The effect of cl 8 of the Deed of Dissolution
49 CSR submitted that even if Div 6, cl 4 of the Deed of Partnership would otherwise have operated to provide indemnity to James Hardie in the McDonald matter, any rights that Amaca had thereunder came to an end by the operation of cl 8 of the Deed of Dissolution. It was submitted that cl 8 had the effect of releasing both CSR and James Hardie from all claims they may otherwise have had against each other under the Deed of Partnership.
50 CSR pointed out that the language of Div 6, cl 4 dealt with the relationship of the parties generally and not in any specific manner. The clause provided that "all rights, duties and obligations of all the parties under [the Deed of Partnership] … shall then cease …". It submitted that the language of cl 8 was wide enough, and was without limitation or exclusion, to demonstrate an intention of the parties to bring the partnership to an end and release each other from all rights and obligations under the Deed of Partnership. The right to indemnity under Div 6, cl 4 was such a right and was released by the terms of cl 8 of the Deed of Dissolution.
51 Clause 8 also provided that each of the parties released the other from all claims, et cetera, that they had had, or might have had, against the other. CSR submitted that the words "might have had" in the clause, properly construed, contemplated the parties would release each other from future claims which they otherwise might have had under the Deed of Partnership.
52 The trial judge rejected CSR's case based on cl 8, having regard to the reasoning of Bergin J in Amaca Pty Ltd formerly known as James Hardie & Coy Pty Ltd v CSR Ltd [2001] NSWSC 324 and the decision of this Court in CSR Ltd v Amaca Pty Ltd [2007] NSWCA 107.
53 CSR submitted that neither Bergin J, nor this Court in CSR Ltd v Amaca Pty Ltd [2007] NSWCA 107, dealt with the question whether claims that might have been made under Div 6, cl 4 were caught within the terms of the release in cl 8. Accordingly, it was contended, the trial judge's reliance upon those decisions led him into error.
54 I have already discussed CSR Ltd v Amaca Pty Ltd [2007] NSWCA 107 (see [27]-[29] above) and noted that the operation of cl 8 in relation to Div 6, cl 4 was not considered in that case. Accordingly, I agree that it does not provide any assistance on the question presently in issue.
55 In Amaca v CSR [2001] NSWSC 324 Bergin J was concerned with the construction of cl 8 of the Deed of Dissolution in the context of claims made by James Hardie under the Partnership Act 1892 and s 5(1)(c) of the Law Reform (Miscellaneous Provisions) Act. Her Honour held as a matter of construction of the release, having regard to the context in which the words were used within the Deed and in the context of the parties' relationship and having regard to all relevant facts surrounding the transaction so far as was known to the parties at the time the Deed was executed, that the claim for contribution made by James Hardie was not within the contemplation of the parties at the time they entered into the Deed: see Bank of Credit and Commerce International SA (in liquidation) v Ali [2002] 1 AC 251; [2001] 1 All ER 961; [2001] 2 WLR 735; Grant v John Grant & Sons Pty Ltd [1954] HCA 23; (1954) 91 CLR 112. Her Honour held, therefore, at [106], that cl 8 did not bar the claims brought by James Hardie under the Partnership Act and s 5(1)(c) of the Law Reform (Miscellaneous Provisions) Act.
56 In this case, there was no evidence of the background to, or the circumstances in which, the Deed of Dissolution was entered. Nor was there any agreement that the parties would be bound by or would proceed on the basis of the facts in the matter before Bergin J. Accordingly, that part of her Honour's judgment dealing with the surrounding circumstances does not assist the construction process that this Court is required to resolve.
57 However, Bergin J did consider the construction of the phrase "might have had": see at [57]. Her Honour noted that this phrase could equally refer to future claims, or to claims that were available to be made at the time the Deed of Dissolution was entered into, but which had not at that time been made: [92]-[93]. Her Honour then had regard to the different terms of cl 9 that provided an indemnity to Bradford for future claims up to a specified period. In particular, her Honour considered that the use of the word "whatsoever" in cl 9 was significant. Her Honour pointed out, at [82], that the word "whatsoever" appeared in cl 9, but not in cl 8. She considered that this tended to suggest that the claims released as between James Hardie and CSR were more limited than those for which the indemnity was given to Bradford in cl 9.
58 Her Honour returned to this issue at [95], where she said:
"As I have said earlier the use of the term 'whatsoever' in clause 9 and its absence in clause 8 may tend to suggest a more limited intention in respect of the release. There is also the absence in clause 8 of the words 'whether before or after the date of dissolution' which are found in clause 9 that tend to support a more limited intention."
59 Her Honour, at [96] ff, returned to the proper construction of the Deed, having regard to the surrounding circumstances. It is apparent from her reasons that she did not find the terminology of the different provisions conclusive and her decision as to the scope of cl 8 was essentially based upon her understanding of the surrounding circumstances. As I have explained, that approach is not available to this Court, there being no evidence of the surrounding circumstances in this case.
