Fitzgerald v Parramatta Leagues Club Limited

DECISION : Application for separate determination dismissed with costs.

CATCHWORDS : PROCEDURE - separate determination of questions - whether separate determination should be ordered - parties executed deed of release - one party seeks separate determination of question whether release precludes cross-claim as filed - cross-claim seeks order declaring deed of release void - separate determination not appropriate

LEGISLATION CITED : Fair Trading Act 1987 Trade Practices Act 1974 (Cth), s 87

CASES CITED : Idoport Pty Ltd v National Australia Bank Ltd [2000] NSWSC 1215

PARTIES : Denis Fitzgerald - Plaintiff Parramatta Leagues Club Limited - Defendant

COUNSEL : Mr A J Sullivan QC/Mr J S McLeod - Plaintiff Mr D L Williams SC - Defendant

SOLICITORS : Slater & Gordon - Plaintiff Middletons - Defendant

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION CCORPORATIONS LIST

2010/94885 DENIS FITZGERALD v PARRAMATTA LEAGUES CLUB LIMITED JUDGMENT 1 The plaintiff, Mr Fitzgerald, was formerly the chief executive of the defendant, Parramatta Leagues Club Ltd. 2 These proceedings were commenced on 19 April 2010 when the plaintiff filed a summons seeking an order restraining the defendant from taking certain steps directed towards termination of the plaintiff's membership of the defendant. An undertaking in relation to that matter has been given pending trial. 3 The defendant has filed a cross-claim. It is the cross-claim that is relevant to the application that is now before me, being the plaintiff's application for an order that certain questions be determined separately from and before any trial of the proceedings. 4 The terms of the proposed separate questions are set out in the plaintiff's notice of motion filed on 7 September 2010: "(a) Does the deed of release executed by the plaintiff and the defendant on or about 2 June 2009 (the Deed) preclude the cross claimant from succeeding on the cross claim? (b) Is the Deed a complete bar to the defendant convening a meeting pursuant to clause 49 of its constitution to consider the plaintiff's life membership of the defendant on the grounds set out in a letter from the defendant to the plaintiff dated 7 April 2010?" 5 The substance of the questions is whether the releases effected by the deed of 2 June 2009 preclude the defendant from making the case it seeks to make in its cross-claim, particularly paragraphs 15 to 18 to which I shall come. 6 The deed in question was entered into by the parties after the plaintiff's employment by the defendant came to an end. It contained mutual releases. The operative provisions of particular significance were as follows (the plaintiff being "the Executive" and the defendant being "the Club"): "5.1 The Executive releases the Club from and indemnifies it against the Circumstances. 5.2 The Club releases the Executive from all Claims including those relating to the Allegations." 7 Clause 1.1 of the deed defines "Circumstances" and "Claims" as follows: "Circumstances means any or all present and future Claims touching upon the matters recited, the Employment, the Allegations, Termination and the Proceedings except for Claims for workers' compensation under workers' compensation legislation." "Claims includes any action, application, arbitration, cause of action, complaint, cost, debt due, demand, determination, inquiry, judgment and verdict: (a) at law; (b) in equity; (c) arising under any statute; or (d) arising under any award, enterprise agreement or other instrument made or approved under any law." 8 The expression "Allegations" takes its meaning from the deed's recital C: "The Club has alleged that the Executive has: (i) misconduct [sic] himself in the Employment; (ii) misled the Office of Liquor, Gaming and Racing; (iii) caused the Club to be in breach of statutory and regulatory obligations; (iv) misled the Board of Directors of the Club; (v) falsified records of the Club; (vi) placed other employees of the Club in positions of conflict and interest; (vii) placed his personal interest in conflict with his obligations and duties owed to the Club; The matters recited above are severally called the Allegations (Allegations)." 9 Recital D then says that the plaintiff denies the Allegations. 10 By its cross-claim, the defendant seeks a declaration that, on the true construction of the deed, the warranties contained in the deed are not released by clause 5 of the deed. There are then claims for damages for breach of contract, damages for deceit, damages under the Trade Practices Act 1974 (Cth), an order under s 87 of the Trade Practices Act that clause 5.2 of the deed is void and that compensation be paid to the defendant. The defendant acknowledges that, since the plaintiff is a natural person, reliance on the Trade Practices Act is misconceived and that it will be necessary to re-plead by reference to corresponding provisions of the Fair Trading Act 1987. I approach the matter before me on that basis. 11 The proposition the plaintiff wishes to see tested by determination of a preliminary question is, in essence, whether the deed forestalls the cross-claim in its entirety - or, more precisely, whether any of the claims in the cross-claim can conceivably succeed in the fact of the deed of release. 12 Important provisions of the deed of release, for these purposes, are, the plaintiff says, paragraphs (d) and (e) of clause 10.1: "The Executive warrants that: … (d) the matters referred to in the Background of this Deed are true and correct; and (e) the Executive is aware that the Club is relying on these warranties." 13 The "Background of this Deed" is the deed's recitals, including recital D to the effect that the plaintiff denies the allegations in recital C. 14 Paragraphs 15 to 18 of the cross-claim are in these terms: "15. By executing the Agreement the executive denied that he had engaged in any of the conduct referred to in the Allegations. Particulars (i) Deed - Background - Part D 16. The Executive expressly represented and warranted that the information provided by him and contained in the recital was all true and correct. Particulars (ii) Deed of Release clause 10.1(d). 17. The representation contained in the Deed that the Executive had not engaged in the conduct the subject of the Allegations was false. 18. In the premises upon the true construction of the Agreement, the representation and warranties contained in clause 10.1(d) of the Deed of Release are unaffected by the release contained in paragraph 5.2 of the Deed of Release." 15 It is the contention of the plaintiff, on the present motion, that the cross-claim will be substantially disposed of by the answer to a question which is, in essence, whether the plaintiff, by executing and delivering the deed of release, made the representation pleaded in paragraph 17 of the cross-claim or, approaching the matter in another way, whether the deed precludes the defendant from making the case it seeks to make in the cross-claim, particularly clauses 15 to 18. 16 Counsel on both sides agreed that the question whether separate determination should be ordered is to be approached in the manner stated by Einstein J in Idoport Pty Ltd v National Australia Bank Ltd [2000] NSWSC 1215 at [7] in a passage which has been quoted with approval in a number of later cases and identifies several propositions of particular relevance to the present motion:

