Idameneo (No 123) Pty Ltd v Auzcare Pty Ltd

Supreme Court of NSW|2017-02-02

Judgment

HER HONOUR: These proceedings relate to claims made by the plaintiff arising from breach of the terms of a deed of settlement and release which was entered into between the plaintiff and the defendant. This judgment involves two issues, firstly, whether the defendants should be granted an adjournment and secondly, whether the plaintiff is entitled to judgment against the defendants.
The plaintiff is Idameneo (No 123) Pty Ltd. The first defendant is Auzcare Pty Ltd. ("Auzcare"). The second defendant is Muhammad Azam. The third defendant is Imrana Azam. The second defendant and third defendant are husband and wife respectively.

(1) The adjournment application

On the first day of the hearing at 10.05 am all defendants were called three times outside court. They did not appear. The defendants have, by letter, sought an adjournment.
On 31 January 2017, (the day before the hearing was to take place) the defendants emailed my associate. (Ex 1). Dr Azam (Mrs Azam in her statement corroborates her husband's account) says: "At the moment I am being treated overseas by my physician for my cardiac condition since December 2016. My treating physician has advised me to rest and not to travel. My next appointment to see my physician is 03/03/2017. Once I am fit and healthy to travel, I will travel to Australia to resume my duties at work. Due to my health reasons, I request the proceedings which is due on 1/2/3 February 2017 be adjourned for 2 - 3 months. I have already informed the plaintiffs 4 weeks ago about my health issues and have provided with the sickness note. Thanks for your help."

