Aldous v State of New South Wales

[2021] NSWSC 668

Supreme Court

New South Wales

Medium Neutral Citation:

Aldous v State of New South Wales [2021] NSWSC 668

Hearing dates:

1 April 2021

Date of orders:

9 June 2021

Decision date:

09 June 2021

Jurisdiction:

Common Law

Before:

Harrison AsJ

The Court orders that:

Decision:

(1) The plaintiff’s statement of claim filed 21 July 2020 is struck out.

(2) The plaintiff is to pay the defendant’s costs on an ordinary basis.

Catchwords:

CIVIL PROCEDURE – Strike out statement of claim – interpretation of deed – role of recitals – res judicata – issue estoppel

Legislation Cited:

Civil Procedure Act 2005 (NSW), s 67

Uniform Civil Procedure Rules 2005 (NSW), rr 13.4 14.28, 42.21

Cases Cited:

BauskiasvLiew [2013] NSWCA 297

Brimsonv Rocla ConcretePipes Ltd [1982] 2 NSWLR 937

Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337; [1982] HCA 24

Grant v John Grant & Sons Pty Limited (1954) 91 CLR 112; 28 ALJR 217; [1954] HCA 23

Muschinski v Dodds (1985) 160 CLR 583 at 619; [1985] HCA 78

Tomlinson v Ramsey Food Processing Pty Ltd (2015) 256 CLR 507; (2015) 323 ALR 1; [2015] HCA 28

Texts Cited:

Nicholas Seddon, Seddon On Deeds (2015, The Federation Press)

Category:

Procedural rulings

Parties:

Adrian Aldous (Plaintiff)
State of New South Wales (Defendant)

Representation:

Counsel:
MJ Morris SC with TM Ower (Plaintiff)
MJ Gollan (Defendant)

Solicitors:
Harris Wheeler Lawyers (Plaintiff)
de Mestre Solicitors (Defendant)

File Number(s):

2020/213237

Publication restriction:

Nil

Judgment

1. HER HONOUR: The State of New South Wales seeks to strike out the plaintiff’s statement of claim.

2. By notice of motion filed 22 October 2020, the defendant seeks orders that:

1. The matter be struck out pursuant to Rule 14.28 of the Uniform Civil Procedure Rules, 2005 (NSW) (“UCPR”);

2. Further or in the alternative, there be a stay of the proceedings pending payment of previous costs orders pursuant to s 67 of the Civil Procedure Act, 2005 (NSW);

3. Further or in the alternate, there be an order that the defendant pay into this Court the amount of $50,000 as security for the defendant’s costs pursuant to UCPR 42.21.

3. At the hearing, Mr Aldous did not press the orders sought in paragraph (2) and (3) of the notice of motion, that leaves only paragraph (1) of this motion for determination.

4. The plaintiff is Adrian Aldous. The defendant is the State of New South Wales. For convenience and ease of reference, I shall refer to the plaintiff as Mr Aldous and the defendant as the State. Mr Aldous relied upon his affidavit dated 12 November 2020. The defendant relied upon the affidavit of Yatendra Singh solicitor dated 22 October 2020. The parties relied upon a joint court book.

Background

5. These proceedings were previously prosecuted and determined in District Court proceedings number 2010/00099473: see State of New South Wales v Adrian Aldous (District Court (NSW), 27 November 2017, unrep (Aldous [2017]); Court of Appeal proceedings number 2013/00199575: see Aldous v State of New South Wales [2014] NSWCA 280 (Aldous [2014]; and Court of Appeal proceedings number 2017/00384434: see Aldous v State of New South Wales [2018] NSWCA 261(Aldous [2018]).

6. I shall refer to these proceedings later in this judgment.

The current statement of claim

7. On the 21 July 2020 by statement of claim, Mr Aldous alleged that the State had breached the terms of the deed executed between the parties on 1 June 2009 (the June 2009 deed).

8. The particulars of this alleged breach are as follows:

1. Making demands upon Mr Aldous after 1 June 2009 to repay the money;

2. Issuing proceedings in the District Court for the recovery of money;

3. Prosecuting proceedings against Mr Aldous in the District Court and Court of Appeal; and

4. Enforcing judgment obtained in the District Court and commencing debt recovery proceedings.

9. Further and in the alternative, the State owed Mr Aldous a duty of care to comply with its obligations under the June 2009 deed in circumstances where it knew Mr Aldous lacked legal expertise, was psychologically vulnerable and had suffered personal injury in its employ; and that the State further breached its duty of care by failing to disclose the terms of the June 2009 deed to the District Court and the Court of Appeal.

10. Mr Aldous claims to have suffered the following loss and damage as a consequence of the State’s breach of the June 2009 deed and breaches of duty: payments made by Mr Aldous to the State as a consequence of the State’s demands and entry of judgment in the District Court; consequential distress and anxiety.