60 CSR argued that the release in cl 8 of the Deed of Dissolution did not expressly reserve any claims for indemnity under Div 6, cl 4 of the Deed of Partnership, which would have been a relatively simple drafting task. It was submitted that the clear language of the release was such that its provisions ought to operate according to its terms. It was also submitted that the language of cl 9 supported this construction, having regard to the express extended indemnity provided to Bradford under that clause. It was submitted that having chosen not expressly to reserve the indemnity in Div 6, cl 4, there was no occasion to construe cl 8 as containing an implied reservation to that effect.
61 The consequence of this construction was, on CSR's submission, a realistic commercial one, in the sense that CSR and James Hardie intended to finalise their partnership rights under the terms of the Deed of Dissolution. Each recognised that they would continue to sell their respective products and any liability of one to the other would be based on justice and equity by reference to the concept of relative culpability in accordance with the provisions of s 5(1)(c) of the Law Reform (Miscellaneous Provisions) Act. The construction for which CSR contended did not embrace Bergin J's indication as to the likely construction of the words "might have had" in cl 8.
62 Clause 8 made two provisions in relation to the position of the parties upon dissolution. First, it provided that as from the date of dissolution, James Hardie and CSR (and Bradford) agreed that the partnership "will be at an end and all rights, duties and obligations of all the parties [under the Deed of Partnership] … shall then cease". Secondly, it provided for a mutual release "from all such actions … or claims which any of them has had or but for this Deed might have had against the others …" (emphases added). These two provisions must be seen as complementary.
63 One of the "rights" that James Hardie had under the Deed of Partnership was the right to indemnity provided for by Div 6, cl 4. The first part of cl 8 of the Deed of Dissolution made it clear that upon dissolution that right ceased. The second part, that is, the release, protected (in the sense that it mutually released) the parties from any claim, past, present or future that James Hardie might have had under its right of indemnity in Div 6, cl 4. Read as a whole, the effect of cl 8, relevantly for the question before this Court, is that Div 6, cl 4 of the Deed of Partnership had no operation after the dissolution date and cannot be sued upon. In this regard, it is to be noted that the dissolution of the partnership is after the sale of assets and satisfaction of all liabilities: see cl 2. Accordingly, there would be no assets of the partnership out of which any such indemnity could be provided. In addition, cl 9 specifically preserved indemnity in favour of Bradford for a specified period. This suggests that except for that indemnity, there was not to be any contractual indemnity between the parties.
64 I should also add that in my opinion, the phrase within cl 8 that the release is in respect of actions, claims et cetera "which any of them has had or but for this Deed might have had against the others or either of the others" (emphasis added) relates to past, present and future. This construction itself derives from the terms of cl 8 as a whole. If, relevantly, all rights under the Deed of Partnership cease upon dissolution, it must follow that the complementary release provisions relate to past actions, claims etcetera, (that is, actions, claims et cetera, that each party "has had" against the others); as well as any subsisting or future actions, claims et cetera (that is, such actions, claims et cetera that the parties but for the Deed of Dissolution "might have had against the others"). This construction is different from the construction of those words preferred by Bergin J.
65 It is not necessary to determine whether the decision of Bergin J in Amaca Pty Ltd formerly known as James Hardie & Coy Pty Ltd [2001] NSWSC 324 was otherwise correct. As already indicated, the question with which her Honour was dealing was whether cl 8 operated to bar claims between James Hardie and CSR for contribution under the Partnership Act or under s 5(1)(c) of the Law Reform (Miscellaneous Provisions) Act. The question with which this Court is concerned is the operation of cl 8 in circumstances where a claim is made under Div 6, cl 4 of the Deed of Partnership. There is a further point of distinction in this case, in that the recitals do not indicate that the release should be limited in any particular claim or class of claims, disputes, or litigation and there was no evidence of the surrounding circumstances. This is to be contrasted with the position in Grant v John Grant & Sons Pty Ltd, where the recitals referred to litigation and other disputes between the parties and of the intention to settle them in the terms embodied in the deed. The Court in that case concluded that the release was based upon the particular considerations of the situation in which the parties stood to one another at the time of entry into the release and was to be construed in that context.
66 Senior counsel for Amaca asserted that he would demonstrate that the partnership had not come to an end. This asserted position was not developed, and neither party placed any argument before the Court or any authorities relating to the continuing rights and obligations of partners under the terms of a partnership agreement notwithstanding that the partnership had been terminated. The point was probably abandoned during the course of argument and in any event had not been raised at the trial. Given those matters, I do not propose to deal with this issue further.
67 It follows, in my opinion, that Amaca's claim for indemnity under Div 6, cl 4 fails.