The Court directions and orders

These proceedings have been before the Court on at least 20 occasions.
On 10 October 2014, the matter came before Adams J who made the following orders: "1 The applications are to file and serve an amended defence dealing with the issue of penalty within 7 days to today, 10 October 2014. 2. The respondent is to file and serve a reply to the amended defence within 7 days thereafter. 3. I dismiss the notice of motion but give liberty to the parties to apply to re-open the motion on 3 days' notice in the event that agreement is not reached on the question of penalty. In the event that no such application is made within 3 weeks of today's date the motion will stand dismissed. 4. Costs are costs in the cause."
On 7 November 2014, the matter again came before Adams J who made the following orders. "1. These proceedings be set down for hearing on a date to be allocated by the Registrar on the discrete question of whether the Deed of Settlement executed by the parties is void, in whole or in part, as a penalty. 2. Liberty to approach the Registrar for allocation of a hearing date for determination of the question referred to in Order 1, with an estimate of 1 day. 3. Stand over the balance of the notice of motion dated 23 October 2014 filed by the first defendant to the hearing of the question referred to in Order 1. 4. Costs of today be costs in the cause."
On 5 February 2015, the matter came before Hidden J for the determination of whether the deed of settlement executed by the parties was void, in whole or in part, as a penalty. Hidden J reserved his decision.
On 9 September 2015, Hidden J handed down his written reasons for decision and a copy of the judgment was emailed to the parties. His Honour found that in all the circumstances, the relevant clauses of the settlement deed did not amount to a penalty.
On 1 October 2015, the matter came before the Registrar for directions. The Registrar noted the defendants were in Pakistan and stood the matter over to 6 October 2015.
On 6 October 2015, when the matter came before the Registrar, there was no appearance for the defendants. The Registrar made orders regarding the filing and serving of both parties' evidence and listed the matter for hearing on 7 March 2016, with a time estimate of three days and ordered the plaintiff notify the defendants of the orders.
On 12 October 2015, the defendants filed a summons seeking leave to appeal the decision of Hidden J.
On 12 November 2015, the matter was listed before the Registrar. There was no appearance by the defendants. The Registrar ordered: "1 The plaintiff is to file and serve its evidence by 3 December 2015. 2 The defendants are to file and serve their evidence by 14 January 2016. 3 The plaintiff is to file and serve its evidence in reply by 18 February 2016. 4 The matter is listed for directions on 25 February 2016. 5 Plaintiff to advise defendant."
On 14 December 2015, Hidden J made orders in accordance with paragraph 1 and 2 of the document entitled Judgment/Order signed by the parties, dated 4 December 2015. The terms of the orders were: "1. That on the question ordered to be determined separately, namely, "whether the Deed of Settlement and Release executed during April 2013 by the plaintiff and the defendants is void as penalty", the Court orders that relevant clauses of the settlement deed are not a penalty. 2. The defendants are to pay the plaintiff's costs of the separate hearing."
On 14 December 2015, the application for leave to appeal was heard by the Court of Appeal. On 18 December 2015, the Court of Appeal delivered judgment and made the following orders: "1. Grant leave to appeal. 2. Direct the appellants to file a notice of appeal in accordance with the "Proposed Notice of Appeal" in the white book. 3. Appeal dismissed. 4. The appellants (Auzcare and Dr Azam) to pay the costs of the appeal (including the costs of the application for leave to appeal) of the first respondent Idameneo."
On 25 February 2016, the matter was listed for directions before the Registrar. Mr Bryne appeared for the defendant. There was no appearance on behalf of the plaintiff and the matter was stood over to 26 February 2016.
On 26 February 2016, this matter was referred to the duty judge, Campbell J heard the defendant's application to vacate the hearing date of 7 March 2016. His Honour in his ex tempore judgment made the following orders: "1. Vacate the hearing to commence 7 March 2016 2. The defendants have to file and serve evidence in the proceedings on or before 30 March 2016 3. Evidence in reply on or before 13 April 2016 4. Fix the proceedings for further directions at 9 a.m. 19 April 2016 before common law case management registrar and if ready to proceed fix a further date for hearing"
On 9 April 2016, this matter was listed for hearing on 6 September 2016 with an estimate of three days before me.
On 19 April 2016, the matter was listed before the Registrar for directions who made orders that: "1 The defendants are to file and serve their evidence by 26 April 2016. 2 The plaintiff is to file its Notice of Motion and affidavit in support to set aside the second defendant's Notices to Produce filed 15 March 2016 and 16 March 2016 by 22 April 2016. 2A Such Motion to be returnable on 29 April 2016 for directions and allocation of a hearing date. 3 Annexure 2 to the Practice Note to apply. 4 The plaintiff is to file and serve its evidence in reply by 24 March 2016. 5 Stood over 29 April 2016. 6 The matter is listed for hearing on 6 September 2016."
