Alloy Fab Pty Ltd v High Performance Alloys (Australia) Pty Ltd
[2017] WADC 15
•10 FEBRUARY 2017
ALLOY FAB PTY LTD -v- HIGH PERFORMANCE ALLOYS (AUSTRALIA) PTY LTD [2017] WADC 15
| DISTRICT COURT OF WESTERN AUSTRALIA | Citation No: | [2017] WADC 15 | |
| Case No: | APP:70/2016 | 20 JANUARY 2017 | |
| Coram: | GETHING DCJ | 10/02/17 | |
| PERTH | |||
| 19 | Judgment Part: | 1 of 1 | |
| Result: | Appeal dismissed | ||
| PDF Version |
| Parties: | ALLOY FAB PTY LTD HIGH PERFORMANCE ALLOYS (AUSTRALIA) PTY LTD |
Catchwords: | Appeal Decision of magistrate refusing to strike out general procedure claim as an abuse of process |
Legislation: | Magistrates Court (Civil Proceedings) Act 2004 (WA) s 17, s 18 |
Case References: | Agar v Hyde [2000] HCA 41; (2000) 201 CLR 552 Allesch v Maunz [2000] HCA 40; (2000) 203 CLR 172 Australian Broadcasting Commission v XIVth Commonwealth Games Ltd (1988) 18 NSWLR 540 Avopiling (WA) v Central Systems Pty Ltd [2015] WASC 82 Batistatos v Roads and Traffic Authority (NSW) [2006] HCA 27; (2006) 226 CLR 256 Blueprint Homes (WA) Pty Ltd v Samuel [2016] WASC 287 BP Refinery (Westernport) Pty Ltd v Hastings Shire Council [1977] UKPCHCA 1; (1977) 180 CLR 266 Brocklehurst v Wolinski [2015] WADC 36 Butler v Bennett [2007] WADC 107 Coal & Allied Operations Pty Ltd v Australian Industrial Relations Commission [2000] HCA 47; (2000) 203 CLR 194 Ermogenous v Greek Orthodox Community of SA Inc [2002] HCA 8; (2002) 209 CLR 95 George 218 Pty Ltd v Bank of Queensland Limited (No 2) [2016] WASCA 182 House v R [1936] HCA 40; (1936) 55 CLR 499 Jago v District Court of New South Wales [1989] HCA 46; (1989) 168 CLR 23 JMT Builders Pty Ltd v Ryan [2016] NTSC 6 Jones v Darkan Hotel [2014] WASCA 133 Koljibabic v BHP Billiton Nickel West Pty Ltd [2011] WASCA 87 Masters v Cameron [1954] HCA 72; (1954) 91 CLR 353 Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd [2015] HCA 37; (2015) 256 CLR 104 Norbis v Norbis [1986] HCA 17; (1986) 161 CLR 513 Pavlovic v Universal Music Australia Pty Ltd [2015] NSWCA 313 Sea Culture International Pty Ltd v Scoles [1991] FCA 677 Servcorp WA Pty Ltd v Perron Investments Pty Ltd [2016] WASCA 79 Sheraz Pty Ltd v Vegas Enterprises Pty Ltd [2015] WASCA 4; (2015) 48 WAR 93 Shilkin v Taylor [2011] WASCA 255 Spencer v Commonwealth of Australia [2010] HCA 28; (2010) 241 CLR 118 Szulc v Szulc [2015] WASC 451 Thorby v Golberg [1964] HCA 41; (1964) 112 CLR 597 Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52; (2004) 219 CLR 165 Vantage Systems Pty Ltd v Priolo Corp Pty Ltd [2015] WASCA 21 Walton v Gardiner [1993] HCA 77; (1993) 177 CLR 378 |
JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
- IN CIVIL
- Appellant
AND
HIGH PERFORMANCE ALLOYS (AUSTRALIA) PTY LTD
First Respondent
ON APPEAL FROM:
For File No : APP 70 of 2016
Jurisdiction : MAGISTRATES COURT OF WESTERN AUSTRALIA
Coram : MAGISTRATE BENN
File No : MI 2521 of 2015
Catchwords:
Appeal - Decision of magistrate refusing to strike out general procedure claim as an abuse of process
Legislation:
Magistrates Court (Civil Proceedings) Act 2004 (WA) s 17, s 18
Result:
Appeal dismissed
Representation:
Counsel:
Appellant : Mr S R Sirett
First Respondent : Mr L Durand
Solicitors:
Appellant : Borello Graham Lawyers
First Respondent : Durand Gangemi
Case(s) referred to in judgment(s):
Agar v Hyde [2000] HCA 41; (2000) 201 CLR 552
Allesch v Maunz [2000] HCA 40; (2000) 203 CLR 172
Australian Broadcasting Commission v XIVth Commonwealth Games Ltd (1988) 18 NSWLR 540
Avopiling (WA) v Central Systems Pty Ltd [2015] WASC 82
Batistatos v Roads and Traffic Authority (NSW) [2006] HCA 27; (2006) 226 CLR 256
Blueprint Homes (WA) Pty Ltd v Samuel [2016] WASC 287
BP Refinery (Westernport) Pty Ltd v Hastings Shire Council [1977] UKPCHCA 1; (1977) 180 CLR 266
Brocklehurst v Wolinski [2015] WADC 36
