Premier Travel Pty Limited & 3 Ors v Yandell & 2 Ors

Civil Procedure Act 2005 (NSW) LEGISLATION CITED : Law Reform (Miscellaneous Provisions) Act 1946 (NSW) Uniform Civil Procedure Rules 2005 (NSW)

Babcock International v Eraring Energy and Babcock Australia Ltd [2001] NSWDDT 4 Baxter v Obacelo Pty Ltd & Anor [2000] NSWCA 69 Brambles Constructions Pty Ltd v Helmers (1966) 114 CLR 213 CASES CITED : Burke v LFOT Pty Ltd (2002) 209 CLR 282 CSR Ltd v Page & Ors [2002] NSWCA 365 Harper v Gray & Walker & Ors [1985] 1 WLR 1196 James Hardie & Coy Pty Ltd v Seltsam Hardies Pty Ltd (1998) 196 CLR 53 Morgan v Ashmore Benson Pease & Co Ltd [1953] 1 WLR 418

Premier Travel Pty Limited Betaco Pty Limited Noviga Pty Limited PARTIES : Robcox Investments Pty Limited Robert Walter Yandell Robert Rex Wright Dean Robert Stell

COUNSEL : Mr R. Darke (Def/Cross-Claimant) Mr T. Tzovaras (Sol) (Cross-Def)

SOLICITORS : Middletons (Def/Cross-Claimant) Tzovaras Legal (Cross-Def)

• 12 - IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION

20226/05 Premier Travel Pty Limited & 3 Ors v Robert Walter Yandell & 2 Ors

JUDGMENT 1 HIS HONOUR: During the period between 1999 and 2002, the Cox parties (which comprised members of the Cox family and their companies) were involved in two joint venture arrangements with the Bourke parties (which comprised members of the Bourke families and their companies). Under these arrangements, the Bourke parties attended to matters of management and development, whilst the Cox parties provided the funding. 2 It was alleged by the Cox parties that there was a cheque practice. This involved the signing of blank cheques by the Cox parties, with the Bourke parties subsequently completing the cheque details. 3 In about November 2002, the Cox parties came to the view that the Bourke parties were applying funds to matters unrelated to the joint ventures. 4 In December 2003, the Cox parties brought proceedings against the Bourke parties (the 2003 proceedings). The recovery of two sums was sought (one was in a total of $3,220,260.00 and the other was in total $418,128.25). The alleged cheque practice was pleaded in the proceedings. Allegations were made of, inter alia, negligence and breach of fiduciary duty. 5 On 25 June 2005, the proceedings were settled. The settlement documentation comprised, inter alia, a Deed of Settlement and Short Minutes of Order (the Short Minutes of Order). 6 The Deed of Settlement contained, inter alia, the following:- "Mutual Release 6. Subject to the provisions of this deed each party hereby discharges and releases all other parties from all or any actions, suits, causes of action, claims and demands whatsoever, which either party now has or, but for this Deed, could, or might have had, against the other party either at law or in equity or arising under the provisions of any statute for, or in respect of, or touching or concerning: 6.1 Krystyna's land; 6.2 The Alexander Point stage 1 land; 6.3 The Alexander Point stage 2 land; 6.4 The Betaco land; 6.5 The Satellite land; 6.6 The joint venture agreements; 6.7 The Price mortgage; 6.8 The Satellite proceedings; 6.9 The Satellite contract; 6.10 The Satellite costs; 6.11 The Noviga proceedings; 6.12 The Appeal costs; 6.13 The Winding Up proceedings; 6.14 The AER costs; 6.15 The Premier proceedings; 6.16 The Satellite Borrowings; 6.17 Camilla or Malia in relation to the Daughter Proceedings; 6.18 Any loan advanced or payments made by the Cox parties to the Bourke parties and Satellite; 6.19 Any other matters referred to or related to the above. … Bar to proceedings 11. The parties may plead this Deed in bar to any claim, suit or cause of action arising directly or indirectly from the proceedings or the dispute." 7 The Deed of Settlement (by Clause 1 thereof) also made provision in respect of the Short Minutes of Order (inter alia, it required the Cox parties to consent to the dismissal of the proceedings on terms to the effect thereof).