On 29 April 2016, the matter came before the Registrar. Mr Gray appeared for the plaintiff. There was no appearance on behalf of the defendants. The Registrar made the following orders: "1 The second defendant is to file an serve any evidence on the plaintiff's Notice of Motion filed 22 April 2016 by 4 May 2016. 2 The plaintiff is to file and serve any evidence in reply on the Motion by 11 May 2016. 3 The Motion is listed for hearing on 26 May 2016. 4 The plaintiff advise the other side."
On 26 May 2016, by consent Fagan J dismissed the plaintiff's notice filed 22 April 2016 and reserved costs.
On 17 June 2016, the defendants' application for special leave, in relation to the separate determination as to penalty, to the High Court was refused.
On Friday, 2 September 2016, the defendants' solicitor emailed my associate advising that she had recently been retained by the defendants and was in the process of taking instructions and requested an adjournment.
On Monday, 5 September 2016, the second defendant Muhammad Azam emailed my associate relevantly stating: "I have arrived in Brisbane recently after looking after my terminally sick father for 18 months. I have started work last month as a Medical Practitioner. So far I have been dissatisfied with my legal representative I am looking for satisfactory legal representative, if I can't find any one I will self represent to the Court. In case of SELF REPRESENTATION 1. I would like to get adjournment so that my case is presented correctly. Previous lawyers have done serious mistakes in my case I,e our properties were mortgaged without explaining to my wife. I have been out of the country 18 months looking after my terminally ill father and I could not work for last 18 months. During this time I have been sick as well. Last 4 weeks I have requested plaintiff for adjournment that have been rejected. HOW TO APPLY FOR ADJOURNMENT ...should I apply online today OR I have to come to the court. 2, If I am not awarded adjournment, then I have to represent myself for the hearing. I have prepared my version of events and affidavit yesterday. Can I submit my affidavit today or tomorrow and where I have to submit. I will arrive in Sydney on 6/9/16 at 9:00 AM."
My associate emailed Dr Azam advising him that as he was legally represented he should raise his concerns with his solicitor.
On 6 September 2016 at 7.03 am, Dr Azam emailed my associate stating: "I am currently self-represented in this matter. I attach for filing a copy of the Notice of Motion and Affidavit (unsigned) for her Honour Associate Justice Harrison's consideration. I will hand a copy of the executed Affidavit at the hearing before her Honour at the hearing tomorrow. ..."
On 6 September 2016, Dr Azam attended the hearing unrepresented. Mr Shariff of counsel appeared for the plaintiff. I granted an adjournment and relisted the matter before myself on 1 February 2017 for the three day hearing. I relevantly ordered that: " … 2. The defendants are to jointly and severally pay the plaintiffs' costs of and incidental to the adjournment. 3. The defendants are to file and serve any affidavit evidence upon, which they wish to rely in the proceedings on or by 5pm on 27 September 2016 and will not be permitted to rely upon any affidavit evidence which is not filed and served by this time without order of the Court. 4. The plaintiff is to file and serve any affidavit evidence in reply, and has leave to file and serve any amended statement of claim, on or by 18 October 2016. 5. The defendants are to file and serve a defence to any amended statement of claim on or by 1 November 2016 together with any affidavit evidence in reply upon which they wish to rely upon and will not be permitted to rely upon any affidavit evidence which is not filed and served by this time. 6. The plaintiff is to file and serve any affidavit evidence in reply, together with any reply to any defences filed by the defendants, on or by 15 November 2016. … 8. The parties are directed to attend a mediation which is to occur on or by 11 October 2016, with the costs of such mediation to be shared equally between the parties."
The defendants did not serve any affidavit evidence.
On 4 November 2016, the proceedings were listed for directions before Davies J. Dr Azam appeared by telephone conference from Brisbane. Davies J ordered: "1 Mediation to take place on or before 25 November 2016. 2 Leave to Defendants to serve any proposed further amended defence and supporting affidavits by 28 November 2016. Copies to be emailed to Associate. 3 Listed for Directions before Davies J at 2:30pm on 2 December 2016. 4 Defendants to pay the plaintiff's costs of today."
The defendants did not comply with these orders.
On 29 November 2016, the matter was listed before the Registrar for directions. The Registrar relevantly ordered the defendants to file and serve any evidence in response to Idameneo's notice of motion filed 21 November 2016 by 8 December 2016 and Idameneo's notice of motion seeking summary judgment was listed before the duty judge for hearing on 12 December 2016.
On 2 December 2016, the matter was listed for directions before Davies J who confirmed the hearing date of 12 December 2016.
On 12 December 2016, Idameneo's notice of motion came before N Adams J who made orders that: "1. The plaintiff's Notice of Motion returnable today is vacated and stood over for hearing on 1 February 2017. 2. The 1st and 2nd defendants are to pay the cost thrown away in the amount of $7,000. 3. That amount is to be paid within 48 hours from the item this order is made."
On 14 December 2016, N Adams J varied order (3) and extended the time for payment to no later than 8 January 2017.
A mediation has taken place but was unsuccessful. To date the sum of $7,000 for costs has not been paid. The defendants have still not filed any evidence. They have breached numerous court timetables.