Butler v Bennett [2007] WADC 107
Coal & Allied Operations Pty Ltd v Australian Industrial Relations Commission [2000] HCA 47; (2000) 203 CLR 194
Ermogenous v Greek Orthodox Community of SA Inc [2002] HCA 8; (2002) 209 CLR 95
George 218 Pty Ltd v Bank of Queensland Limited (No 2) [2016] WASCA 182
House v R [1936] HCA 40; (1936) 55 CLR 499
Jago v District Court of New South Wales [1989] HCA 46; (1989) 168 CLR 23
JMT Builders Pty Ltd v Ryan [2016] NTSC 6
Jones v Darkan Hotel [2014] WASCA 133
Koljibabic v BHP Billiton Nickel West Pty Ltd [2011] WASCA 87
Masters v Cameron [1954] HCA 72; (1954) 91 CLR 353
Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd [2015] HCA 37; (2015) 256 CLR 104
Norbis v Norbis [1986] HCA 17; (1986) 161 CLR 513
Pavlovic v Universal Music Australia Pty Ltd [2015] NSWCA 313
Sea Culture International Pty Ltd v Scoles [1991] FCA 677
Servcorp WA Pty Ltd v Perron Investments Pty Ltd [2016] WASCA 79
Sheraz Pty Ltd v Vegas Enterprises Pty Ltd [2015] WASCA 4; (2015) 48 WAR 93
Shilkin v Taylor [2011] WASCA 255
Spencer v Commonwealth of Australia [2010] HCA 28; (2010) 241 CLR 118
Szulc v Szulc [2015] WASC 451
Thorby v Golberg [1964] HCA 41; (1964) 112 CLR 597
Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52; (2004) 219 CLR 165
Vantage Systems Pty Ltd v Priolo Corp Pty Ltd [2015] WASCA 21
Walton v Gardiner [1993] HCA 77; (1993) 177 CLR 378
1 GETHING DCJ: By appeal notice dated 13 September 2016 the appellant, Alloy Fab Pty Ltd (Alloy), appeals from a decision of his Honour Magistrate Benn in the Magistrates Court at Midland on 24 August 2016. The magistrate dismissed Alloy's application to strike out a general procedure claim lodged by the respondent, High Performance Alloys (Australia) Ltd (HPA), as being an abuse of process or, in the alternative, for summary judgment against HPA. Alloy asserted that the debt the subject of HPA's general procedure claim was the subject of a binding and immediately enforceable settlement agreement between it and HPA. The magistrate determined that it was clearly arguable that the settlement agreement had not been finalised, and dismissed the application.
Factual background
2 There were two affidavits before the magistrate. The first was filed on behalf of Alloy, and was sworn by Adam Spitz, a solicitor employed by its lawyers, on 13 June 2016. The second was filed on behalf of HPA, and was sworn by its director David Smith on 12 July 2016. The factual background is drawn from these two affidavits. Neither party sought to file additional evidence in the appeal.
3 From February 2008 until 24 February 2015 Mr Smith was a director and shareholder of Alloy. He founded Alloy and was in effect its sole owner. Mr Smith describes himself as 'an experienced world renowned welder' who works locally and internationally on welding jobs.
4 Mr Smith says that by 2014 he was getting too busy for a one man operation and looked around for a managing engineer. He says he was approached by a group of people who owned a company called Innovative Asset Solutions Group Ltd (IAS). He says he was convinced by the people from IAS to hand over Alloy in return for shares in IAS.
5 Mr Smith continued to operate his welding business through HPA. Mr Smith says that in 2015 HPA performed a welding job for Alloy. In discharging that job, plant and equipment belonging to HPA was placed on the premises of Alloy. HPA raised invoices for this work totalling $32,165.31. These invoices are the subject of its general procedure claim.
6 Alloy refused to pay the invoices. HPA then threatened to take legal action against Alloy for the unpaid invoices.
7 Mr Smith goes on to say that because he persisted in wanting payment, all arrangements between Alloy and HPA were effectively cancelled. In response, he wanted all plant and equipment belonging to HPA returned to him.
