Grave v Blazevic Holdings Pty Limited

Judgment 1CAMPBELL JA: I agree with the orders proposed by Bergin CJ in Eq, and with her Honour's reasons. 2There is an additional reason for rejecting the sixth of the Appellant's submissions. 3Prior to the enactment of the Civil Procedure Act 2005 there had been a live question concerning whether s 63 of the Supreme Court Act 1970 enabled the Court to use the procedural vehicle of a notice of motion filed in proceedings to decide the question of whether those proceedings themselves had been settled: Green v Rozen [1955] 1 WLR 741; McCallum v Country Residences Ltd [1965] 1 WLR 657 cf Roberts v Gippsland Agricultural & Earth Moving Contracting Company Pty Ltd [1956] VLR 555; Darling Downs Investments Pty Ltd v Ellwood (1988) 18 FCR 510. Even if the Court had such jurisdiction, there remained a question of whether it was an appropriate exercise of discretion for the Court to permit the procedure to be adopted: Phillips v Walsh (1990) 20 NSWLR 206; Fine Real Estate Network Pty Ltd v Howell (No 2) (Supreme Court of New South Wales, Young J, 9 December 1997 unreported). 4The question of the Court's jurisdiction to decide, on a notice of motion, whether proceedings had been settled was brought to an end by the enactment of s 73 Civil Procedure Act. Section 73 provides: (1) In any proceedings, 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. (2) This section does not limit the jurisdiction that the court may otherwise have in relation to the determination of any such question. 5When such a course of action was open consistent with ss 56-58 of the Civil Procedure Act, s 73(2) would permit the Court to decline to hear, upon the filing of a notice of motion, complex litigation concerning whether the proceedings in which the notice of motion was filed had settled. However, there can now be no doubt about its jurisdiction to entertain such proceedings. Slattery J has recognised this in Ahmed v Chowdhury [2011] NSWSC 893 at [4]. 6One cannot conclude from the fact that the T & C List proceedings were only to be dismissed after the second payment had been made, that the purpose in keeping them alive was so that the merits of the case could be litigated if the payment was not made. It is equally consistent that the proceedings were to be kept alive for the purpose of enforcing the settlement agreement that had been reached. Indeed, when the Respondent took steps to enforce the settlement agreement it did so by filing a notice of motion in the proceedings that had been kept alive, rather than by starting separate proceedings. Thus, the fact that the proceedings were kept alive does not assist a conclusion that no settlement had been reached. 7BARRETT JA: I agree with Bergin CJ in Eq. 8BERGIN CJ in EQ: This is an appeal from the judgment of Nicholas J (the trial judge) in which his Honour found that the Appellant, Warwick S Grave, and the Respondent, Blazevic Holdings Pty Limited, had reached a settlement agreement as set out in a Deed of Release (the Deed) drafted by the Appellant's solicitor: Blazevic Holdings Pty Limited v Warwick S Grave [2011] NSWSC 287. 9The Appellant contends that the trial judge fell into error in: (1) finding that the conversations between the legal representatives of the Appellant and the Respondent on 2 December 2010 effected an immediately binding final settlement of the proceedings then pending in the Technology and Construction List (the T&C List proceedings) of the Court; and (2) in not finding that the settlement was not binding unless and until each had executed the Deed. Background 10In February 2009 the Respondent, of which Josip Blazevic is the sole director, carried out construction work (fit out works) at the Appellant's dental surgery in the CBD of Sydney. On 6 March 2009 the Respondent served a payment claim on the Appellant under the Building and Construction Industry Security of Payment Act 1999 in respect of that construction work for an amount in excess of $126,000. An amount of $66,000 was paid to the Respondent on account of that payment claim by cheque drawn on the account of Gradenco Pty Ltd (Gradenco). 11On 6 April 2009 the Respondent served a further payment claim on the Appellant for an amount a little in excess of $57,000. The Appellant did not respond to that payment claim. 12On 5 May 2009 the Respondent commenced proceedings in the District Court of New South Wales against the Appellant seeking judgment for the unpaid balance of the amount sought in the payment claims, plus interest and costs. 