Defence

11. By defence filed 4 September 2020, the State alleges alternate facts and pleads that:

1. The June 2009 deed related to a claim of work injury damages. The subject of the judgment in the District Court and Court of Appeal was not a claim for personal injury sustained in the course of employment;

2. Proceedings brought in the District Court and Court of Appeal were not with respect to a claim for damages;

3. Mr Aldous entered into a deed dated 25 July 2007 (the July 2007 deed) that in the event of a payment for total and permanent disability benefit he would be required to repay the partial permanent disability benefit received;

4. By reason of the award, under which Mr Aldous was entitled to the benefits previously received he was not entitled to retain both partial and permanent disability and total and permanent disability benefits;

5. Mr Aldous is estopped and remains estopped by the July 2007 deed with the amounts claimed in the District Court proceedings;

6. By reason of the previous proceedings the issues that arise on these pleadings, should the June 2009 deed be found to apply, is the subject of res judicata; and

7. The State denies Mr Aldous’ entitlement to claim the relief sought.

Reply

12. By reply dated 25 September 2020, Mr Aldous pleads in answer to the State’s allegations of estoppel and res judicata, that the issue of proceedings and/or the failure of the State to disclose the terms of the June 2009 deed to the District Court and Court of Appeal in those proceedings was a fundamental flaw that vitiates the applicability of estoppel and res judicata.

13. The June 2009 deed was expressed to be and acted as a release by the State of its claims against Mr Aldous. Accordingly, Mr Aldous did not owe any debt to the State at the time of demand or at the time of issue of proceedings and there was no cause of action upon which it was entitled to issue proceedings for recovery of any moneys against Mr Aldous, or upon which to obtain judgment against him.

The law – strike out pleadings

14. UCPR 14.28 enunciates grounds, upon which a defective pleading may be struck out. UCPR 13.4 focuses on the weakness of a party’s case rather than the defects of a pleading: Brimson v Rocla Concrete Pipes Ltd [1982] 2 NSWLR 937.

Res Judicata and issue estoppel

15. The State submitted that these current proceedings are the subject of res judicata and/or issue estoppel.

16. So far as res judicata and issue estoppel are concerned, in Tomlinson v Ramsey Food Processing Pty Ltd (2015) 256 CLR 507; (2015) 323 ALR 1; [2015] HCA 28 (“Tomlinson”) (per French CJ, Bell, Gageler and Keane JJ) at [20]-[26] the High Court explained res judicata, issue estoppel and Anshun estoppel as follows:

1. The High Court at [20], stated that a final judgment “quells” the controversy between the persons involved, with the rights and obligations in controversy ceasing to have an independent existence and merging in the final judgment, equating to a “res judicata” in the strict sense;

2. The High Court at [22], explained that three forms of estoppel have been recognised as having the potential to result from the rendering of a final judgment in adversarial proceedings, including:

1. “cause of action estoppel”, which operates to preclude “assertion in a subsequent proceeding of a claim to a right or obligation which was asserted in the proceedings and which was determined by the judgment”;

2. “issue estoppel”, which operates to preclude the raising in a subsequent proceeding of an ultimate issue of fact or law which was necessarily resolved as a step in reaching the determination made in the judgment. The High Court said that the classic expression of the primary consequence of its operation was that a “judicial determination directly involving an issue of fact or of law disposes once for all of the issue, so that it cannot afterwards be raised between the same parties or their privies”; and

3. “Anshun estoppel”, which operates to preclude the assertion of a claim, or the raising of an issue of fact or law, if that claim or issue was so connected with the subject matter of the first proceeding as to have made it unreasonable in the context of that first proceeding for the claim not to have been made or the issue not to have been raised in that proceeding.

17. In Tomlinson at [25]-[26], the plurality explained the concept of abuse of process as follows.

18. Abuse of process, which may be invoked in areas in which estoppels also apply, is inherently broader and more flexible than estoppel. Although insusceptible of a formulation which comprises closed categories, abuse of process is capable of application in any circumstances in which the use of a court’s procedures would be unjustifiably oppressive to a party or would bring the administration of justice into disrepute. It can for that reason be available to relieve against injustice to a party or impairment to the system of administration of justice which might otherwise be occasioned in circumstances where a party to a subsequent proceeding is not bound by an estoppel.

19. Accordingly, it has been recognised that making a claim or raising an issue which was made or raised and determined in an earlier proceeding, or which ought reasonably to have been made or raised for determination in that earlier proceeding, can constitute an abuse of process even where the earlier proceeding might not have given rise to an estoppel. Similarly, it has been recognised that making such a claim or raising such an issue can constitute an abuse of process where the party seeking to make the claim or to raise the issue in the later proceeding was neither a party to that earlier proceeding, nor the privy of a party to that earlier proceeding, and therefore could not be precluded by an estoppel.

The State’s submissions

20. Mr Aldous pleads that the June 2009 deed entered into between himself and his employer, specifically cl 20, entitles him to avoid the judgment debt and costs in consequence of a judgment entered by the District Court in Aldous [2017]. Those proceedings were appealed to the Court of Appeal which entered judgment in favour of the State (the judgment creditor) on 9 November 2018.

21. The debt, in reliance upon the June 2009 deed, was the subject of previous District Court and Court of Appeal judgments.