8 In an attempt to resolve the situation, a meeting of the people concerned took place on 17 September 2015.
9 Following the meeting, HPA's lawyers, Durand Gangemi, sent a letter dated 23 September 2015 to one Mervyn Sher, who is described as a director/principal of Sher Associates Pty Ltd. Mr Sher had chaired the meeting on 17 September 2015, apparently on the instructions of Alloy. He appears to have acted on behalf of Alloy as its agent in some form, though not as its lawyer. The 23 September letter contained a settlement offer on behalf of Mr Smith, which included the claim made by HPA.
10 Mr Sher responded by letter dated 30 September 2015 to HPA's lawyers in which he responded on behalf of his 'client', Alloy (Alloy's 30 September letter). Mr Sher sets out a number of matters which he says resulted in a serious breach of the then subsisting agreements between Alloy and HPA. The letter also contained a threat of a counterclaim should HPA persist with its threat of litigation in relation to the invoices which are now the subject of the general procedure claim. It is clear from the tone of this letter that there was a high level of acrimony and mistrust between the officers and representatives of HPA and Alloy. The letter concluded with a counter offer which I will describe in detail at a later point in these reasons. This offer was expressed to be without prejudice save as to costs. The offer remained open until the close of business 16 October 2015.
11 On 1 October 2015, HPA's lawyers wrote to Alloy's lawyers (HPA's 1 October letter). Given the significance of this letter, it is instructive for me to quote it in full:
Our client's position has changed from yesterday. He has instructed us to hold back on the Summons and to advise you as follows:
a. He will accept the settlement proposed in your letter of 30 September 2015 and on the condition that the cost for the Deed of Settlement is paid for and drafted by your clients.
We would like a response to this acceptance of the offer by 5.00 pm, today, 1 October 2015.
12 Mr Sher responded on behalf of Alloy by letter also dated 1 October 2015 (Alloy's 1 October letter). That letter is in the following terms:
We acknowledge receipt of your letter of even date, wherein your Client has accepted our Client's offer as included in our letter to yourself dated 30 September 2015.
We confirm that our Client will have the Deed of Settlement drawn up at their sole cost.
We will revert to you, most likely in the new week, once a draft Deed of Settlement is ready for your positive considerations.
13 By letter dated 12 October 2015, HPA's lawyers inquired as to the progress in drafting the deed of settlement. The letter is in the following terms:
HIGH PERFORMANCE ALLOYS AUSTRALIA AND ALLOY FAB PTY LTD
We refer to the agreement reached between the parties in respect to the abovementioned matter.
We write to remind you that we are still awaiting to receive a draft of the Deed of Settlement from you. Are you in a position to advise us as to when we might expect to receive the draft Deed?
14 By a letter dated 12 October 2015, Mr Sher advised HPA's lawyers that his client had instructed solicitors to draw up a deed of settlement, and that he would inquire of his client as to the progress in the matter and revert shortly.
15 By a letter dated 26 October 2015, Mr Sher forwarded to HPA's lawyers a draft deed of release (Draft Deed) for the consideration of their client.
16 By a letter dated 9 November 2015, HPA's lawyers wrote to Mr Sher outlining a number of matters with the Draft Deed which needed to be addressed from the perspective of HPA (HPA's 9 November letter). I will return to the substance of those concerns later in these reasons.
17 In the materials before me, there is no evidence of any letter written on behalf of Alloy addressing the issues set out in HPA's 9 November letter.
18 In his affidavit, Mr Smith states (pars 24, 26 and 27):
The draft deed contained numerous matters which had not been finalised at the meeting of 17 September 2015. More importantly a new party had been introduced in the Deed which had not been discussed at all at the meeting of 17 September 2015. Alloy Fab was involved in a Court action with a company called Prep Engineering and the matter was going through Court.
…
It would have been unwise for the Claimant to accept the terms of the Deed since it was not the discussed terms at the meeting of 17 September 2015.
When I handed over the company Alloy Fab to its current directors there was no action in any Court involving Alloy Fab in any matter. Now when it was now time to return Alloy Fab to me in accordance with the discussion at the meeting, I found that it was involved in Court actions.
19 Mr Smith goes on to depose that Alloy could not resolve the problems with the Draft Deed and that settlement could not therefore take place. He does say that, in due course and in various stages, Alloy released the plant and equipment which belonged to HPA.
20 HPA commenced its general procedure claim on 22 December 2015.
Proceedings in the Magistrates Court
21 In HPA's general procedure claim it claimed the sum of $32,165 from Alloy. This is described in the claim as the cost of services provided by HPA to Alloy in June and July 2015, which debt had not been paid as at the date on which the claim was commenced.