8 The Short Minutes of Order contained the following:- "By consent the Court: 1. Directs the sum of $350,000 paid into Court on 2 November 2004 in accordance with the Orders of the Court made on 24 August 2004, together with any interest earned on such sum, be paid out to the First Plaintiff. 2. Otherwise orders the proceedings be dismissed with each party bearing his, its or their own costs."

9 On 12 July 2005, certain of the Cox parties brought the present proceedings (the 2005 proceedings). The defendants are solicitors who were retained by the Bourke parties in relation to the joint ventures. The proceedings seek recovery of the two sums claimed in the 2003 proceedings. The claims (which are presently pleaded in the Amended Statement of Claim) are founded, inter alia, in tort and breach of fiduciary duty. In a general sense, what is alleged against the solicitors is a failure to detect the misapplication of the monies comprising the sums (the cheque practice is again pleaded). 10 The defendants have brought a cross-claim (the second cross-claim) against certain of the Bourke parties (Mr Bourke and four companies). The second cross-claim seeks contribution (pursuant to s5 of the Law Reform (Miscellaneous Provisions) Act 1946 (NSW) against all cross-defendants and equitable contribution against Mr Bourke and Hunter Development Company Pty Limited). 11 On 13 October 2006, the cross-defendants filed a defence to the second cross-claim. It pleaded the matters of the Mutual Release and the consent dismissal of the 2003 proceedings and raised the issue that the claims for contribution were not maintainable. 12 There are presently two Notices of Motion before the Court. The cross-defendants are seeking summary dismissal of the second cross-claim (it was filed on 19 October 2006). The plaintiffs are seeking an order requiring the defendants to answer interrogatories. 13 Both Notices of Motion came before the Court on 8 May 2007. There was a consensus that the summary dismissal application should be first heard. The Court was told that the summary dismissal application involved lengthy and complex argument and it appeared that the Court may have to reserve judgment in relation to it. In the circumstances, a consensus was reached to put the other motion aside. It was later stood over and placed in a Registrar's list. If a hearing of it is required, it can be determined by a Registrar. A hearing of the other Notice of Motion then took place. 14 The application for summary dismissal looks, inter alia, to the terms of the Short Minutes of Order and the language of the Mutual Release. This documentation was relied on to demonstrate that the claims for contribution were not maintainable. 15 Firstly, it is said that because of the terms of the Short Minutes of Order, s5 has no application. 16 The relevant provisions of s5 are as follows:- "5 Proceedings against and contribution between joint and several tort-feasors (1) Where damage is suffered by any person as a result of a tort (whether a crime or not): … (c) any tort-feasor liable in respect of that damage may recover contribution from any other tort-feasor who is, or would if sued have been, liable in respect of the same damage, whether as a joint tort-feasor or otherwise, so, however, that no person shall be entitled to recover contribution under this section from any person entitled to be indemnified by that person in respect of the liability in respect of which the contribution is sought." 17 For the purposes of this application, the parties focused on the words "who is, or would if sued have been, liable in respect of the same damage". These words have been described as expressing the two limbs of the provision. 18 The application of these or similar provisions have been considered in a number of cases (including James Hardie & Coy Pty Ltd v Seltsam Hardies Pty Ltd (1998) 196 CLR 53; CSR Ltd v Page & Ors [2002] NSWCA 365; Brambles Constructions Pty Ltd v Helmers (1966) 114 CLR 213; Harper v Gray & Walker & Ors [1985] 1 WLR 1196 and Morgan v Ashmore Benson Pease & Co Ltd [1953] 1 WLR 418). 19 The cross-defendants put the argument that the dismissal order in the Short Minutes of Order had the effect of a final judgment in favour of the Bourke parties and so took them out of the class of persons against whom an order for contribution could be made. Accordingly, it is said that the cross-claimants are unable to satisfy either of the two limbs set forth in (c) of s5(1). 20 The argument advanced in support of the effect of the mutual release is put in the following terms:- "50. In any event, it is submitted that the release provided in clause 6 of the Deed of Settlement releases all of the parties from "all or any actions, suits …" in respect of or touching or concerning a wide range of subject matters. Upon its proper construction, the Deed of Settlement is intended to operate in complete settlement and satisfaction of the Plaintiffs' claim so that the release operates fully and comprehensibly. See Babcock International v Eraring Energy and Babcock Australia Ltd [2001] NSWDDT 4 and Baxter v Obacelo Pty Ltd & Anor [2000] NSWCA 69 . 51. That being so, the Plaintiffs cannot make any claim against any parties including the Cross-claimants and, accordingly, the Cross-claimants have no claim against the Cross-defendants." 21 What was said in respect of the equitable contribution claim contained the following:- "46. A right to equitable contribution depends upon the parties having shared obligations which may give rise to a coordinate liability. In the present case, the Plaintiffs' claim against the Cross-claimants is not in respect of the same obligations or liability as that upon which the Plaintiffs' claim is made in the 2003 Proceedings: see Burke v LFOT Pty Ltd (2002) 209 CLR 282 . 47. In any event, the simple answer to the equitable contribution claim is that the Cross-defendants are not liable in respect of the damage given the dismissal of the Plaintiffs' claims in the 2003 Proceedings and the release provided in clause 6 of the Deed of Settlement. 48. As to the dismissal of the earlier proceedings, the effect of it is that there is a res judicata that precludes any claim, including the equitable contribution claim, by the Plaintiffs against the Cross-defendants of that damage. 49. As to the release, the effect of it is that the Cross-defendants have no liability (coordinate or otherwise) to the Plaintiffs in respect of that damage. Prior to s.5 of the Act coming into effect, the common law position was that the release of one of several joint tort-feasors resulted in the release of all other joint tort-feasors. Thus, but for s.5 of the Act, at common law the Cross-defendants will be treated as being released from any contribution claim. In equity, the position of the Cross-defendants should be even stronger. This is because even if the Cross-defendants remain theoretically "liable", it is not a liability that could ever be enforced by the Plaintiffs and, therefore, it could not be equitable for the Cross-defendants to have to contribute to the Cross-claimants."