13On 10 June 2009 default judgment was entered in the District Court for the Respondent against the Appellant in the amount of $120,232.08. On 1 December 2009 the Appellant's application in the District Court to set aside the default judgment was dismissed. 14On 8 February 2010 the Respondent caused a Bankruptcy Notice to be issued against the Appellant in respect of the default judgment amount. 15On about 28 May 2010 the Appellant and Gradenco issued proceedings in the Consumer, Trader & Tenancy Tribunal (CTTT Proceedings) against the Respondent and Mr Blazevic. The nature of the claims in the CTTT proceedings is unknown. 16On 10 June 2010 the Federal Magistrates Court dismissed the Appellant's application to set aside or extend the time for compliance with the Bankruptcy Notice and ordered the Appellant to pay the Respondent's costs. 17The Appellant appealed from the dismissal of his application to set aside the default judgment. In July 2010 the Court of Appeal granted a stay of the District Court judgment on the condition that the Appellant pay $48,000 to the Respondent on the Respondent's undertaking to repay the amount within a month of any final judgment of the Court of Appeal setting aside the District Court judgment. The Court of Appeal also ordered that the Appellant provide a bank guarantee in the amount of $79,283. Gradenco paid the sum of $48,000 to the Respondent on 26 August 2010. 18On 16 November 2010 the Court of Appeal (Allsop P, Macfarlan JA and McDougall J) granted the Appellant leave to appeal and allowed the appeal: Grave v Blazevic Holdings Pty Ltd [2010] NSWCA 324. The Court of Appeal noted (at [9]) that the defence proposed by the Appellant was that he was not a party to the construction contract under which the Respondent had carried out the construction work. It was alleged that the Appellant's service company, Gradenco, was party to the construction contract. The default judgment was set aside and the Appellant was let in to defend the proceedings. The Court of Appeal removed the proceedings from the District Court to the T&C List and ordered that the matter be listed before the T&C List Judge with a view to the expeditious resolution of the question as to whether the Appellant was a relevant party to the construction contract for the purpose of the Building and Construction Industry Security of Payment Act 1999. The Court also set aside the order requiring the provision of a guarantee. 19On 26 November 2010 the T&C List Judge (Hammerschlag J) made an order that the question of whether the Appellant was the relevant party to the construction contract was to be tried as a separate issue. That separate trial was listed for hearing on 13 December 2010. 20On 30 November 2010 the Appellant filed a Notice of Motion seeking security for costs from the Respondent. That Motion was listed for hearing on 3 December 2010. 21On 3 December 2010 Hammerschlag J was informed that the whole of the proceedings had settled. By consent his Honour ordered that the hearing date on 13 December 2010 be vacated and the proceedings be listed for directions on 25 February 2011 with liberty to apply. Hammerschlag J also made an order that if Consent Orders were faxed to his Chambers before 12 noon on 24 February 2011, the listing on 25 February 2011 would be vacated. 22On 10 March 2011 the Respondent filed a Notice of Motion in the T&C List proceedings seeking a declaration that the parties had reached a settlement agreement as set out in the Deed that had been drafted by the Appellant's solicitors. The Respondent also sought "further, or in the alternative" an order that the Appellant pay to the Respondent the sum of $25,000 and that the Appellant personally and or through his company Gradenco be restrained from commencing or continuing any action concerning the building works undertaken at the Appellant's premises. The Respondent also sought an order that any previous order of the Court requiring it to repay the sum of $48,000 to the Appellant be vacated. The Motion was listed for hearing before Nicholas J on 7 April 2011. The Trial 23The only evidence relied upon at the hearing was an affidavit of the Respondent's lawyer, Mitch Lozina, sworn on 9 March 2011. Mr Lozina was not cross-examined. Annexed to his affidavit was a copy of the Deed and the email communications between the respective legal representatives. The only other documentary material before the trial judge was an ASIC search of Gradenco recording the Appellant and his wife as the directors of that company. 