22. The parties to the District Court and Court of Appeal proceedings were those that are now named as the parties in these present proceedings. At no time in those previous proceedings did Mr Aldous raise the terms of the June 2009 deed now relied upon.

23. The subject debt was acknowledged by the State as payable in circumstances where Mr Aldous became entitled to further amounts under cll 7 and 8 of the Crown Employees (Police Officers Death and Disability) Award 2005 (NSW) (the award).

24. Mr Aldous admits that on 23 October 2008 he received the sum of $301,985.97 from Metlife Insurance Limited; and on 20 May 2009 he received a further sum of $585,557.95 (Aff, [17] and [23]).

25. In short compass, Mr Aldous was entitled to a benefit under cl 9 of the June 2009 deed of the award for “partial and permanent disability”. In the event that Mr Aldous became entitled to “total and permanent disablement benefits” the lesser amount paid for partial and permanent disability became repayable, therefore, Mr Aldous could not retain the benefit of both payments and he was only entitled to retain the greater amount, being the amount paid for total and permanent disablement. An acknowledgment of the operation of the award reflecting that conclusion was the subject of the July 2007 deed and undertaking to be paid, signed by Mr Aldous on 25 July 2007.

26. Mr Aldous’ statement of claim proceeds on the assumption that the June 2009 deed, in respect of personal injury damages, captures the subject matter of the payments for total and permanent disablement under the award. The payments under the award are neither in respect of personal injury nor damages. They are award entitlements, payable upon meeting the conditions precedent with respect to disability but otherwise have no connection to a claim for personal injury damages.

27. Simply put, the subject matter of the debt and costs sought to be avoided by Mr Aldous’ present cause of action are not subjects captured by the June 2009 deed. Moreover, the subject debt has already been exhaustively litigated.

28. Mr Aldous is estopped by the June 2009 deed from denying the debt and estopped by the judgment and/or res judicata, being those of the District Court and the Court of Appeal.

Mr Aldous’ submissions

29. The State is a model litigant. It has advanced no submission or material upon which the Court can be satisfied that this claim should be summarily dismissed. Mr Aldous submitted that these proceedings should be permitted to proceed to a full hearing on the facts.

30. The injuries and disabilities sustained by Mr Aldous as part of his service with NSW Police were psychiatric in nature. It is these injuries and disabilities that form the basis of the claim, firstly, negligence; secondly, for the permanent and partial disability benefit; and finally, for the total and permanent disability benefit.

31. To the extent Anshun estoppel is a potential defence, the Court has a broad discretion but needs to conclude it was unreasonable for it to not have been raised in the earlier proceedings. As such, it is fact specific and not an automatic preclusion. There needs to be an assessment of the circumstances to assess reasonableness.

32. Mr Aldous submitted that he is entitled to argue, in circumstances where he was not legally represented and where he was suffering from psychiatric disability, that the defences of estoppel or election do not apply because it was not unreasonable for him not to raise it in the permanent and partial disability recovery. Further, if the June 2009 deed provided a release, and where it was at all times in the possession of the State, then as a model litigant, it had a positive obligation to consider the matter and also draw the terms of the June 2009 deed to the attention of the District Court and Court of Appeal in the permanent and partial disability recovery.

The two deeds

33. It is necessary to briefly refer to the two deeds.

The July 2007 deed

34. The July 2007 deed is between Adrian Aldous (the recipient) and the Commissioner of Police for and on behalf of the “New South Wales Police Force”.

35. This DEED – UNDERTAKING TO REPAY, dated 25 July 2007 (July 2017 deed) relevantly reads as follows:

“RECITALS

A.   The Recipient has become entitled to a benefit under clause 9 the Crown Employees Police Officers Death and Disability) Award 2005 (“the Award”) for partial and permanent disability.

B.   Clause 10.6 of the Award provides that members can only receive one benefit either a “partial and permanent disability benefit” or “total and permanent disablement benefit” Clauses 7 and 8 of the Award provide for entitlements to a lump sum payment for either an “on duty” or an “off duty”, death or total and permanent disablement, respectively

C.   The Parties have agreed, in accordance with the terms of this Deed, that the Recipient will repay NSW Police Force all moneys paid to him/her by NSW Police Force under the Award in the event the Recipient becomes entitled to a benefit under clause 7 or clause 8 of the Award and receives payment for that benefit.

IT IS AGREED AS FOLLOWS:

1.   The Recipient … :

(a) hereby irrevocably authorises Metlife Insurance Limited to deduct NSW Police Force, or

(b) in the event that such deduction is not remitted to NSW Police Force, agrees hereby undertakes to repay to NSW Police Force, an amount equal to the amount received by the Recipient pursuant to clause 9 of the Award, in the event the Recipient of his or her estate becomes entitled, at some future time, to receive benefits under clause 7 or clause 8 of the Award (for an “off duty” or an “on duty” death or total and permanent disablement).

2.   The Recipient (including his/her estate or lawful assigns) agrees to and hereby undertakes to pay the amount referred to in clause 1(b) above to NSW Police within 14 days from receipt of benefits paid under clause 7 or clause 8 of the Award.