The legal principles in relation to adjournments

Counsel for the plaintiff referred to ss 56, 57 58 and 66 of the Civil Procedure Act 2005 that relevantly read: "56 Overriding purpose (1) The overriding purpose of this Act and of rules of court, in their application to civil proceedings, is to facilitate the just, quick and cheap resolution of the real issues in the proceedings. (2) The court must seek to give effect to the overriding purpose when it exercises any power given to it by this Act or by rules of court and when it interprets any provision of this Act or of any such rule. (3) A party to civil proceedings is under a duty to assist the court to further the overriding purpose and, to that effect, to participate in the processes of the court and to comply with directions and orders of the court. (3A) (Repealed) (4) … 57 Objects of case management (1) For the purpose of furthering the overriding purpose referred to in section 56 (1), proceedings in any court are to be managed having regard to the following objects: (a) the just determination of the proceedings, (b) the efficient disposal of the business of the court, (c) the efficient use of available judicial and administrative resources, (d) the timely disposal of the proceedings, and all other proceedings in the court, at a cost affordable by the respective parties. (2) This Act and any rules of court are to be so construed and applied, and the practice and procedure of the courts are to be so regulated, as best to ensure the attainment of the objects referred to in subsection (1). 58 Court to follow dictates of justice (1) In deciding: (a) whether to make any order or direction for the management of proceedings, including: … the court must seek to act in accordance with the dictates of justice. (2) For the purpose of determining what are the dictates of justice in a particular case, the court: (a) must have regard to the provisions of sections 56 and 57, and (b) may have regard to the following matters to the extent to which it considers them relevant: (i) the degree of difficulty or complexity to which the issues in the proceedings give rise, (ii) the degree of expedition with which the respective parties have approached the proceedings, including the degree to which they have been timely in their interlocutory activities, (iii) the degree to which any lack of expedition in approaching the proceedings has arisen from circumstances beyond the control of the respective parties, (iv) the degree to which the respective parties have fulfilled their duties under section 56 (3), (v) the use that any party has made, or could Have made, of any opportunity that has been available to the party in the course of the proceedings, whether under rules of court, the practice of the court or any direction of a procedural nature given in the proceedings, (vi) the degree of injustice that would be suffered by the respective parties as a consequence of any order or direction, (vii) such other matters as the court considers relevant in the circumstances of the case. 66 Adjournment of proceedings (1) Subject to rules of court, the court may at any time and from time to time, by order, adjourn to a specified day any proceedings before it or any aspect of any such proceedings. (2) ...."
In Hamod v State of New South Wales [2011] NSWCA 375, the Court of Appeal reviewed the principles to be considered in deciding whether an adjournment should be granted. The trial judge had refused an adjournment by a self-represented litigant part way through the hearing. The Court of Appeal referred to Aon and stated "In Aon, the Court was dealing with the rules of the Supreme Court of the ACT", they are similar to those of the Supreme Court of New South Wales.
Their Honours continued at [139] to [145]: 139 The considerations relevant to the determination of interlocutory applications were recently considered by the High Court in Aon Risk Services Australia Ltd v Australian National University . In Aon Risk Services Australia Ltd, the Court was dealing with the rules of court of the Supreme Court of the ACT. Those rules are relevantly similar to the Civil Procedure Act, s 56 ff. Although the application in question in that case was an application to amend pleadings, the High Court addressed the concerns of case management more generally, noting the impact that substantial delay and wasted costs has on parties, the court and other litigants. Relevant to the application in this case are the comments of French CJ, at [5]: "[T]here is an irreparable element of unfair prejudice in unnecessarily delaying proceedings. Moreover, the time of the court is a publicly funded resource. Inefficiencies in the use of that resource, arising from the vacation or adjournment of trials, are to be taken into account. So too is the need to maintain public confidence in the judicial system." 140 His Honour further stated, at [30]: "Also to be considered is the potential for loss of public confidence in the legal system which arises where a court is seen to accede to applications made without adequate explanation or justification, whether they be for adjournment, for amendments giving rise to adjournment, or for vacation of fixed trial dates resulting in the resetting of interlocutory processes." 141 A just resolution of proceedings remains the paramount purpose of the case management objectives articulated in the relevant procedural provisions of the civil procedure legislation: in particular see the Civil Procedure Act, s 56. What constitutes a "just resolution" is to be understood in light of the purposes and objectives stated in the statutory provisions. Speed and efficiency, in the sense of minimum delay and expense, are seen as essential to a just resolution of proceedings. However, these terms are relative and parties should be given an appropriate opportunity to plead and argue their case. Nonetheless, there are limits to the extent that a party will be accommodated in the conduct of the litigation. In Aon Risk Services Australia Ltd, Gummow, Hayne, Crennan, Kiefel and Bell JJ, at [98], stated: "The Rule's reference to the need to minimise costs implies that an order for costs may not always provide sufficient compensation and therefore achieve a just resolution. It cannot therefore be said that a just resolution requires that a party be permitted to raise any arguable case at any point in the proceedings, on payment of costs." 142 In his submissions to this Court, Mr Hamod made specific reference to these provisions, as well as to s 66. He submitted that his Honour was obliged to apply s 66, subject to s 56, and to then make his determination according to the dictates of justice as required by ss 57-58. Section 66 provides, relevantly, that the court may at any time, by order, adjourn proceedings. 143 There is nothing new in this provision. It merely confers upon the court a discretion to grant an adjournment. The court has always had that power, both in the exercise of its inherent jurisdiction and pursuant to the Supreme Court Act 1970. Nor is s 56 a new concept. Rather, it is the statutory embodiment of jurisprudence that had already gained prominence in the case law. Issues of delay, costs and inefficiency have led to active case management in the courts as a recognised feature of the administration of justice for at least the last two decades. 144 Mr Hamod also relied upon ss 57 and 58. Section 57 provides that in furthering the overriding purpose of a just, quick and cheap resolution of case, the court is required to manage cases having regard, inter alia, to "the just determination of the proceedings ": s 57(a). Section 58 provides that in making any order or direction the court is to" seek to act" in accordance with the dictates of justice, including having regard to the "degree of injustice that would be suffered by the respective parties as a consequence of any order or direction". 145 These provisions have been the subject of frequent judicial comment: Tripple Take Pty Ltd v Clark Rubber Franchising Pty Ltd [2005] NSWSC 1169; Baulderstone Hornibrook Engineering Pty Ltd v Gordian Runoff Ltd [2005] NSWSC 1339; Dennis v Australian Broadcasting Corporation [2008] NSWCA 37; Hans Pet Constructions Pty Ltd v Cassar [2009] NSWCA 230; Bi v Mourad [2010] NSWCA 17 at [47]; Richards v Cornford (No 3) [2010] NSWCA 134; McMahon v John Fairfax Publications Pty Ltd [2010] NSWCA 308. In McMahon v John Fairfax Publications Allsop P, at [26], referred to the case management provisions ss 56-60 as follows: "The operation of the Civil Procedure Act, ss 56-60 has brought about important changes to the conduct of civil litigation in this State. To a significant degree those provisions enshrined many of the developments in case management and the approach to litigation over the previous 20-30 years in this country. They now have statutory form. They are, however, a clear statutory watershed. That statutory form comprises the over-riding purpose: s 56, the fulfilment of which binds the Court (s 56(2)), the parties (s 56(3)) and legal advisers (s 56(4)). That over-riding purpose is the 'just, quick and cheap resolution of the real issues in the proceedings'."

