Prout v FC Capital Holdings Pty Ltd - [2024] NSWSC 1518 - NSWSC 2024 case summary — Zoe

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Prout v FC Capital Holdings Pty Ltd

[2024] NSWSC 1518

Supreme Court of NSW|2024-11-26|Before: Stevenson J, The J

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At a glance

Source facts

Court

Supreme Court of NSW

Decision date

2024-11-26

Before

Stevenson J, The J

Catchwords

[2009] UKHL 38 Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337
[1982] HCA 24 Ecosse Property Holdings Pty Ltd v Gee Dee Nominees Pty Ltd (2017) 261 CLR 544
[2017] HCA 12 Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640 at 656
[2014] HCA 7 Miles v Luneburger Franchising Pty Ltd [2021] NSWCA 248 Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104

Source

Original judgment source is linked above.

Catchwords

[2009] UKHL 38 Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337[1982] HCA 24 Ecosse Property Holdings Pty Ltd v Gee Dee Nominees Pty Ltd (2017) 261 CLR 544[2017] HCA 12 Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640 at 656[2014] HCA 7 Miles v Luneburger Franchising Pty Ltd [2021] NSWCA 248 Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104[2015] HCA 37 QBT Pty Limited v Wilson [2024] NSWCA 114 Reardon Smith Line Ltd v Hansen-TangenHansen-Tangen v Sanko Steamship Co [1976] 1 WLR 989[1976] 3 All ER 570 Simic v New South Wales Land and Housing Corporation (2016) 260 CLR 85

Judgment (13 paragraphs)

[1]

Solicitors: Macpherson & Kelley Lawyers (Sydney) Pty Limited (Plaintiff) Allen Overy Shearman Sterling (Defendant) File Number(s): 2024/410887

[2]

EX TEMPORE JUDGMENT (REVISED)

On 19 July 2019, the plaintiff, Mr Bradley Prout, and the defendant, FC Capital Holdings Pty Limited ("Holdings") entered a "Deed of Indemnity, Insurance and Access" ("the Deed").
By the Deed, Holdings agreed to advance the defence costs of defending proceedings, defined in the Deed as "Relevant Proceedings", brought against Mr Prout because he is or was an officer of Holdings or of one of its subsidiaries including FC Securities Pty Limited ("Securities").
Mr Prout has been involved in two "Relevant Proceedings," one in this Court and one in the Federal Court of Australia. Mr Prout has incurred costs in the order of $44,000 in the proceedings in this Court, and costs in the order of $1.6 million in the proceedings in the Federal Court.
Mr Prout has made the following requests for payment: No. Email Dated Invoice Date Amount

18 August 2023     28 July 2023       $79,853.59

18 August 2023     28 July 2023       $16,142.42

18 August 2023     7 August 2023      $12,375.00

10 September 2023  31 August 2023     $1,150.05

10 September 2023  31 August 2023     $59,596.31

13 October 2023    29 September 2023  $2,285.45

13 October 2023    9 October 2023     $76,429.44

9 November 2023    31 October 2023    $2,948.42

9 November 2023    8 November 2023    $29,836.30

8 December 2023 30 November 2023 $146,833.81
8 December 2023 30 November 2023 $1,244.76
22 December 2023 21 December 2023 $60,442.18
9 February 2024 31 January 2023 $91,209.65
11 March 2024 29 February 2024 $103,554.50
11 March 2024 29 February 2024 $7,580.85
5 April 2024 28 March 2024 $100,594.96
10 May 2024 30 April 2024 $43,973.12
11 June 2024 31 May 2024 $122,343.74
10 July 2024 28 June 2024 $204.280,14
23 October 2024 5 July 2024 $11,979.00
16 August 2024 31 July 2024 $427.33
16 August 2024 31 July 2024 $223,917.14
16 September 2024 30 August 2024 $117.26
16 September 2024 30 August 2024 $190,714.88
11 October 2024 30 September 2024 $183,458.74 Total 1,773,289.04

[3]

Holdings has made the following payments: No. Date Amount Payee

8 December 2023   $53,088.01   Holdings

27 February 2024  $415,537.57  Securities

26 June 2024      $100,000.00  Securities

6 November 2024   $500,000.00  Holdings

Total $1,068,625.58

[6]