1. The power of the court to order the separate determination of an issue is a discretionary power which must be exercised judicially, but cannot otherwise be fettered.

2. In exercising the power, the court must give effect to the overriding purpose of the rules of court which is to facilitate the just, quick and cheap resolution of the real issues in the proceedings.

3. The court begins from the position that it is ordinarily appropriate that all issues in a proceeding should be disposed of at the one time, so that it is for the party who wishes to have a question separately determined to show that it is desirable for that to occur.

4. The separate determination of an issue may prove to be an appropriate procedure in at least the following sets of circumstances: (a) where the resolution of that separate issue will have the effect of resolving the entirety of the litigious controversies or of substantially narrowing the field of litigious controversy; (b) where the resolution of that separate issue carries with it a strong prospect that the parties will thereafter be able to resolve their dispute themselves and thus avoid further litigation; (c) where there is a clear demarcation between that issue and all other issues in the case, including issues going to the credit of witnesses. 17 I am not persuaded that this is an appropriate case in which to direct the determination of a separate question. Mr Williams SC, counsel for the defendant, pointed out that a substantial element of the cross-claim goes to the question whether the plaintiff engaged in misleading or deceptive conduct (in the form of misrepresentation) in connection with the parties' adoption of the deed of release and whether he thereby induced the defendant to enter into the deed. As I have said, one of the claims in the cross-claim is for a statutory order declaring the deed void. 18 The attempt to undermine the deed itself cannot be answered by relying on the force and effect of the deed itself. Furthermore, the claims of statutory misconduct will, as it now appears, cover a wide factual field. 19 It is therefore not possible to foresee that determination of a preliminary question of the kind outlined at paragraphs [4] and [5] above is likely to put an end to the cross-claim or otherwise to reduce the scope of the proceedings in any appreciable way. For that reason, separate determination of any such question is not warranted. 20 The plaintiff's notice of motion filed on 7 September 2010 is dismissed with costs. **********

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