3.   The Recipient, both personally and on behalf of his or her estate and lawful assigns, hereby:

(a)   undertakes, and

(b)   irrevocably authorises Metlife Insurance Limited,

to notify NSW Police Force that the Recipient (or his or her estate) has subsequently became eligible to receive or has received benefits pursuant to clause 7 or clause 8 of the Award (for an “off duty” or an “on duty” death or total and permanent disablement), - in the case of the Recipient ( including his/her estate or lawful assigns) with 14 days becoming award of such eligibility, - in the case of Metlife Insurance Limited as soon as practicable

And that such notification is to include information as to any approval or authorisation given in relation to payment pursuant to clause 7 or clause 8 of the Award, including:

1. the amount to be or which has been paid and

2. the date on which the amount is to be or has been paid to the Recipient (or his/her estate)

And to that end, and also to facilitate deduction and remittal under clause 1(a) above, the Recipient hereby irrevocably consents and authorises and permits NSW Police provide information to Metlife Insurance Limited in respect of the receipt, by the Recipient of the amounts, paid pursuant to clause 9 of the Award,

…”

36. The July 2007 deed was duly signed and executed by the both parties.

The June 2009 deed

37. The June 2009 deed is between NSW Police Force (the employer) and Adrian Aldous (the employee). It relevantly reads:

“Recitals

…

8   The employer and the employee have agreed to resolve these proceedings and all other claims or possible claims for damages by or on behalf of the employee against the employer and its officers, employees, successors, heirs and assigns on the basis set out in this Deed.

…

Now this deed witnesses:

13 In full and final satisfaction of the injury and/or injuries as set out in this Deed of Release the employer agrees to pay to the employee an amount of $540,000 inclusive of costs under schedule 7 of the Workers Compensation Regulation 2003 and clear of workers compensation payments made to date.

…

15   In consideration of the payment referred to in clause 13 the employee releases and will release the employer and each of its related bodies corporate, officers, employees, successors, heirs and assigns from all claims and liabilities of any nature (including any costs) connected with or incidental to:

(a)   the proceedings and any possible proceedings;

(b)   the circumstances or allegations referred to in the proceedings and any possible proceedings or upon which the proceedings and any possible proceedings were, are or could be based;

(c)   the employment of the employee and any matter, act, or thing occurring during the course of that employment, including but not limited to the circumstances of the termination/resignation of that employment;

…

19   This Deed contains the entire agreement between the parties with respect to its subject matter.

20   The parties acknowledge that they enter into this Deed fully and voluntarily on their own information and investigation and that it is their intention to and they do fully, finally, absolutely, and forever settle according to the provisions of this Deed any and all liabilities, claims, disputes, and differences which now exist or may exist or have ever existed between them relating in any way to the matters the subject of this Deed.

…

EXECUTED by the parties as a Deed.”

Prior proceedings

The District Court proceedings

38. On 7 April 2010, the State commenced District Court proceedings against Mr Aldous in the District Court.

39. On 6 February 2013, Delany DCJ entered summary judgment against Mr Aldous. On 13 August 2014, the Court of Appeal set aside that judgment (Aldous [2014]). The matter was remitted to the District Court for hearing. On 24 November 2017, it was heard by Balla DCJ. On 4 December 2017, in Aldous [2017], Balla DCJ (the primary judge) entered verdict in favour of the State against Mr Aldous in the sum of $276,957.88 together with interest of $186,791.78 totalling $463,749.66; and verdict for the cross defendant against the cross claimant. Mr Aldous appealed this decision to the Court of Appeal: Aldous [2018].

The hearing before the Court of Appeal – Aldous [2018]

40. On 29 August 2018, Mr Aldous appeared without legal representation. Mr R Perla appeared as amicus curiae on his behalf. Mr Aldous outlined the history of his service with the NSW Police to the Court. He then explained at T4:

“…, what happened was an obvious occurrence from the police force’s mishandling of me, especially given that I’d sued them for negligence, and part of the triggers are that you try to avoid the person that’s giving you the triggers. Now, on 1 June 2009 mediation ended and the police accepted that although they probably didn’t say that they were negligent they gave me 450 grand. That 450,00 it was my belief at that time, I didn’t know that I was holding an extra $300,000, I got that cheque, I put it in the bank, and at that point in time I accepted $450,000 on the belief that, as I say, I had 23 years of policing left over and I was on nearly $100,000 a year. Now on that day there was no way in the world I would have accepted $450,000 in my hand if I knew that I had to give them back $300,000. They had a solicitor representing them, the police service, I had a solicitor there, nobody said anything to me that I owed them $300,000.