22 Alloy lodged a notice of intention to defend the claim.
23 By application dated 13 June 2016, Alloy sought orders pursuant to Magistrates Court (Civil Proceedings) Act 2004 (WA) (MCCPA) s 17 striking out HPA's claim in its entirety and granting judgment in its favour. Further in the alternative, Alloy sought summary judgment under MCCPA s 18. The specific orders sought were as follows:
NATURE OF ORDER SOUGHT:
1. Pursuant to Section 17(1) of the Magistrates Court (Civil Proceedings) Act 2004 (WA) (MCCPA), the Claimant's General Procedure Claim be struck out in its entirety on the grounds that:
A. the Claimant's General Procedure Claim was filed to harass or annoy, or to cause delay or detriment, or is otherwise wrongful as the parties had formed a binding settlement agreement with respect to the amounts claimed by the Claimant prior to the Claimant filing its General Procedure Claim (Section 17(1)(c));
B. further or in the alternative, the Claimant's General Procedure Claim is an abuse of the Court's process as the parties had formed a binding settlement agreement with respect to the amounts claimed by the Claimant prior to the Claimant filing its General Procedure Claim (Section 17(1)(d)).
2. Pursuant to Section 17(2) of the MCCPA, the Claimant's action against the Defendant be dismissed and judgement entered for the Defendant.
3. Further or in the alternative, pursuant to Section 18 of the MCCPA, judgement be entered for the Defendant without a trial on the basis that the Claimant does not have a reasonable prospect of succeeding in its General Procedure Claim as the parties had formed a binding settlement agreement with respect to the amounts claimed by the Claimant prior to the Claimant filing its General Procedure Claim.
4. Pursuant to Section 25 of the MCCPA the Claimant, or such other person as the Court deems appropriate, pay the Defendant's costs of this application on such basis as it deems fit.
24 The essence of Alloy's case is that in or around July or August 2015, a dispute arose between HPA and it in regard to the debt the subject of HPA's general procedure claim. The parties met for a settlement discussion on 17 September 2015. Alloy's 30 September letter contained a without prejudice offer to HPA for the full and final settlement of the dispute. Alloy says HPA's 1 October letter constituted an acceptance of the offer in Alloy's 30 September letter, thereby forming a binding settlement agreement between the parties. Alloy says that the settlement agreement covered the debt the subject of HPA's general procedure claim. Alloy asserted that because HPA's claims had already been settled by way of a binding settlement agreement, HPA's claim should be struck out as an abuse of process or, alternatively, summary judgment should be awarded in its favour.
25 HPA's case was that the correspondence did not give rise to a binding settlement agreement. Rather, the intention of the parties was that there was to be no binding agreement until the deed of settlement foreshadowed in the correspondence was executed. In the course of negotiating the deed, issues of concern arose which ultimately led to the parties not signing any deed. In that context, HPA's position was that there was no binding settlement agreement between the parties.
26 The matter came on for hearing before his Honour Magistrate Benn on 24 August 2016. As I mentioned, his Honour dismissed the application. His Honour's reasons were stated succinctly, and it is convenient to quote them:
Essentially the issue here is whether or not a concluded and binding agreement was reached between the parties in full and final settlement of the matter that now forms the basis of this general procedure claim. And it's not in dispute between the parties that in an endeavour to resolve the dispute between the parties and prior to legal action being commenced that endeavours were made by the parties to try and reach an agreement in settlement of this matter.
To that end and various correspondence went backwards and forwards between the parties and ultimately it seemed a number of issues were, I will describe as, agreed to tentatively subject ultimately though to the matter – the agreement, the settlement – being finalised by a written deed of release and settlement.
And it seems that things started to break down because following discussions – in an effort to reach agreement and I think it can be fairly said, in my view on the material before me, getting very close to finalisation – the deed was prepared and then things fell apart because there were some matters – some issues – in the deed that had not been discussed and not formed part of the previous correspondence negotiations and discussions and ultimately the claim was then commenced.
Having reviewed the material I understand Mr Graham's argument that on the evidence before me – the materials – I should conclude that there was a final binding agreement between the parties but ultimately I'm not satisfied that that is necessarily the case. In my view there is clearly an arguable issue here in respect to the agreement not being finalised until everything was signed off in the deed of release and settlement.
That clearly never happened. That's not in issue between the parties and I'm not satisfied that having regard to the nature of the discussions and particularly in regard to the discussions requiring a deed to be signed off by the parties that it could be said without doubt that there was a valid final and binding agreement between the parties prior to the deed and things breaking down.