Conclusion - adjournment application

It is my view that the defendants have had numerous opportunities to put on evidence to support their amended defences but they have not done so. The defendants' application for adjournment is unsatisfactory. Dr Azam should have provided updated evidence as to his medical condition. The medical certificate was dated 30 December 2016 and stated that Dr Azam would be able to travel overseas four weeks after treatment. That period elapsed on 27 January 2017, prior to the hearing date, yet no updated medical evidence was furnished. The second and third defendants did not rely on sworn or affirmed affidavit evidence, nor was a motion filed seeking an adjournment prior to the hearing, yet Dr Azam had followed this procedure when he was granted an adjournment by me on 6 September 2016. The defendants have not paid the $7,000 despite the time for payment being extended. However, most importantly, in my view the defendants' defences have no chance of success. I shall examine the defences in more detail shortly. Taking all of these circumstances into account, it is my view that justice between the parties is best served if the application for the adjournment is refused. Hence, I refuse the adjournment.

(2) Whether the plaintiff is entitled to judgment against the defendants

The plaintiff's claim relates to repayment of a debt of $800,000, plus interest, which was acknowledged and agreed to be payable in clause 2(a) of the deed of settlement and release ("settlement deed"). The question of whether this debt amounts to a penalty was determined in the plaintiff's favour by Hidden J in Idameneo (No 123) v Auzcare [2015] NSWSC 1318 and by the Court of Appeal in Auzcare Pty Ltd v Idameneo (No 123) Pty Ltd [2015] NSWCA 412 ("Idameneo"). In Idameneo, the Court of Appeal at [20], [28] and [31] stated: "20 …The effect of cl 2(a) of the Deed was to bind the parties to the Deed to that acknowledgment. … … 28 … Auzcare and Dr Azam expressly and unambiguously acknowledged a debt of $800,000. Moreover, the express acknowledgement was given in circumstances where there was no dispute that the money was received by them, nor that both breached the original agreements with Idameneo shortly thereafter, and were faced with a claim of money had and received for the whole of the purchase price. 31 … Again, there was an acknowledgement of debt, in a formal document executed by the parties, whose binding effect is not otherwise challenged. Auzcare and Dr Azam (and Mrs Azam) are bound by cl 2(a). The nature of the cause of action which was compromised giving rise to the acknowledgement of debt cannot undermine the effect of the acknowledgement. …"
On 17 June 2016, the defendants' application for special leave to the High Court of Australia, in relation to the penalty decision, was refused.

