not support the submission made by Mr Williamson. Third, Mr Williamson points to the personal hardship that will follow.
6. Whilst I am sympathetic to Mr Williamson's personal situation, and well appreciate that entry of judgment against him may have serious financial consequences including bankruptcy, the Bank is nonetheless entitled to judgment in accordance with the Settlement Agreement. So much was contemplated by its terms, which set a final date for payment even in the absence of judgment in the Elder proceedings. In the event that Johnson J awards Mr Williamson damages, then Mr Williamson will still be entitled to the fruits of that judgment. If Mr Williamson is bankrupt then his trustee in bankruptcy may have need of some of the damages to pay Mr Williamson's creditors and Mr Williamson would likely be discharged from bankruptcy.
7. Mr Williamson did not rely upon the allegations made in the District Court proceedings, nor did he seek a stay of these proceedings pending determination of the District Court proceedings. Indeed, Mr Williamson's submissions rather proceeded on the basis that the Settlement Agreement was valid and binding. It appears to me that proceedings were commenced in the District Court in an effort to prevent the Bank entering judgment in this court which the Bank had indicated to Mr Williamson it intended to do, and I would not have been minded to grant a stay under section 67 of the Civil Procedure Act had I been asked to do so. The District Court proceedings appear to me to have been filed for the purpose of frustrating the Bank's application for judgment in this Court and are of insufficient apparent merit to stay these proceedings on the Court's own motion: see, for example, In the matter of Webuildem Pty Ltd and In the matter of Maroun Investments Pty Ltd [2012] NSWSC 708 per Black J cf Mills v Futhem Pty Ltd [2011] NSWCA 166 per Campbell JA.
8. Stephen Flamer-Smith of the Bank deposed that the Bank has incurred legal costs and disbursements excluding GST since the date of the Settlement Agreement in the sum of $12,247.90. It is not entirely clear to me why the Bank is entitled to its legal costs and disbursements on a complete indemnity basis. It may be that the loan agreement between the Bank and Mr Williamson provided for this, but such documentation was not in evidence before me, nor contained in the Settlement Agreement. The Settlement Agreement provides that Mr Williamson will consent to the entry of judgment against him in accordance with the agreement "and any costs incurred by the plaintiff after the date of this agreement in obtaining judgment". I do not think the terms of the Settlement Agreement clearly indicate a departure from the ordinary rule that costs are on a party and party basis and that is the order I am prepared to make.
9. The Court makes the following orders. 1. Judgment in favour of the plaintiff against Hugh Williamson in the sum of $403,863.01, being the Settlement Sum plus interest until 16 November 2018. 2. Order Mr Williamson to pay the Bank's costs from 18 August 2017 to date, including the costs of the amended motion filed on 6 November 2018, on a party and party basis.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 16 November 2018