In fact the very breaking down of negotiations by the deed clearly indicates, in my view, that on the materials, matters had not reached a proper and concluded finalisation. And on that basis I'm simply not satisfied that the defendant has made out its application for the claim to be struck out. And on that basis the defendant's application for strikeout is dismissed. That leaves the issue of costs which I will hear the parties on now.
27 His Honour formally ordered that Alloy's application be dismissed, and that the costs be in the cause.
Appeal notice
28 The appeal notice identifies two errors said to have been made by the magistrate:
1. The Magistrate erred in law and fact by:
A. dismissing the Applicant's application on the basis that the parties had not previously settled the matter that is the subject of the Respondent's General Procedure Claim dated 24 December 2015;
B. whereas the Magistrate should have found that on or around 1 October 2015 the parties settled the matter that is the subject of the Respondent's General Procedure Claim in writing and that the Respondent's General Procedure Claim was an abuse of process or in the alternative that the Applicant was entitled to summary judgment.
29 The decision under appeal related to an application pursuant to MCCPA s 17(3) and s 18.
30 No appeal lies from the decision of a magistrate to refuse to give summary judgment on an application pursuant to MCCPA s 18(2): MCCAP s 18(7). Accordingly, the present appeal is limited to the refusal of the magistrate to give judgment pursuant to MCCPA s 17.
31 The right of appeal from a decision made pursuant to MCCPA s 17 is found in MCCPA s 40(1).
32 An appeal pursuant toMCCPA s 40 (1) is by way of a 'reconsideration of the evidence' that was before the Magistrates Court: District Court Rules 2005 (WA) (DCR) r 50(1). An appeal by way of a reconsideration of the evidence is to be undertaken by way of a rehearing: Brocklehurst v Wolinski [2015] WADC 36 [14] (Derrick DCJ); Butler v Bennett[2007] WADC 107 [6] - [10] (Bowden DCJ). This means that it is necessary for the appellant to demonstrate error in the court below: Coal & Allied Operations Pty Ltd v Australian Industrial Relations Commission [2000] HCA 47; (2000) 203 CLR 194 [14] (Gleeson CJ, Gaudron and Hayne JJ); Allesch v Maunz [2000] HCA 40; (2000) 203 CLR 172 [23] (Gaudron, McHugh, Gummow and Hayne JJ); Koljibabic v BHP Billiton Nickel West Pty Ltd [2011] WASCA 87 [54] (Newnes JA with whom Pullin and Buss JJA agreed). The error may be legal, factual or discretionary: Allesch [23].
33 The onus is on Alloy as the appellant to demonstrate this error: Jones v Darkan Hotel [2014] WASCA 133 [31] (judgment of the court).
34 The decision under appeal in the present case involved the exercise of a judicial discretion. The nature of the inquiry an appellate court is to undertake when reviewing a discretionary decision is conveniently summarised in the decision of Dixon, Evatt and McTiernan JJ in House v R [1936] HCA 40;(1936) 55 CLR 499, 504 - 505 (references omitted):
The manner in which an appeal against an exercise of discretion should be determined is governed by established principles. It is not enough that the judges composing the appellate court consider that, if they had been in the position of the primary judge, they would have taken a different course. It must appear that some error has been made in exercising the discretion. If the judge acts upon a wrong principle, if he allows extraneous or irrelevant matters to guide or affect him, if he mistakes the facts, if he does not take into account some material consideration, then his determination should be reviewed and the appellate court may exercise its own discretion in substitution for his if it has the materials for doing so. It may not appear how the primary judge has reached the result embodied in his order, but, if upon the facts it is unreasonable or plainly unjust, the appellate court may infer that in some way there has been a failure properly to exercise the discretion which the law reposes in the court of first instance. In such a case, although the nature of an error may not be discoverable, the exercise of the discretion is reviewed on the ground that a substantial wrong has in fact occurred.
35 In Norbis v Norbis [1986] HCA 17; (1986) 161 CLR 513, Mason J and Deane J made the following comments elaborating on the principles set out in House (518 – 519):
Because these assessments call for value judgments in respect of which there is room for reasonable differences of opinion, no particular opinion being uniquely right, the making of the order involves the exercise of a judicial discretion. The contrast is with an order the making of which is dictated by the application of a fixed rule to the facts on which its operation depends.
The principles enunciated in House … were fashioned with a close eye on the characteristics of a discretionary order in the sense which we have outlined. If the questions involved lend themselves to differences of opinion which, within a given range, are legitimate and reasonable answers to the questions, it would be wrong to allow a court of appeal to set aside a judgment at first instance merely because there exists just such a difference of opinion between the judges on appeal and the judge at first instance. In conformity with the dictates of principled decision-making, it would be wrong to determine the parties' rights by reference to a mere preference for a different result over that favoured by the judge at first instance, in the absence of error on his part. According to our conception of the appellate process, the existence of an error, whether of law or fact, on the part of the court at first instance is an indispensable condition of a successful appeal.