The factual issues

The factual circumstances that give rise to the plaintiff's claim are mostly common ground.
In 2004, the Springwood property was sold without notice to Idameneo. The Calamvale property is about to be sold by National Australia Bank. Hence, Idameneo is no longer seeking possession of these properties.
The plaintiff is a company duly incorporated and able to sue in and by its corporate name and the lessee of medical centre premises at Oxley, Queensland ("the centre").
The plaintiff's usual business is the provision of suitable medical centre premises, administrative and other services to licensed medical practitioners. The second defendant Dr Azam is a general medical practitioner and the sole director and secretary of the first defendant. The first defendant is a company duly incorporated and able to be sued in and by its corporate name. The third defendant Mrs Azam is the wife of Dr Azam.
Prior to 21 August 2012, the first defendant owned and conducted a medical practice at premises at Springwood, Queensland. ("the practice").
On about 22 August 2012, the plaintiff entered into an agreement with the first and second defendants whereby, in consideration of the plaintiff paying to the first defendant $800,000 ('the purchase price"), the plaintiff acquired the practice and a promise Dr Azam would (through the first defendant) render medical services from the centre. ("the sales agreement"). The sales agreement was signed by the plaintiff and Dr Azam for and on behalf of himself and the first defendant.
On 22 August 2012, the plaintiff entered into the services agreement with the first defendant whereby the first defendant agreed to procure Dr Azam to render medical services from the centre ("the services agreement"). The services agreement was signed by the plaintiff and the first defendant. Also on that day, the plaintiff and Dr Azam entered the performance guarantee, whereby Dr Azam guaranteed the first defendant's obligations to the plaintiff ("the performance guarantee"). The sales agreement, services agreement and performance guarantee are referred to as "the original agreements".
On 23 August 2012, the plaintiff paid the sum of $800,000 to first defendant by way of electronic funds transfer.
Despite the terms of the original agreements and the payment of the $800,000 purchase price by the plaintiff, the first defendant and Dr Azam failed, refused or neglected to perform the terms of the original agreements.
On 29 October 2012, the plaintiff commenced proceedings against the first and second defendants seeking that the defendants repay the sum of $800,000 for breach of the deed of settlement. The statement of claim was amended to join the third defendant Mrs Azam.