41. In these current proceedings before me, Mr Aldous deposed as to the hearing in the Court of Appeal at [62]-[63]:

“62   On 29 August 2018, I represented myself in the Supreme Court of New South Wales, Court of Appeal. I was grateful the judges let me speak to them but I did not know how to put my arguments in a proper or cohesive way. I tried to tell them about the 1 June 2009 mediation and settlement but I did not understand the importance of the deed even though I was asked questions of it. Again, I did not give the Court a copy of the deed from 1 June 2009 as I had been told it was confidential and I was not allowed to show it to anybody. I was not aware the deed from 1 June 2009 was relevant and had I so realised I would have given it to the Court of Appeal. At that hearing, counsel for the New South Wales Police Force was asked questions about the 1 June 2009 settlement but did not raise the 1 June 2009 deed either or seek to provide a copy of it for consideration.

63   As at August 2018, I was medicated and suffering from anxiety, jitters, uncontrollable shaking, nervousness, depression, flashbacks, lack of sleep, irritability, and an inability to concentrate properly.”

42. In Aldous [2018], Payne JA (with Basten and Mcfarlan JJA agreeing) set out the relevant facts. They can be summarised as follows.

43. On 14 May 2007, Dr McClure, a psychiatrist, diagnosed Mr Aldous as suffering from an adjustment disorder with mixed anxiety and depressed mood and a major depressive episode. In July 2007, Mr Aldous’ employment with the NSW Police ceased.

44. Under the Crown Employees (Police Officers Death and Disability) Award 2005 (the award), a police officer became entitled to be paid a partial and permanent disability benefit from the NSW Police if certain conditions were met and to be paid a total and permanent disablement benefit from Metlife Insurance Limited (“Metlife”) through First State Super, if conditions were met for the police officer to found to be entitled to a total and permanent disability benefit. Clause 10.6 of the award, however, provided that a police officer could only receive one benefit, either a partial and permanent disability benefit or a total and permanent disablement benefit. Clause 10.6 of the award also required police officers, prior to receipt of any benefit, to enter into a deed of repayment, in terms agreed by the parties (emphasis added).

45. Mr Aldous made a claim under the award for a partial and permanent disability benefit arising from his psychiatric injury. The primary judge characterised Mr Aldous’ injury as Post Traumatic Stress Disorder. On 25 July 2007, Mr Aldous and the Commissioner of Police (for and on behalf of the NSW Police) entered into the July 2007 deed (some provisions are reproduced earlier in this judgment). The July 2007 deed provided that Mr Aldous was entitled to a partial and permanent disability benefit under cl 9 of the award. The July 2007 deed recited that cl 10.6 of the award provided that members could only receive one benefit, either a partial and permanent disability benefit or a total and permanent disablement benefit.

46. The July 2007 deed recorded the agreement of both parties that Mr Aldous would repay the NSW Police all moneys paid to him for a partial and permanent disability benefit if he became entitled to either a death benefit or a total and permanent disablement benefit under cll 7 and 8 of the award. The July 2007 deed provided that if Mr Aldous became eligible for either a cl 7 or cl 8 benefit, he would either remit the amount he had received as a partial and permanent disability benefit to the NSW Police within 14 days, or Metlife would be irrevocably authorised to deduct and pay directly to the NSW Police the total amount paid as the partial and permanent disability benefit.

47. On 23 October 2008, a partial and permanent disability benefit in the sum of $434,957.88 was paid to Mr Aldous. Mr Aldous received $301,985.97. The primary judge found that the difference between the two amounts was tax levied as an “employment termination payment” on the benefit which was paid by the NSW Police to the Australian Taxation Office. No challenge was made to that finding.

48. On 20 May 2009, a total and permanent disablement benefit in the sum of $633,488 was paid to Mr Aldous. Mr Aldous received $582,557.95. The primary judge found that the difference between the amounts of $633,488 and $582,557.95 was tax levied as an “employment termination payment” on the benefit which was paid by the NSW Police to the Australian Taxation Office. No challenge was made to that finding.”

The grounds of appeal – Court of Appeal

49. The grounds of appeal were firstly, procedural fairness in the District Court; secondly and thirdly, misapplication of legal principles; fourthly, Mr Aldous’ health; and finally, breach of fiduciary duty of care. I do not propose to canvass all of Mr Aldous’ submissions under each ground of appeal but refer only to the salient ones that relate to whether these current proceedings are subject to res judicata or issue estoppel.

Ground 1 - Procedural fairness

50. Mr Aldous’ submissions generally addressed an asserted denial of his request in his written submissions for leave to amend his pleadings; and the fact that he was not allowed to raise as an issue an alleged change to the form of the repayment used by the NSW Police.

51. As to the first matter, Mr Aldous’ request for leave to amend his pleadings was made in his final written submissions. The application was to the effect that if the primary judge took the view that Mr Aldous’ pleadings were deficient in some (unidentified) way, he should be given leave to amend “to accommodate the real evidence”. No form of any amended pleading was ever proposed to the primary judge.

52. The failure of the primary judge to grant leave to amend at large during or at the conclusion of the hearing was not an error and did not give rise to any procedural unfairness. A litigant has no right to an order granting leave to amend a pleading at large, without identifying the content of the proposed amendment.

53. For the purposes of the appeal Mr Aldous prepared a document entitled “Amended Statement of Cross Claim”. That document did not establish that Mr Aldous was denied procedural fairness. No intelligible cause of action beyond the issues identified by the primary judge was pleaded in that document.