Determination of the appeal
36 At the hearing before me, counsel for Alloy submitted that, in essence, the decision of the magistrate was, on the facts, so unreasonable or plainly unjust, that the appellate court may infer that in some way there has been a failure properly to exercise the discretion which the law reposed in the magistrate at first instance. If made out, this would constitute one of the errors in the exercise of discretion identified in the passage from the decision in House quoted above.
37 The starting point in determining the appeal is the statutory jurisdiction which the magistrate was called to exercise in deciding the application, being MCCPA s 17. The power to dismiss a case in MCCPA s 17 is in the following terms:
17. Striking out, Court's powers as to
(1) The Court may strike out all or a part of a case statement if —
(a) any claim in it is outside the Court's jurisdiction; or
(b) it does not disclose any reasonable grounds for any claim, or for any defence, in it; or
(c) its purpose is to harass or annoy, or to cause delay or detriment, or is otherwise wrongful; or
(d) it is an abuse of the Court's process; or
(e) it is frivolous, vexatious, scandalous or improper.
(2) If the Court strikes out all of a case statement the Court may give judgment accordingly without a trial.
(3) The Court may set aside a judgment given under subsection (2) and may do so on conditions as to the payment of costs or as to other matters.
38 The categories of abuse of process are not closed, and a court may exercise its power in relation to an abuse of process 'as and when the administration of justice demands': Jago v District Court of New South Wales [1989] HCA 46; (1989) 168 CLR 23, 74 (Gaudron J); Walton v Gardiner [1993] HCA 77; (1993) 177 CLR 378, 394 (Mason CJ, Deane & Dawson JJ); Sheraz Pty Ltd v Vegas Enterprises Pty Ltd [2015] WASCA 4; (2015) 48 WAR 93[8] (Buss JA). For present purposes, I proceed on the basis that an attempt to litigate in the court a dispute or issue which has been resolved by settlement, without any remaining residual issues, may, depending on the circumstances, constitute an abuse of process: JMT Builders Pty Ltd v Ryan [2016] NTSC 6 [12] - [13] (Master Luppino) ; Sea Culture International Pty Ltd v Scoles [1991] FCA 677 [12] (French J) and more generally Sheraz [3] - [20] (Buss JA); [118] - [134] (Murphy JA).
39 The power to summarily terminate proceedings for an abuse of process must, however, be exercised with caution: Spencer v Commonwealth of Australia [2010] HCA 28; (2010) 241 CLR 118 [24] (French CJ and Gummow J); Shilkin v Taylor [2011] WASCA 255 [40] (Newnes JA, with whom Pullin and Buss JJA agreed). In Agar v Hyde [2000] HCA 41; (2000) 201 CLR 552 [57] Gaudron, McHugh, Gummow and Hayne JJ made the following observation about the summary determination of proceedings:
It is, of course, well accepted that a court whose jurisdiction is regularly invoked in respect of a local defendant… should not decide the issues raised in those proceedings in a summary way except in the clearest of cases. Ordinarily, a party is not to be denied the opportunity to place his or her case before the court in the ordinary way, and after taking advantage of the usual interlocutory processes. The test to be applied has been expressed in various ways … but all of the verbal formulae which have been used are intended to describe a high degree of certainty about the ultimate outcome of the proceeding if it were allowed to go to trial in the ordinary way. (citations omitted)
40 These observations were adopted by Gleeson CJ, Gummow, Hayne & Crennan JJ in Batistatos v Roads and Traffic Authority (NSW) [2006] HCA 27; (2006) 226 CLR 256 [46] in the context of an application to stay proceedings on the ground that they were an abuse of the processes of the court.
41 As Magistrate Benn correctly identified, the essential issue in the present case is whether or not a concluded and binding agreement was reached between the parties in full and final settlement of the matter that forms the basis of HPA's general procedure claim. In assessing this issue, the conventional starting point in the analysis is the three categories of class identified by Dixon CJ, McTiernan and Kitto JJ in Masters v Cameron [1954] HCA 72; (1954) 91 CLR 353, 360:
Where parties who have been in negotiation reach agreement upon terms of a contractual nature and also agree that the matter of their negotiation shall be dealt with by a formal contract, the case may belong to any of three classes. It may be one in which the parties have reached finality in arranging all the terms of their bargain and intend to be immediately bound to the performance of those terms, but at the same time propose to have the terms restated in a form which will be fuller or more precise but not different in effect. Or, secondly, it may be a case in which the parties have completely agreed upon all the terms of their bargain and intend no departure from or addition to that which their agreed terms express or imply, but nevertheless have made performance of one or more of the terms conditional upon the execution of a formal document. Or, thirdly, the case may be one in which the intention of the parties is not to make a concluded bargain at all, unless and - until they execute a formal contract.