The settlement deed

On about 15 April 2013, in order to resolve the proceedings, the plaintiff entered into an agreement with the first, second and third defendants ("the settlement deed"). Whereby, in consideration of the plaintiff not immediately enforcing its rights against the defendants, the defendants each acknowledged that they were jointly and severally indebted to the plaintiff in the sum of $800,000 ("the debt"). Each agreed to repay the debt should the settlement deed be breached by ay of the defendants.
The relevant terms of the settlement deed include that: "(a) Auzcare, Dr Azam and Mrs Azam each agree and acknowledge that, as at the date of this deed, they are jointly and severally indebted to Idameneo in the amount of $800,000 by reason of the liability arising pursuant to the causes of action pleaded in the Amended Proceedings (the debt). … (c) Auzcare and Dr Azam agree to be bound by a new agreement comprised of the terms of the Sale Deed (as amended by this Deed), the Services Deed (as amended by this Deed) and the Guarantee (the Deeds). The terms of the Sale Deed, the Service Agreement, each as amended by this Deed, and the Guarantee are hereby incorporated by this Deed, and the Guarantee are hereby incorporated into this Deed. (d) Auzcare, through Dr Azam, is to conduct its medical practice and render medical services at a new centre on 9th April 2013 in accordance with the Sale Deed (as amended by this Deed) and the Services Deed (as amended by this Deed). (e) The Sale Deed and the Services Deed be amended as follows: (i) all references in the Sale Deed and the Services Deed to "10 years" be amended to read "10 years and 7 months" (see especially clauses 4.2(2) and (b) of the Sale Deed and clause 2 of the Services Deed); (ii) the definition of "the Purchase Price" in clause 1.1 of the Sale Deed be deleted and replaced with: "the Purchase Price" means the $800,000 already paid to the IMP on 24 August 2012"; (iii) paragraph (a) of the definition of "the New Premises" be deleted and re-placed with "the premises leased by the Purchaser at Town Centre, East Building Cnr Redland Bay, Cleveland Road & Colburn Avenue, Victoria Point, Queensland 4165." (iv) Clauses 2.3 of the Sale Deed be deleted; (v) a "clause 2.3A" of the Sale Deed be inserted as follows: "The IMP agrees to waive any rights it has or had, either in law or equity, in respect of obtaining any amount greater than the $800,000 already paid to the IMP, such that the Purchase Price payable by the Purchaser to the IMP is $800,000, being an amount already paid to the IMP"; (vi) Clause 2.9(a) of the Sale Deed is deleted; (vii) The handwritten clause between clauses 4.2(b) and 4.2(c) of the Sale Deed is deleted. (viii) The strike out and the handwritten word "Sunday" in paragraph 4.2(c)(i) of the Sale Deed is deleted so that the words underneath the strike out now apply. (ix) Dr Azam agrees to render medical services at the New Premises in accordance with the following agreed roster: "9 hours (between 1.00pm and 10.00pm) on Monday, Tuesday or Wednesday (depending on the needs of the Centre as determined by Idameneo), Thursday, Saturday, and Sunday." (Agreed Roster). Idameneo agrees to review the Agreed Roster after Auzcare, Dr Azam and Mrs Azam have all complied with the terms of this Deed for 6 months from the date of This Deed being entered into. Otherwise, the Agreed Roster remains until there is agreement between Idameneo and Dr Azam as to its amendment. Such an amendment may only occur in accordance with the terms of the Deeds (as amended by this Deed). (x) Clause 7.2(a) of the Sale Deed is amended so that the "10th anniversary" becomes the "11th anniversary". (xi) Clause 7.2 of the Services Deed be amended so that the insurance referred to in that paragraph is carried until the 7th anniversary of the termination of this Deed; (f) Idameneo notes the conditions placed on the medical registration of Dr Azam. Auzcare and Dr Azam warrant to the plaintiff that each will at all times ensure that a chaperone is present when Dr Azam is rendering medical services at the centre. This chaperone is to be appropriately qualified to conform with the requirements of Australian Health Practitioner Regulations Agency's conditions and must hold a valid certificate of professional indemnity insurance. The costs of the chaperone and the insurance is to be borne by Auzcare and/or Dr Azam. The chaperone retained by Dr Azam/Auzcare is their employee and is the responsibility of Dr Azam and/or Auzcare. (g) In addition to the above rights and in the event of any breach by Auzcare and/or Dr Azam of the sale deed (as amended), the services deed (as amended) the guarantee (as amended) and/or this deed, Idameneo may exercise its rights under the deeds (as amended) and as incorporated herein. (h) Mrs Azam agrees that in the event of any breach referred to in sub-paragraph 2(g) above that she will fully indemnify Idameneo for any loss or damages arising from any breach. (i) Auzcare, Dr Azam and Mrs Azam each acknowledge and agree that the Freezing Orders are to remain in place until both the mortgages at schedules 2 and 3 hereto have been duly executed and duly registered with the Queensland Government. (i) Auzcare, Dr Azam and Mrs Azam agree that they jointly and severally will Indemnify Idameneo for any costs, including, but not limited to legal costs, incurred by reason of any breach by them of this deed, or those deeds incorporated by it, in respect of the enforcement of this deed. (j) Auzcare, Dr Azam and Mrs Azam agree that they jointly and severally will indemnify Idameneo for any interest, including, but not limited to interest on monies owing to it under this deed and those incorporated by it and the costs incurred by reason of any breach by them of this deed, or those deeds incorporated by it or in respect of the enforcement of this deed."
Importantly, in clause 2(c) of the settlement deed, the parties agreed that the amended agreements would be incorporated into the settlement deed. Clause 9.3 of the deed entitled "Sale of Practice" (as amended and incorporated into the settlement deed) and also clause 9.3 of the deed entitled "Provision of Services to Incorporated Medical Practitioner" (as also amended and incorporated into the settlement deed), Idameneo was able to terminate the amended agreements and, in turn, enforce its rights of recovery of the debt for breach of the settlement deed on the happening of any of the following events. (a) Clauses 5.1(b), 5.3(a) and (b) and 7.4 of the services agreement; (b) Either Auzcare or Dr Azam is guilty of any misconduct; and/or (c) Conditions on the registration of Dr Azam were imposed under the Health Practitioner Regulation National Law, as applied in Queensland; and (d) Clauses 4.2(b), (c) and (d) of the sales agreement.
There have been two breaches of the terms of the settlement deed. The first is that between April 2013 and January 2014, Auzcare, through Dr Azam, failed to comply with the amended agreements by failing to render medical services as agreed and in turn breached the settlement deed. Pursuant to the settlement deed and the amended sale deed, Dr Azam was to render medical services from the centre leased by the Idameneo at Victoria Point, Queensland ("the centre") for not less than 45 hours per week for 48 weeks per financial year. The period commencing 9 April 2013 and ending 11 February 2014 inclusive comprises 44 calendar weeks and one day, that is to say, 44.2 calendar weeks. The hours report records that during those 44.2 weeks, Dr Azam rendered medical services from the centre for a total of 1,385.65 hours (436.85 hours in FYE2013 and 948.80 hours in FYE2014) which is an average of 31.4 hours per week (1,385.65 hours/44.2 hours). (Aff, Brewer, 9 February 2016, [6] and 8]). In other words, Dr Azam did not work the required 45 hours per week. For 44.2 weeks he only worked 31.4 hours.
The second breach of the agreement is that on 20 January 2014, a condition was imposed on Dr Azam's medical registration that is different to the one referred to in clause 2(f) of the deed. As from 20 January 2014, Dr Azam was not to consult, assess, examine or treat females. (CB2.225 EX A(2)). The imposition of the condition meant that from 20 January 2014 onwards Dr Azam was unable to see female patients that attended the Victoria Point Centre and was in turn, in breach of the settlement deed.
The first and second defendants breached the original agreements (as amended). In particular they breached clauses 4.2(b), (c) and (d) of the sales agreement and clauses 5.1(b), 5.3(a), 5.3(b) and 7.4 of the services agreement.
On 14 February 2014, Idameneo terminated the amended agreements.