54. There was no denial of procedural fairness in the primary judge failing to advise Mr Aldous during the hearing about the best way in which he might amend his pleadings. The duty of a trial judge to assist an unrepresented litigant was explained by Gleeson JA (with whom Beazley P and Barrett JA agreed) in Bauskias v Liew [2013] NSWCA 297.

Grounds 2 and 3 Misapplication of legal principles

55. The Court of Appeal accepted Mr Aldous’ submission that he had never asserted that he could or should keep both payments. Mr Aldous accepted that at the time he signed the July 2007 deed he understood that the partial and permanent disability benefit amount “would have to be deducted or repaid” if he subsequently became entitled to a total and permanent disablement benefit.

56. Mr Aldous’ compliant, expressed in various ways, is that he assumed the NSW Police had ensured that Metlife had deducted the partial and permanent disability benefit amount from the total and permanent disablement benefit amount he was paid. The primary judge assumed in Mr Aldous’ favour, that at the time he received the total and permanent disablement benefit amount he assumed that the earlier partial and permanent disability benefit amount had already been deducted from the total amount he received. That conclusion, however, did not establish that the conduct of the NSW Police was unconscionable.

57. The primary judge was correct to conclude that there was no relevant unfairness or unconscientious taking advantage of Mr Aldous in the conduct of the NSW Police in requiring repayment of a benefit to which Mr Aldous had no entitlement. There was no injustice in the circumstances relating to the July 2007 deed at the time it was made, given that it required repayment of the partial and permanent disability benefit amount only if Mr Aldous received the larger total and permanent disablement benefit amount. There was no injustice in the circumstances relating to the attempts to recover the payment made to Mr Aldous to which he was not entitled.

58. The email correspondence demonstrated that Mr Aldous was not operating under some special disability or disadvantage at the time the total and permanent disability benefit amount was paid. Further, there was no evidence that the NSW Police knew of and unconscientiously took advantage of any disability or disadvantage in a way that affected the ability of Mr Aldous to make a rational judgment about his own best interests. Absent such proof, the Court of Appeal found unconscionability could not be made out.

Ground 4 – Breach of fiduciary duty

59. As the amicus submitted, an alleged breach of a duty of care or any duty alleged to be owed would have to accommodate the provisions of the award and the contractual relationship between the parties established by the July 2007 deed. The July 2007 deed simply reflected the terms of Mr Aldous’ entitlements under the award. The July 2007 deed provided that if Mr Aldous became eligible for either a clause 7 or 8 benefit, he would either remit the amount he had received as a partial and permanent disability benefit to the NSW Police within 14 days, or Metlife would be irrevocably authorised to deduct and pay directly to the NSW Police the total amount paid as the partial and permanent disability benefit. Metlife was permitted but not required to deduct and pay directly to the NSW Police the total amount paid as the partial and permanent disability benefit.

60. A duty upon the NSW Police to ensure that Metlife deducted the amount of the partial and permanent disability benefit before paying the total and permanent disability benefit amount to Mr Aldous would be inconsistent with the parties’ obligations under the July 2007 deed. Even assuming that the primary judge should have addressed the asserted duty of care in greater detail, her Honour correctly concluded that the NSW Police did not owe Mr Aldous a duty of care which was inconsistent with the contractual relationship between the parties established by the July 2007 deed.

61. Further, the email exchanges demonstrated that shortly after the payment of the total and permanent disablement benefit amount, Mr Aldous was informed by the NSW Police that he was required to repay the partial and permanent disability benefit amount. Mr Aldous understood that he was required to do so, He agreed to make the repayment, he had sufficient assets to make the repayment and he informed the NSW Police of all these matters. The Court of Appeal held that no breach of any asserted duty of care or any causal link between any alleged breach and any loss and damage allegedly suffered by Mr Aldous was shown.

Ground 5 – Mr Aldous’ health

62. The primary judge was correct to find that Mr Aldous was capable of understanding the general nature of what he was doing at the time that he signed the July 2007 deed. The primary judgeidentified the relevant legal principles, which were not challenged on the appeal. Whether Mr Aldous had the capacity to understand the general nature of the July 2007 deed is to be assessed against the particular transaction.

63. The essential purpose of the July 2007 deed was to set out the consequences of Mr Aldous receiving both a partial and permanent disability benefit and a total and permanent disablement benefit. Mr Aldous’ evidence was that he understood at the time of signing the July 2007 deed (and now) that if he received a total and permanent disability benefit, he would be obliged to repay to the NSW Police the partial and permanent disability benefit.

64. Dr Peter Klug gave evidence that Mr Aldous’ psychiatric problems in 2007 “had the capacity to affect [Mr Aldous’] cognition and understanding of the [deed] at the time”, the primary judge correctly recorded that Dr Klug made concessions in cross examination including that he would not expect Mr Aldous to have had difficulty generally understanding the July 2007 deed.