22 In support of these submissions, the Court was taken to passages in the judgments in Burke (including what was said by McHugh J).

23 In Burke, McHugh J expressed the principles of contribution as follows:- "[38] Both common law and equity give a person the right to obtain contribution to a payment made by that person in discharging "a common obligation" that is owed by that person and others. In determining whether there is "a common obligation", the traditional test is whether the liability of each party "is of the same nature and to the same extent". Early cases suggested that the common law right arose as a result of an implied contract between the parties. But whether that be right or not - and if it is, in many cases, it must be the result of a contract imputed to the parties - the equitable principles now cover the field. Those principles are based on the equitable doctrine of equality. When a person pays more than his or her share of a common monetary obligation, the payment pro tanto discharges the obligation of all who owe the common obligation. In accordance with the maxim that equality is equity, equity requires the common burden to be shared equally so that none of those owing the common obligation will pay more than his or her share of the burden. An order of contribution prevents the injustice that would otherwise flow to the plaintiff by the defendant being enriched at the plaintiff's expense in circumstances where they have a common obligation to meet the liability which the plaintiff has met or will have to meet." 24 The cases demonstrate that the doctrine of contribution has application in the case of sureties and additionally to other relationships (including co-insurers under contracts of indemnity insurance, co-contactors, parties liable to the holder of a bill of exchange, partners, joint tenants and tenants in common). 25 In Burke, McHugh J further said:- "[49] However, the circumstances in which a court will order contribution are not closed. In recent years, courts have held that a difference in the causes of action pursuant to which two parties are liable will not of itself preclude an order for contribution between them provided the liability of each "is of the same nature and to the same extent"." 26 There is no issue as to what must be demonstrated by a party seeking summary relief. The onus is borne by the applicant. The nature of that onus has been variously described. As the granting of summary relief deprives a party of going to trial, it must be clearly demonstrated that the claim is manifestly hopeless. 27 What was done by the parties to resolve the 2003 proceedings had its own unique circumstances. Primarily, the resolution between the parties was effected by the provisions of the Deed of Settlement. It contained, inter alia, the Mutual Release (Clause 6) and the Bar to Proceedings (Clause 11). It required the execution of the Short Minutes of Order, which implemented the two consent orders. The consent orders dealt with the payment of the sum of money and otherwise provided for the dismissal of the proceedings. The Cox parties were required to consent to a dismissal in those terms and did so. 28 What was intended by this documentation gives rise to questions of construction. It seems to me that this is an exercise best done in the context of a trial when the Court has before it all relevant material. 29 On one view, the Short Minutes of Order may be seen as bringing about an order for payment of money. Also, on one view, the dismissal may be seen as not having been intended to be a bar to the commencement of further proceedings between the parties. In the circumstances of this case, there is no need to further pursue the matters of construction. 30 Leaving aside those matters, written submissions relied on by the cross-claimants posed the following:- "6. ….The central question is whether it is arguable that the cross defendants are tortfeasors who would if sued have been liable for the losses claimed by the plaintiffs in the proceedings notwithstanding the terms of the settlement they reached with the plaintiffs." 31 In addressing this question, the parties placed a focus on the effect of the consent dismissal order in the circumstances of this case. The cross-claimants contended that it did not have the effect of a final judgment in the sense required by the authorities (see James Hardie). 