Principles

There was no dispute as to the relevant principles.
A court in interpreting a provision of a document has regard to its words, its context, and the purpose of the document as a whole. The leading modern statement on the importance of context and purpose is found in the reasons of French CJ, Nettle and Gordon JJ in Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd: [2] "The rights and liabilities of parties under a provision of a contract are determined objectively, [3] by reference to its text, context (the entire text of the contract as well as any contract, document or statutory provision referred to in the text of the contract) and purpose. [4] … Ordinarily, this process of construction is possible by reference to the contract alone. Indeed, if an expression in a contract is unambiguous or susceptible of only one meaning, evidence of surrounding circumstances (events, circumstances and things external to the contract) cannot be adduced to contradict its plain meaning. [5] However, sometimes, recourse to events, circumstances and things external to the contract is necessary."
The question is what a reasonable business person in the position of the parties would have understood the relevant terms to mean; an objective task involving identification of the imputed intention of the parties by reference to the contractual text, construed in the light of its context and purpose. [6]
Further, as has also been correctly stated: "… the only relevant meaning is that which the text conveys. This follows from the need to ascertain the intention expressed in the document. Although ... context and purpose are relevant, ultimately the court must attribute meaning to the words actually used." [7] (Emphasis in original.)
Reference was also made in submissions to cases dealing with what has been described as "rectification by construction". This is the process of construction where the Court has power to correct obvious mistakes in a contract where "something has gone wrong with the language", [8] and where "there is obviously an error in the parties' written contract", [9] and where the "literal meaning of [a clause] is absurd". [10]
That is not this case. There is no obvious error in the wording the parties have used in clause 2.3. There is perhaps some infelicity in the drafting of the Deed, but no obvious error of the kind referred to in those authorities. Those principles have no relevant application here.

[13]

Endnotes

At [11].
(2015) 256 CLR 104; [2015] HCA 37 at [46], [48]-[49].
Citing Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640 at 656; [2014] HCA 7 at [35] (French CJ, Hayne, Crennan and Kiefel JJ).
Citing Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337 at 350, 352 (Mason J); [1982] HCA 24; Reardon Smith Line Ltd v Hansen-Tangen; Hansen-Tangen v Sanko Steamship Co [1976] 1 WLR 989 at 995; [1976] 3 All ER 570 at 574 (Lord Wilberforce).
Citing Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (supra) at 352 (Mason J).
Miles v Luneburger Franchising Pty Ltd [2021] NSWCA 248 at [32] (Gleeson, Macfarlan JJA and Simpson AJA agreeing), citing Electricity Generation Corporation v Woodside Energy Ltd (supra) at [35] French CJ, Hayne, Crennan and Kiefel JJ); Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd supra) at [46]-[51], [108]-[109] (French CJ, Nettle and Gordon JJ); Victoria v Tatts Group Ltd [2016] HCA 5 at [51]-[75] (French CJ, Kiefel, Bell, Keane and Gordon JJ); Ecosse Property Holdings Pty Ltd v Gee Dee Nominees Pty Ltd (2017) 261 CLR 544; [2017] HCA 12 at [16] (Kiefel, Bell and Gordon JJ); Simic v New South Wales Land and Housing Corporation (2016) 260 CLR 85; [2016] HCA 47 at [18] (French CJ).
P Herzfeld and T Prince, Interpretation (3rd ed, 2024, Thomson Reuters) at [19.60].
Chartbook Limited v Persimmon Homes Limited [2009] AC 1101 at [25] (Hoffman LJ); [2009] UKHL 38.
QBT Pty Limited v Wilson [2024] NSWCA 114 at [71] (Leeming JA, Bell CJ and Ward P agreeing).
Ibid at [81].
Cf [C29] of the List Statement which shows that Mr Prout made a claim for costs he now accepts is "not related to Relevant Proceedings".
Adopting the language of Meagher and Kirk JJA in The J & P Marlow (No 2) Pty Ltd v Joseph Hayes & Andrew McCabe in their capacity as joint and several liquidators of Peak Invest Pty Ltd (in liq), Five Islands Invest Pty Ltd (in liq), Surry Hills Pub Invest Pty Ltd (in liquidation) and Four By Four Investments Pty Ltd (in liq) [2023] NSWCA 117 at [100].
As asserted in Holding's solicitor's letter of 3 September 2024.
Defending proceedings where there is a liability in respect of which the company is not permitted to provide an indemnity; for example where the officer has a liability to the company itself: see s 199A(2)(a). 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: 29 November 2024

Prout v FC Capital Holdings Pty Ltd

At a glance

Court

Decision date

Before

Catchwords

Source

Catchwords

Judgment (13 paragraphs)

Parties

Legislation Cited (1)

Cases Cited (14)