65. Finally, the primary judge did not find, as was submitted, that Mr Aldous was advised about the language of the July 2007 deed. The primary judge concluded, as she was entitled to on the evidence, that during June and July 2007, at the time of signing the July 2007 deed, Mr Aldous had engaged two firms of solicitors, Turner Freeman in relation to his Workers Compensation Act 1987 (NSW) claim and Oates & Smith in relation to his common law claim. The primary judge found that there was no contemporaneous evidence of any concern by these solicitors about Mr Aldous’ capacity to comprehend documents sent to him on his behalf in June and July 2007, nor was it mentioned in the correspondence they sent during those months.

66. As all the grounds of appeal were unsuccessful, the appeal was dismissed.

Mr Aldous’ further submissions in these current proceedings

67. Senior counsel for Mr Aldous submitted that at the hearing before the Court of Appeal, Mr Aldous did not raise the June 2009 deed, but it was “clearly an issue which was bubbling away”. Senior counsel submitted that if it is accepted that the June 2009 deed was in discussion with the Court of Appeal then Mr Aldous is entitled to advance the submission to this court that he had thought by settling his common law claim he would be entitled to retain the $450,000 and the $300,000 for which he was being sued (T15-T16). Therefore, Mr Aldous is entitled to argue that given the State’s position, the nature of the June 2009 deed and the State’s position as a model litigant, when the issue came up about the existence of the June 2009 deed it ought to have been brought to the Court of Appeal’s attention.

Construction of the release

68. Mr Aldous submitted that the issues of the construction of any release and any defence of estoppel need to be addressed within a factual context. As such, it is inappropriate to strike out the claim on a summary basis without the opportunity for both parties to advance that factual background to the Court for deliberation.

69. With respect to the June 2009 deed, the State’s reference and reliance to cl 8 is a reference to a recital which is not an operative provision. The operative provisions are to be found at cl 20. Clause 20, properly characterised, is a release and is broader than the recitals. It captures any kind of dispute that might exist between the parties. Mr Aldous is entitled to advance an argument that in all of the circumstances, the recitals do not constrain the provisions of cl 20.

70. Clause 22 provides that the June 2009 deed may be pleaded in bar. However, Aldous is entitled to argue that in the circumstances the release operated to extinguish any cause of action. If this is the case, then the State had no cause of action available when it issued the partial and permanent disability recovery proceedings.

71. To the extent it is relevant, if cl 8 of the June 2009 deed contains an ambiguity (which is not admitted), Mr Aldous is entitled to argue it should be construed in his favour under general principles; given the expansive nature of the operative cl 20; and in the particular circumstances of the case.

72. Mr Aldous says that the June 2009 deed was not drawn to the attention of the District Court or the Court of Appeal during the partial and permanent disability recovery, although reference to the settlement of the common law claim was clear. Mr Aldous considered the common law settlement had some impact on the partial and permanent disability recovery by the State, but he did not understand why. The amicus curiae was aware of the settlement as a potential issue, as was counsel for the State and the corollary was identified by Basten JA. Yet in the face of this discussion, no attempt was made to identify the terms of any such settlement and the effect it may have had on the partial and permanent disability recovery.

73. Mr Aldous is entitled to advance a case against the State based on breach of the June 2009 deed. Mr Aldous is entitled to argue that the June 2009 deed gave rise to a release and there was no cause of action underlying the partial and permanent disability recovery brought by the State because of the release in the June 2009 deed. As such, Mr Aldous is entitled to argue issues of estoppel and election do not apply.

74. The State accepted that in the June 2009 deed, cl 20 is broader than the recital in cl 8 on one reading of it. However, as I understand the thrust of Mr Aldous’ argument, the June 2009 deed was intended to give rise to a complete release by both parties so as to disentangle them from all of their disputes and that includes his obligations under the July 2007 deed.

Recitals

75. Both parties refer to Grant v John Grant & Sons Pty Limited (1954) 91 CLR 112; 28 ALJR 217; [1954] HCA 23 (Grant), the High Court per Dixon CJ, Fullagar, Kitto and Taylor JJ stated:

“The question raised by this appeal and cross-appeal is whether any and which of three replications is good. They are replications to a plea that the claims put in suit were released. The release is contained in a deed by which certain disputes were compromised and settled. It is expressed in very general words. The deed is set forth as part of the replications and much turns upon its provisions but the replications plead some additional facts which, as the plaintiff contends, result in the exclusion of the claims sued upon from the operation of the general words of the release. The first and second replications are pleaded on the footing that at law, as distinguished from equity, this consequence ensues from the facts they respectively plead, but the third replication is pleaded by way of a reply on equitable grounds.”

76. In Grant the High Court continued:

“The replication clearly enough depends upon a construction of the release which confines it to the subject matter of the disputes between the H C Grant and W A Grant families which the recital says they resolved to settle on the terms and conditions contained in the deed. The principle relied upon is that adopted by the common law long ago for the restriction of wide general words in a release of obligations, viz. that the general words of a release should be restrained by the particular occasion: Knight v Cole. Thus the general words of a release are to be restrained by the particular recital: Payler v Homersham. As it is concisely expressed by Best J in Lampon v Corke “If there be introductory matter, that will qualify the general words of the release.”