32 In CSR Limited, the following was said:- "13 In my opinion, the effect of the decision in James Hardie is not that any dismissal of proceedings in favour of the person against whom contribution is sought is sufficient to prevent that person being sued under the second alternative in s5(1)(c): what is required for the result is a judgment in favour of that person which finally determines the issues so as to give rise to res judicata and issue estoppel. A consent judgment as dealt with in James Hardie is such a decision." 33 In addressing the question, regard also must be had to the provisions of s91 of the Civil Procedure Act 2005 (NSW) (which deals with the effect of dismissal of proceedings). 34 In this case, there is no entry of judgment in favour of the Bourke parties which finally determines the issues so as to give rise to res judicata and issue estoppel. 35 In my view, it has not been clearly demonstrated that what was done in the 2003 proceedings brought about a final judgment in the sense contemplated by the authorities. I accept the submission made on behalf of the cross-claimants that it is arguable that the second limb of (c) of s5(1) has application. 36 I now turn to the question of the Mutual Release. Whilst it has width of language, the Mutual Release is restricted in its operation to parties thereto and to the matters enumerated therein. 37 Again, what was intended by the Deed of Settlement gives rise to questions of construction. As earlier said, it seems to me that this is an exercise best done in the context of a trial when the Court has before it all relevant material. 38 I consider that there are real issues concerning whether or not the cross-parties have received full satisfaction and whether or not the Deed of Settlement was intended to release all tortfeasors. I do not consider that Babcock and Baxter provide the support contended for by the cross-defendants. 39 In my view, it has not been clearly demonstrated that the Mutual Release was intended to exclude the present litigation. 40 There remains the matter of the viability of the claim for equitable contribution which is made against the two parties. 41 The primary question to be answered is whether the respective liabilities are of the same nature and to the same extent. Again, I have come to the view that the cross-defendants have not clearly demonstrated that it is unarguable that they are of the same nature and to the same extent. 42 Whether or not this is the situation is a matter best dealt with at the trial. It will involve the making of findings by the trial Judge on the evidence placed before the Court. 43 Other submissions have been made by the cross-defendants, which look again to the settlement documentation. These submissions are not supported by authority. In my view, they are also matters that should be left for determination at a trial. 44 Accordingly, I am also of the view that the cross-defendants have failed to make out a clear case for the dismissal of the claims for equitable contribution. 45 It follows that, I am not satisfied that the cross-defendants have discharged the requisite onus. In my view, this is not one of those clear cases that justifies the granting of summary relief. 46 Before making final orders, I will digress to mention one other matter. As earlier mentioned, this application for summary dismissal was brought subsequent to the filing of a defence. Whilst Part 13 of the Uniform Civil Procedure Rules 2005 (NSW) imposes no temporal restriction on the bringing of an application for summary dismissal, it seems to me that the appropriate time for the bringing of such an application is prior to the filing of a defence (and in so doing, may avoid the expense of a defence). I consider that any application should be made expeditiously. The power to grant summary dismissal is discretionary. In the circumstances of a particular case, the timing of the bringing of such an application may be a relevant discretionary consideration. As this matter has not been the subject of argument, I take it no further in this case. 47 The Notice of Motion is dismissed. The cross-defendants are to pay the costs of the application for summary relief. The exhibits may be returned. **********

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