The pleading in the defences

By defence filed 24 October 2014, Auzcare and Dr Azam admit that: (a) they executed the settlement deed; (b) the settlement deed contained the acknowledgement that the debt was owed as pleaded at paragraph 16(a) of the statement of claim; (c) the settlement deed contained the clause pleaded at paragraph 16(c) of the statement of claim, namely, that where there was a breach of the original agreements (as amended by the settlement deed) by Auzcare and Dr Azam, Idameneo could recover the debt; (d) the condition was imposed by the Medical Board of Australia "but says that the complaints made which resulted in the imposition of the condition referred to were made by employees of Idameneo and not by patients and further that condition is an interim one only and that the complaints had not yet been heard or determined by the Medical Board of Australia".
However, the Medical Board imposed this condition on Dr Azam's registration to practice before he filed his defence. His allegation is contrary to the evidence.
Apart from the argument in relation to the condition, Auzcare and Dr Azam have admitted that Idameneo is entitled to recover $800,000 from them, jointly and severally.

Mrs Azam's position

By amended defence filed 5 November 2014, Mrs Azam appears to admit executing the settlement deed (para 4) but states that she "has extremely limited command and understanding of the English language (the language Issue) and was at no time invited to seek legal advice in relation to the settlement deed" ("the representation issue").
In relation to the language issue, Mrs Azam has neither filed nor served any evidence to support her assertion that she has an "extremely limited command and understanding of the English language" despite being ordered to serve her evidence on many occasions. The only evidence before this Court is her letter supporting her husband's application for an adjournment which is in English and well written.
In relation to the representation issue, Mrs Azam was at all times represented by a solicitor when the original deeds were signed during the original proceedings and when the settlement deed was signed by the parties.
In any event, irrespective of the pleading of the language issue and the representation issue, Mrs Azam set out her understanding of the settlement deed in her amended defence (para 6). Her understanding includes that the "$800,000 can be recovered in its entirety by the Plaintiff as a debt in the event of a breach by any of the Defendants of the Settlement Deed" Hence, by her defence, Mrs Azam was aware of the effect of the settlement deed, at least in so far as it related to Idameneo's claim to recover the $800,000 debt owed to it by the defendants in the event of a breach of the settlement deed.

Conclusion - whether the plaintiff is entitled to judgment against the defendants

I am satisfied that Dr Azam breached the settlement deed by firstly, not working the hours he was contractually obliged to work; and secondly, by having the condition imposed on his medical registration. Therefore the defences raise no arguable issues and should be dismissed. The debt can be recovered against the first and second defendants and against Mrs Azam. John Houston, a director of Idameneo, deposes (Aff, 8/2/2017 [3]) that having reviews the books and records of Idameneo, none of the defendants have made any payment in respect of the debt of $800,00 upon which Idameneo sues in these proceedings. The defendants are liable to pay Idameneo the sum of $800,000. I enter judgment accordingly.

Judgment (1) The defendants are to pay to the plaintiff the sum of $800,000.

The Court orders that: (2) The defendants' application for an adjournment is refused. (3) The first and second defendants' amended defence dated 24 October 2014 and the third defendant's amended defence dated 5 November 2014 are dismissed. (4) The defendants are to pay the plaintiff's costs. (5) The defendants are to pay the plaintiff's interest calculated at $146,235.61.

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: 10 February 2017

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Judgment (14 paragraphs)

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Cases Cited (12)