In each of the first two cases there is a binding contract: in the first case a contract binding the parties at once to perform the agreed terms whether the contemplated formal document comes into existence or not, and to join (if they have so agreed) in settling and executing the formal document; and in the second case a contract binding the parties to join in bringing the formal contract into existence and then to carry it into execution
42 In essence, Alloy said the correspondence falls into the first or perhaps second class, whereas HPA says it falls into the third class.
43 The continued relevance of this analysis was recently affirmed by the Court of Appeal inVantage Systems Pty Ltd v Priolo Corp Pty Ltd [2015] WASCA 21 [87] (Buss JA, with whom McLure P and Newnes JA agreed): see also Blueprint Homes (WA) Pty Ltd v Samuel [2016] WASC 287 [33] (Le Miere J). (There may be a fourth category but I, like the Court of Appeal in Vantage Systems [94], do not need to enter into this debate.) The categories are not, however, strict categories into which the case must fall: Pavlovic v Universal Music Australia Pty Ltd [2015] NSWCA 313 [69]; Blueprint [39]. They are perhaps best viewed as assisting the court to apply the applicable general principles.
44 As to those general principles, the question of whether the parties intended to bind themselves to a contract is to be determined objectively: Pavlovic [15] (Bathurst CJ), [64]; Blueprint [39]. The court looks at 'what each party by words and conduct would have led a reasonable person in the position of the other party to believe': Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52; (2004) 219 CLR 165 [40] (Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ); Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd [2015] HCA 37; (2015) 256 CLR 104 [47] (French CJ, Nettle and Gordon JJ); George 218 Pty Ltd v Bank of Queensland Limited (No 2) [2016] WASCA 182, [85] (reasons of the court); Pavlovic [65]; Avopiling (WA) v Central Systems Pty Ltd [2015] WASC 82 [31] (Allanson J). The subjective beliefs or understandings of the parties are not relevant: Toll [40]. The objective 'enquiry will require consideration of the language used by the parties in the contract, the circumstances addressed by the contract and the commercial purpose or objects to be secured by the contract': Mount Bruce [47]. So what is said by the parties in correspondence is to be considered in the context of the correspondence, the conduct of the parties as a whole and the commercial context and surrounding circumstances of the parties' dealings: Avopiling [32]; Pavlovic [72]. As Le Miere J stated in Blueprint [37]:
There is no one factor that will determine whether the parties intended to be immediately bound by the negotiated agreement. The ultimate outcome depends on a consideration of the dealings between the parties as a whole in the context of the surrounding circumstances.
45 As 'a matter of fact and common sense, other things being equal, the more numerous and significant the areas in respect of which the parties have failed to reach agreement, the slower a court will be to conclude that they had the requisite contractual intention' to make a concluded bargain: Australian Broadcasting Commission v XIVth Commonwealth Games Ltd (1988) 18 NSWLR 540, 548 (Gleeson CJ, with whom Hope and Mahoney JJ agreed); Blueprint [38]. The parties being at odds as to whether a legally binding contract was formed, Alloy as the party asserting the contract must demonstrate the existence of a contract: Ermogenous v Greek Orthodox Community of SA Inc [2002] HCA 8; (2002) 209 CLR 95 [26] (Gaudron, McHugh, Hayne and Callinan JJ); Avopiling [30].
46 The terms of the alleged settlement as contained in Alloy's 30 September letter were:
(a) the shares in Alloy be returned to Mr Smith;
(b) all plant, equipment and stock of Alloy be returned to Mr Smith;
(c) IAS will pay the sum of $35,000 to Mr Smith;
(d) Mr Smith will return to IAS the shares provided to him; and
(e) the parties shall keep and hold these matters private and confidential.
47 The acceptance of this offer in HPA's 1 October letter was on condition 'that the cost for the Deed of Settlement is paid for and drafted by' Alloy (see [11] above). In Alloy's 1 October letter, Mr Sher confirms that Alloy 'will have the Deed of Settlement drawn up at their sole cost' (see [12] above). The parties clearly contemplated that there would be a deed of settlement. Consistent with this intention, the Draft Deed was provided.
48 I accept that it is arguable from the language of Alloy's 30 September letter and HPA's 1 October letter that the parties had reached a settlement agreement that was immediately binding. However, that is not sufficient for the appeal to be determined in Alloy's favour.
