Australian Funding Partners Ltd v Botsman & Ors - [2019] HCATrans 102

[2019] HCATrans 102

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
Melbourne No M179 of 2018

B e t w e e n -
AUSTRALIAN FUNDING PARTNERS LTD (ACN 167 628 527)
Applicant
and
WENDY DIANNE BOTSMAN
First Respondent
LAURENCE JOHN BOLITHO
Second Respondent
BANKSIA SECURITIES LIMITED
Third Respondent
THE TRUST COMPANY (NOMINEES) LTD (ACN 000 154 441)
Fourth Respondent
RSD CHARTERED ACCOUNTANTS (ACN 60 616 244 309) (FORMERLY KNOWN AS RICHMOND SINNOTT AND DELAHUNTY)
Fifth Respondent
PATRICK JOHN GODFREY
Sixth Respondent
NICHOLAS LIVINGSTONE CARR
Seventh Respondent
PETER WILLIAM KEATING
Eighth Respondent
GEOFFREY GRENVILLE SKEWES
Ninth Respondent
GEOFFREY S A LIPSHUT
Tenth Respondent
MAXWELL BROWN & MOUNT JOY (A PARTNERSHIP)
Eleventh Respondent
LANTERN LEGAL GROUP PTY LTD T/A HARWOOD ANDREWS
Twelfth Respondent
INSURANCE HOUSE PTY LTD (ACN 006 500 072)
Thirteenth Respondent
THE CHANNEL SYNDICATE 2015
Fourteenth Respondent
THE AMTRUST SYNDICATE 1206
Fifteenth Respondent
CHAUNCER SYNDICATES LIMITED
Sixteenth Respondent
JOHN ROSS LINDHOLM AND PETER DAMIEN McCLUSKEY IN THEIR CAPACITY AS JOINT AND SEVERAL SPECIAL PURPOSE RECEIVERS OF BANKSIA SECURITIES LIMITED (RECEIVERS AND MANAGERS APPOINTED) (IN LIQUIDATION)
Seventeenth Respondent
BANKSIA SECURITIES LIMITED (RECEIVERS AND MANAGERS APPOINTED) (IN LIQUIDATION) (ACN 004 736 458)
Eighteenth Respondent
Application for special leave to appeal

NETTLE J
EDELMAN J

TRANSCRIPT OF PROCEEDINGS

AT MELBOURNE ON FRIDAY, 17 MAY 2019, AT 11.32 AM

____________________

MR P.D. CRUTCHFIELD, QC: If the Court pleases, I appear with MR K.A. LOXLEY for the applicant. (instructed by Arnold Bloch Leibler Lawyers)

MR C.H. WITHERS: If the Court pleases, I appear with MR C.M. TAM for the first respondent. (instructed by Christopher Anthony Botsman)

MR R.A. DICK, SC: May it please the Court, I appear with MR J.A. REDWOOD and MR A.C. ROE for the third, seventeenth and eighteenth respondents. (instructed by Maddocks)

MR I.G. WALLER, QC: May it please the Court, I appear with MR P.G. LIONDAS and MS F.L. SHAND for the fourth respondent. (instructed by Clayton Utz Lawyers)

NETTLE J: Yes, Mr Crutchfield.

MR CRUTCHFIELD: If the Court pleases. The Court should have received an affidavit yesterday from our instructing solicitor, Mr Mengolian.

NETTLE J: Yes.

MR CRUTCHFIELD: The only purpose of putting that forward, your Honours, is so that I wanted to take your Honours to the deed because unless I can establish, at least on a reasonable basis, that the construction point is arguable I am in obvious difficulty in relation to any special leave question. So that is where I wanted to start, if the Court pleases. Could I go first to the recitals and your Honours will see recital I and you can see what the Parties have agreed to do, that is:

settle the Bolitho Proceeding and BSL Proceeding on the terms set out in this Deed, subject to the satisfaction of certain conditions, including approval by the Court.

As your Honours know, our fundamental proposition is approval orders were not obtained.

NETTLE J: Yes.

MR CRUTCHFIELD: To use the modern…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2019] HCATrans 102
Decision Date

CaseChat Overview and Summary

The applicant, Australian Funding Partners Ltd, sought special leave to appeal from a decision of the Court of Appeal. The dispute concerned the interpretation of a settlement deed entered into by various parties, including the applicant and Banksia Securities Limited (in liquidation), in relation to underlying proceedings. The core of the applicant's argument was that the settlement deed was conditional upon the court making specific approval orders, which it contended were not obtained.

The High Court was required to determine two primary legal issues. First, the proper construction of the settlement deed, specifically whether the deed was rendered ineffective due to the alleged failure to obtain the stipulated approval orders. Second, and more broadly, whether parties to a settlement deed could, through contractual provisions, constrain the court's statutory power under sections 33V and 33ZF of the *Federal Court of Australia Act 1976* (Cth) to approve or reject aspects of a group proceeding settlement, including the quantum of a funder's commission.

The applicant argued that the deed, by its express terms, stipulated that it would cease to have effect unless specific approval orders were made by the court. It contended that the definition of "Approval Orders" and the conditions precedent within the deed clearly indicated that the entire settlement was contingent on judicial approval of all its terms, including the funder's commission. The applicant further submitted that the Court of Appeal erred in its interpretation of the statutory provisions, suggesting that the court could, contrary to the deed's terms, approve the settlement while disallowing the funder's commission. The applicant maintained that the parties' freedom of contract should permit them to define the conditions upon which their settlement would be effective, and that the court should not be able to unilaterally alter these agreed-upon conditions.

The High Court ultimately granted special leave to appeal, indicating that the issues raised were of sufficient importance to warrant further consideration. The Court acknowledged the applicant's submission that the construction of the deed and its interaction with the statutory powers for approving group proceeding settlements presented a significant legal question.

Orders