…

… As to the first all that remains is to apply the principle that prima facie the release should be read as confined to the matters forming the subject of the disputes which the deed recites. …” (Footnotes omitted)

77. Mr Aldous submitted that “the particular occasion with respect to the June 2009 deed could not be more patently clear that it was about resolving common law disputes. The total and permanent disability benefits or the partial disability benefits, while they have a condition precent with respect to a medical condition or disability, it is not a personal injury claim (T11.49-T12.9).

78. Mr Aldous referred to Nicholas Seddon, Seddon On Deeds (2015, The Federation Press) at [5.4] headed “Deed of Release”, the learned author quoted from Morrison, RJA and Goolden, HJ (eds), Norton a Treatise on Deeds (2^nd edn 1928), Sweet & Maxwell, 208 citing Ramsden v Hylton (1751) 2 Ves Sen 305 at 310; 28 ER 196 at 200 (Lord Hardwicke LC) where Norton explained “the most striking instance of the generality of the operative words being controlled by the recitals occurs in a release”. Seddon continued “The courts are astute to preventing very wide terms of release being construed as covering disputes or matters other than the ones the subject of the deed” and referred to Cloutte v Storey [1911] 1 Ch 18 at 34, where Farwell LJ stated:

“It is not in accordance with principle or authority to construe deeds of compromise of ascertained specific questions so as to deprive any party thereto of any right not then in dispute and not in contemplation of any of the parties to such a deed.”

79. In accordance with this approach to interpretation of deeds of release, the courts look to the recitals and more readily at the surrounding circumstances. If ever there is a case where contex­tual material is important for interpretation and understanding of what was intended, it would seem that deeds of release are clear candidates for such an approach. Even so, judges some­times are constrained by the “traditional” Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337; [1982] HCA 24 approach.

80. According to Seddon, the equitable principle referred to in Grant has been questioned and may be no more than the principle, accepted in Australia, that a document will not be interpreted in a way that gives it an unconscionable operation: see Muschinski v Dodds (1985) 160 CLR 583 at 619; [1985] HCA 78 (Deane J); Legione v Hateley (1983) 57 ALJR 292; 152 CLR 406 at 444; [1983] HCA 11 (Mason and Deane JJ); Stern v McArthur (1988) 168 CLR 489; [1988] HCA 51; Olex Focas Pty Ltd v Skodaexport Co Ltd (1996) 134 FLR 331; (1997) ATPR; [1998] 3 VR 380; Boral Formwork & Scaffolding Pty Ltd v Action Makers Ltd (in administrative receivership) [2003] NSWSC 713. See s 20 of the Australian Consumer Law (Sch 2 to the Competition and Consumer Act 2010 (Cth)).

Resolution

81. In Aldous [2018], the Court of Appeal referred to both the July 2007 deed and the June 2009 deed. In the original statement of claim in the District Court filed 7 April 2020, which was the subject of the decisions of the District Court and the Court of Appeal, the NSW Police sought to recover the outstanding balance, being $276,957.88 (the difference between the $434,957.88 repayment sought in the NSW Police’s letter dated 22 January 2010 and the $158,000 already repaid by Mr Aldous), plus interest.

82. The current statement of claim in these proceedings, involves the same parties and essentially repleads the same pleading in the earlier District Court statement of claim. The Court of Appeal decision directly concerned both deeds. The provisions and interpretation of both deeds were considered in detail by both the primary judge and the Court of Appeal. However, Mr Aldous’ submissions did not find favour with either the primary judge or the Court of Appeal. The subject matter of these current proceedings has been already adjudicated upon. Mr Aldous raised his mental health condition in his affidavit before this Court. However, his mental state at the time he entered into the June 2009 deed was considered by the primary judge and the Court of Appeal. Mr Aldous was legally represented when he signed both July 2007 and June 2009 deeds. He was afforded a trial on its merits and challenged the decision of the primary judge on appeal. He was unsuccessful. These latter proceedings are the subject of res judicata.

83. Mr Aldous’ current argument that firstly, cl 20 of the June 2009 deed properly characterised, is a release and is broader than the recitals; and secondly, cl 22 of the June 2009 deed operates to extinguish any cause of action. If this is right, Mr Aldous says that the State had no cause of action available when it issued the partial and permanent disability recovery proceedings. It is my view that this current argument (which is not pleaded) raises the ultimate issues of fact and law which were resolved as a step in reaching the determination made in the earlier judgments of the District Court and the Court of Appeal. It is therefore the subject of issue estoppel. In these circumstances, these proceedings are an abuse of process and should be struck out pursuant to UCPR 14.28. In the exercise of my discretion, Mr Aldous should not be afforded an opportunity to replead his claim as it is futile. The result is that the statement of claim is struck out.

84. Costs are discretionary. Costs usually follow the event. The plaintiff is to pay the defendant’s costs on an ordinary basis.

The Court orders that:

1. The plaintiff’s statement of claim filed 21 July 2020 is struck out.

2. The plaintiff is to pay the defendant’s costs on an ordinary basis.

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Decision last updated: 10 June 2021