49 From HPA's 9 November letter, it appears that HPA had two broad areas of concern with the terms of the Draft Deed. The first was what constituted the plant, equipment and stock of Alloy. By cl 2.2(2), IAS agreed to pay Mr Smith an amount in respect of the replacement value of items that were no longer amongst the stock of Alloy, and were omitted from the list of that stock set out in sch 1 to the Draft Deed. HPA queried the value of five of the items. HPA also queried three items of equipment which it says it purchased, and which were not included in sch 1 as forming part of the equipment of Alloy to be handed over to HPA (see cl 2.2(c)(1)). Alloy appeared to HPA to assert that this equipment belonged to a third party by the name of PREP Engineering and Welding Services Pty Ltd. In HPA's 9 November letter, HPA's lawyers sought proof of this.
50 The second broad area of concern relates to a mutual indemnity to be given, as set out in cl 4.4, in the following terms:
(a) Subject to clause 4.4(b), each party must indemnify each other party and each of its Related Parties against all damage, loss, cost or expense arising from any claim, action, demand, suit or proceeding brought or threatened by any person against the other party or any of its Related Parties in respect of the Released Matters.
(b) IAS's indemnity of Alloy Fab under clause 4.4(a) is limited to all damage, loss, cost or expense arising from any claim, action, demand, suit or proceeding brought or threatened by:
(1) Any person against Alloy Fab in respect of any liabilities incurred by Alloy Fab while Alloy Fab was a wholly owned subsidiary of IAS from 24 February 2015 to the date of this deed; and
(2) PREP against Alloy Fab in respect to job number JN955 under purchase order 366.
(c) In the event that Alloy Fab recovers any money from PREP in connection with the job described in clause 4.4(b)(2), Alloy Fab must pay that sum of money to IAS within 2 Business Days of receiving it from PREP.
51 HPA's 9 November letter raises the following concerns in relation to cl 4.4:
Clauses 4.4(b)(2) and 4.4(c)
Prep Engineering was not a party to the contract between the parties at any time. Further, Prep Engineering was not discussed as being part of the settlement when the Mediation occurred at your offices. Client requires that any reference to Prep Engineering be removed from the Deed of Settlement.
52 In my view, it is arguable from the matters set out at [49] to [51] that a reasonable person, viewing the correspondence in its entirety, would form a view that there were sufficient matters outstanding between the parties to mean that the exchange of correspondence on 23 September and 1 October was not intended to give rise to an immediate legally binding contract. The commercial purpose or object to the settlement agreement was to bring to an end all disputes between HPA, Alloy and IAS; unless the property of Alloy was agreed and the issue of the claim by PREP resolved, this commercial purpose could not be achieved. It is further arguable that these disputes go beyond matters which could be cured by the implication of terms: BP Refinery (Westernport) Pty Ltd v Hastings Shire Council [1977] UKPCHCA 1; (1977) 180 CLR 266, 283 (Privy Council); Servcorp WA Pty Ltd v Perron Investments Pty Ltd [2016] WASCA 79, [66] – [71] (Martin CJ and Buss JA).
53 Neither of the issues included in the Draft Deed and identified in HPA's 9 November 2015 letter were addressed in Alloy's 23 September letter. In my view, it is further arguable that the exchange of correspondence on 23 September and 1 October left open certain essential terms of the agreement, at least being:
(a) how the dispute between PREP and Alloy was to be dealt with; and
(b) what was the plant, equipment and stock of Alloy that would be made available to Mr Smith on transfer of the shares in Alloy to him.
54 The fact that essential terms had been left open is also evidenced by the fact that the parties were not able to reach an agreement regarding the issues raised in HPA's 9 November letter (an observation also made by the magistrate). There can be no binding and enforceable contract unless the terms of the contract, or at least its essential or critical terms, have been agreed upon: Szulc v Szulc [2015] WASC 451 [16] (Acting Master Gething); Thorby v Golberg [1964] HCA 41; (1964) 112 CLR 597, 607 (Menzies J). In this case it is arguable that they were not so agreed.
55 In my view, in no way can it be said that the magistrate reached a decision which was so unreasonable or plainly unjust that I could infer that in some way there has been a failure properly to exercise the discretion which the law reposed in the magistrate. The magistrate exercised an entirely appropriate level of caution in not summarily determining HPA's general procedure claim (see [39] above). There is no injustice to Alloy in its application being dismissed as it is entitled to raise the existence of a settlement agreement by way of defence. There would, however, be injustice to HPA in having its claim summarily determined without the arguable issue of whether there was a binding settlement being resolved at trial.
56 Alloy has not discharged the onus on it to demonstrate an error of law, fact or discretion by the magistrate in the decision under appeal. Accordingly the appeal must be dismissed.
57 I will hear from the parties as to costs.
0
39
1