24Mr Lozina's affidavit evidence related in part to the conversations between himself and Mr JJ Garnsey QC, counsel for the Appellant (defendant) in the T&C List proceedings. That evidence was as follows: 2. On or about 1 December 2010, I was contacted by Mr John Garnsey QC, counsel for the Defendant and we had a conversation in words to the following effect that dealt specifically with a settlement proposal: JG: I think it would be in both parties' interests if this matter were to settle. ML: I don't disagree. What is he prepared to offer? JG: Your client has already been given $48,000 by my fellow and he would be prepared to let your client keep that money with each party walking away. ML: I am pretty sure that my guy won't walk away. He would at least want something for his legals given how long this has gone on. I'll get some instructions and call you back. 3. Later that same day, I contacted Mr Garnsey by telephone and we had a further conversation in words to the following effect: ML: Hi John, Joe is prepared to finish this if the Doctor pays him $40,000 inclusive of costs. JG: I can't see that happening but I will get some instructions and get back to you. 4. We had a number of telephone conversations that went into the evening and the next day until we were able to have our respective clients agree on the following terms: i. The Plaintiff to retain the $48,000 paid to him by the Defendant. ii. The Defendant to pay to the Plaintiff a further $25,000 within 2 months. iii. Each part[y] to bear its own legal costs. iv. The CTTT proceedings to be discontinued. v. A Deed of Release would be prepared by Swaab Attorneys. vi. The hearing dates for the Motion and Hearing would be vacated. 25Mr Lozina's affidavit also annexed the email communications between the Appellant's then solicitors, Swaab Attorneys, and Mr Lozina. On 2 December 2010 Jessica Bates, of Swaab Attorneys, wrote to Mr Lozina in the following terms: Subject: Blazevic Holdings Pty Ltd v Warwick Grave Supreme Court of New South Wales Proceedings no324672 of 2009 We refer to the above proceedings and your telephone conversations with Mr Garnsey QC yesterday and today. Please see attached deed of release that we have prepared to record the settlement that has been reached in this matter. Please have your client and Mr Blazevic execute the deed and deliver the original to us (with all 7 pages) as soon as possible. We propose that the motion and the proceedings be adjourned tomorrow to the first available Court date after the expiration of 2 months (ie a date in mid February 2011) after both payments have been made, with liberty to apply to file the short minutes prior to the Court date if appropriate. Please let us know whether your client will consent to this adjournment. 26The Deed that was attached to the email identified the parties as the Appellant, Gradenco, the Respondent and Mr Josip Blazevic. It included the following: Recitals A. Mr Blazevic is the sole director and secretary of Blazevic. B. Grave is a director of Gradenco. C. In or about February 2009, Blazevic carried out the Fit Out Works at the Premises and issued Invoices for the Fit Out Works. D. On 5 May 2009, Blazevic commenced the District Court proceedings against Grave. E. On 10 June 2009, Blazevic was awarded default judgment against Grave. F. On or about 28 May 2010, Grave commenced the CTTT proceedings against Mr Blazevic. G. On 8 June 2010, in the Federal Magistrates Court proceedings, the Federal Magistrates Court dismissed Grave's application to set aside or extend the time for compliance with the bankruptcy notice issued by Blazevic against Grave in respect of the default judgment and ordered Grave to pay Blazevic's costs of the application. H. On 12 July 2010, in the Appeal proceedings, Young J ordered, inter alia, that Grave pay Blazevic the sum of $48,000 on Blazevic's undertaking to repay that amount within a month of final judgment of the Court of Appeal setting aside the District Court judgment. Grave paid the sum $48,000 to Grave (sic) on 26 August 2010. I. On 16 November 2010, the Court of Appeal in the Appeal proceedings ordered, inter alia, that the default judgment in the District Court proceedings be set aside, the District Court proceedings be transferred to the Supreme Court (to become the Supreme Court proceedings) and that Blazevic pay Grave's costs of the Appeal proceedings. J. On 26 November 2010, the Supreme Court proceedings were listed for hearing on 13 December 2010. K. On 30 November 2010, Grave filed and served the Motion, which is returnable on 3 December 2010 at 9.15am. L. Grave is defending the Supreme Court proceedings inter alia on the basis that Blazevic carried out the Fit Out Works at the Premises pursuant to an agreement with Gradenco and not Grave. M. The parties have agreed to finalise all matters between them on the terms set forth below. OPERATIVE PROVISIONS