Gravern Holdings Pty Ltd v Yepp Rowing Pty Ltd

Federal Court of Australia|2014-02-06|Before: Mr P, Murphy J

The application for adjournment 7 The respondents sought an adjournment of the application on the basis that they were presently unable to comply with the Terms, but that through payments pending from the Australian Taxation Office and through monies pledged by various unnamed investors they would be able to pay if given more time. Further, Mr Thomson submits that if judgment is ordered then the investors will not make the pledged investments, and the applicants will in reality be unable to recover the debt. The application is opposed by the applicants. 8 I refuse the application for adjournment. The risk that obtaining judgment will prejudice the applicants is a matter for them. There are likely also risks for them in a delay in obtaining judgment. On the face of the Terms, the applicants are entitled to judgment if the Terms are breached, and the respondents are not entitled to delay that because of their own commercial situation.

The terms of settlement 9 Pursuant to the Terms, the respondents were required to make a series of payments. In particular, pursuant to cll 1 and 2, the respondents jointly and severally agreed to pay each of the applicants the amounts set out in the Schedule to the Terms ("Settlement Sum"), doing so by way of five instalments to be made on or before the dates set out. 10 Importantly, cl 6 of the Terms provided: If the Respondents do not comply with any payment obligations to an Applicant under these Terms: (a) the outstanding balance of that Applicant's Settlement Sum becomes a debt immediately due and payable by the Respondents to the relevant Applicant; (b) the relevant Applicant can seek orders/judgment for the outstanding balance of that Applicant's Settlement Sum together with the taxed costs on a solicitor and own client basis of such application from the Respondents; and (c) for the purpose of obtaining an order pursuant to paragraph 6(b) above, the Respondents agree that these Terms may be produced to the Court as evidence of their consent to such orders.

The failure to pay 11 Mr Watson deposes that the respondents paid the first two instalments of the Settlement Sum to the applicants pursuant to the Terms. The third instalment of the Settlement Sum was due to be paid by 31 December 2013. He deposes that on 31 December 2013 he was informed by email from Mr Thomson that the respondents were unable to pay the third instalment on time. The email stated: I refer to the Terms of Settlement dated 1 October 2011 between the parties in the matter - Gravern Holdings Pty Ltd and Ors v Yepp Rowing Pty Ltd and Ors - Federal Court of Australia proceeding no VID 1160 of 2010. According to those terms, the third series of payments are due to be made to the parties on 31 Dec 2013. I can assure you that it is our most sincere intention to honour our obligations under the Terms of Settlement, however we are hindered at present due to the late arrival of funds due from the ATO. Although they appear to have been processed and are showing is a credit some in the company's ATO portal, they have not yet been transferred into our bank. Understandably, we have no direct control over their release, but reasonably anticipate receipt sometime next week. These funds will be sufficient to cover the 3rd payment in full. In advance we thank you and your clients for consideration in this matter and expect that we can drive this to a conclusion as soon as the Xmas and New Year holiday period is over, and a normal routine resumes on the 6th. 12 Mr Watson deposes that he sent an email in response to Mr Thomson on 7 January 2014 which stated, in summary, that: (a) the failure to pay the third instalment of the Settlement Sum was a breach of the Terms by the respondents; (b) the applicants were therefore entitled to exercise their rights to seek an order for immediate payment of the balance of the Settlement Sum; and (c) Mr Thomson was requested to urgently provide further information or proof regarding the assertions in his email. 13 Other than an email from Mr Thomson in which he stated that he had requested his accountants to provide the documents and information sought, Mr Watson deposes that he has received no further communication, documents or information from Mr Thomson. 14 Importantly, Mr Thomson, on behalf of the respondents, concedes that the respondents are in breach of the Terms. The thrust of his position is that the respondents require additional time to pay.

Consideration 15 The applicants have applied to reinstate the proceedings and seek judgment against the respondents, together with declaratory relief. Each respondent was served with the application together with the affidavit of Mr Watson and its annexures, and they appeared in opposition to the application. 16 The Court may reinstate the proceedings. Section 22 of the Federal Court of Australia Act 1976 (Cth) ("FCA Act") provides: The Court shall, in every matter before the Court, grant, either absolutely or on such terms and conditions as the Court thinks just, all remedies to which any of the parties appears to be entitled in respect of a legal or equitable claim properly brought forward by him or her in the matter, so that, as far as possible, all matters in controversy between the parties may be completely and finally determined and all multiplicity of proceedings concerning any of those matters avoided. (Emphasis added.) The Court therefore has power to enforce an agreement compromising proceedings and it is not necessary to institute fresh proceedings to enforce the compromise: Darling Downs Investments Pty Ltd v Ellwood (1988) 18 FCR 510 at 526 per Pincus and Einfeld JJ. 17 Further, r 39.05(f) of the Rules provides: The Court may vary or set aside a judgment or order after it has been entered if: … (f) the party in whose favour it was made consents… 18 The 4 October 2011 Orders were in favour of both the applicants and the respondents because they provided for dismissal of both the applicants' claims and the respondents' cross-claim. The applicants - in whose favour the orders dismissing the cross-claim were made - have consented to the order being set aside or varied, to the proceedings being reinstated and to orders being made for judgment. 19 In my view the respondents - in whose favour the orders dismissing the applicants' claims were made - have also consented to the variation of the orders through cl 6(c) of the Terms. That provision requires that the respondents consent to the production of the Terms to the Court for the purpose of obtaining the judgment now sought: see also Swift Seat Australia Pty Ltd v The Harrington Global Corporation Pty Ltd [2013] FCA 43 per Gordon J. If I am wrong in this approach to r 39.05(f), pursuant to r 1.34 I dispense with the requirement for compliance with r 39.05, and I make the orders sought pursuant to the power under s 22 of the FCA Act. 20 Through Mr Thomson, the respondents concede that they have defaulted on the settlement reached. Apart from the declaratory relief sought, the applicants are entitled to reinstate the proceedings so that judgment may be given, as provided in the Terms. Mr Thomson did not seek to argue otherwise. The applicants are also entitled to their costs on a solicitor and own client basis pursuant to the Terms, as Mr Thomson concedes.

Application for a stay 21 Upon the orders being made the respondents applied for a stay of 30 days. The basis of the submission was essentially the same as in relation to the adjournment. That is, a stay would enable the respondents to put their house in order and to make an offer in resolution of the dispute. The stay was opposed by the applicants who apparently have little faith that the provision of any further time to the respondents will result in the payment of the Settlement Sum. I refuse the stay. I certify that the preceding twenty one (21) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Murphy.

Trade Practices Act 1975(Cth)

Leave to appear 5 Rule 4.01(2) of the Federal Court Rules 2011 ("the Rules") provides that a company may only proceed before the Court through a lawyer. Peter Thomson, the fifth respondent, appeared for himself and also sought leave to appear for the first, second, third and fourth respondents, which are corporations. He is not a lawyer. 6 The relevant principles are set out in Termi-Mesh Australia Pty Ltd v Josu Manufacturing Pty Ltd [1999] FCA 1241 at [13] per French J, and I found helpful the practical approach described in Worldwide Enterprises Pty Ltd v Silberman & Anor [2009] VSC 165 at [20] per Forrest J. Mr Thomson is the sole director of the corporate respondents, he has a detailed knowledge of the dispute, I can see no divergence between his personal interests and the interests of the companies, it is appropriate for the orderly disposition of the proceedings that the companies be represented, and I formed the view that Mr Thomson would conduct himself appropriately. The applicants do not oppose the grant of leave. I will dispense with the requirements of r 4.01(2) as an exercise of my discretion under r 1.34.

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