Australian Xinyangfeng Fertilizer Pty Ltd v Andrew Freshwater
[2020] VSC 450
•27 July 2020
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL COURT
S ECI 2017 00268
| AUSTRALIAN XINYANGFENG FERTILIZER PTY LTD (ACN 607 433 652) | Plaintiff |
| v | |
| ANDREW ROBERT JAMES FRESHWATER & Ors (as set out in the attached Schedule) | Defendants |
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JUDGE: | SLOSS J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 16 June 2020 |
DATE OF JUDGMENT: | 27 July 2020 |
CASE MAY BE CITED AS: | Australian Xinyangfeng Fertilizer Pty Ltd v Andrew Freshwater |
MEDIUM NEUTRAL CITATION: | [2020] VSC 450 |
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PRACTICE AND PROCEDURE – Compromise of proceeding at or following a Court-ordered mediation — Where parties entered into terms of settlement — Where terms of settlement provided that in the event of default in payment the plaintiff shall be at liberty to apply ex parte to reinstate the proceeding and enter judgment by consent — Where default in payment by first defendant — Where plaintiff sought to enforce the terms of settlement by action in the original proceeding — Whether appropriate to use summary procedure to enforce terms of settlement — Where exercise of power to do so is discretionary — Whether Court clearly satisfied that justice can be done —Roberts v Gippsland Agricultural Earthmoving Contracting Co Pty Ltd [1956] VLR 555 applied — Civil Procedure Act 2010 (Vic) – ss 8(1), 9(1), 9(2)(f), 9(2)(g).
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr N Andreou of counsel | Morrison & Sawers Lawyers |
| For the First Defendant | Mr A R J Freshwater appeared in person | |
TABLE OF CONTENTS
Introduction........................................................................................................................................ 1
Background......................................................................................................................................... 1
The proceeding and the pleadings............................................................................................. 1
The proceeding was stayed as against second and third defendants................................... 4
The proceeding was referred to mediation............................................................................... 4
The plaintiff’s summons seeking reinstatement and entry of judgment............................... 4
Relief sought by the plaintiff....................................................................................................... 4
The hearing of the application on 16 June 2020........................................................................ 6
Terms of settlement........................................................................................................................... 7
Events following entry into the terms of settlement................................................................. 11
The first defendant’s response...................................................................................................... 13
Legal principles................................................................................................................................ 15
Summary procedure to enforce terms of settlement.............................................................. 15
Analysis and Conclusion................................................................................................................ 18
HER HONOUR:
Introduction
By summons dated 20 April 2020, the plaintiff seeks reinstatement of this proceeding as against the first defendant, Andrew Robert James Freshwater (the first defendant), and then it moves for judgment to be entered as against him in the sum of $205,000 together with costs and interest on the whole amount of the judgment debt from the date of default in payment.
The judgment the plaintiff seeks to have entered is founded on terms of settlement that were entered into between the parties on 1 November 2018, in the circumstances described below. The question raised by the plaintiff’s summons is whether justice can be done if the Court were summarily to enforce the compromise reached between the parties, in the existing proceeding, being the procedure that was approved by the Full Court in Roberts v Gippsland Agricultural and Earth Moving Contracting Co Pty Ltd.[1]
[1][1956] VLR 555 (Roberts).
For the reasons which follow, I am satisfied that it is appropriate to grant the relief sought by the plaintiff.
Background
The proceeding and the pleadings
The plaintiff was, at all material times, the registered proprietor of land located at 2248 Tantanon Road, Mathoura, 2170 (the Farm). The plaintiff proposed to conduct a large sheep farming enterprise at the Farm.
On 15 February 2016, the plaintiff employed Mr Freshwater, who held himself out as a farming consultant, to serve as the plaintiff’s Farm manager. At that time, Mr Freshwater was also the sole director of Certified Dorper Lamb Pty Ltd and Moorella Farming Pty Ltd. Certified Dorper Lamb Pty Ltd was the trustee of the IAG Farm Inputs Hybrid Trust (IAG Farm Inputs) and the Australian Precision Farming Hybrid Trust (APF Trust).
By writ filed on 16 November 2017, the plaintiff commenced proceedings against Mr Freshwater (as the first defendant) and three others. The second defendant, FG Agri Pty Ltd (FG Agri), carried on a business of providing consulting services to the farming industry. The third defendant, David Charles Knowles Anderson, was, at all material times, the managing director, secretary and shareholder of FG Agri. The fourth defendant, Angela Murphy, was, at all material times, the domestic partner and wife of the first defendant.
In its statement of claim filed on 16 November 2017, the plaintiff alleged that between 15 February 2016 and 24 March 2016, the first and second defendants represented to the plaintiff that:
(a) the plaintiff should purchase seeds, fertilizers and other farming products from IAG Farm Inputs;
(b) IAG Farm Inputs was a well-known and established business in the farming industry;
(c) IAG Farm Inputs would supply and deliver seeds, fertilizers and other farming products to the Farm;
(d) the plaintiff should engage Australian Precision Farming to supply labour to the Farm;
(e) Australian Precision Farming was a well-known and established business in the farming industry; and
(f) Australian Precision Farming would supply and deliver labour to the Farm.
The plaintiff contended that these representations were misleading or deceptive or likely to mislead or deceive, and that, in reliance on these representations, the plaintiff made payments for seeds, fertilizers and farming products.
The first defendant, as agent for the plaintiff, entered into various agreements with IAG Farm Inputs to supply the plaintiff with various services and products including glyphosate, seeds and DAP fertiliser (the supply agreements). The plaintiff contended that not all of these services or products were delivered.
The plaintiff claimed that the first defendant breached the terms of his employment and fiduciary duties by, inter alia, failing to disclose to the plaintiff that he controlled and would make profits from the payments made by the plaintiff to IAG Farm Inputs, the APF Trust and Certified Dorper Lamb Pty Ltd. The plaintiff claimed it suffered loss and damage of $352,481.05 due to the first defendant’s breaches.
The plaintiff also claimed that the first defendant breached the terms of his employment and fiduciary duties by advising the plaintiff to not accept a certain offer to buy sheep in March 2016, and in circumstances where the first defendant later procured Certified Dorper Lamb Pty Ltd to purchase those same sheep.
Relevantly, for present purposes, the plaintiff also made claims in the proceeding in respect of its purchase from the first defendant in May 2016 of an airseeder, which is an item of agricultural equipment, for the sum of $110,000 plus GST. The plaintiff claimed that representations made by the first defendant, to the effect that the airseeder being sold to the plaintiff was ‘a 2014 model Excel Agriculture Stubble Warrior disc Airseeder’, were misleading or deceptive or likely to mislead or deceive because the airseeder was a 2007 model and that, but for the representations, the plaintiff would not have purchased it. The plaintiff claimed it had suffered loss and damage as a result, and that the market value of the airseeder supplied by the first defendant was nil.
The plaintiff also claimed that the third defendant knowingly assisted the first defendant in breaching his fiduciary duties, and that the fourth defendant received a sum of money that the first defendant had misappropriated from the plaintiff.
In his defence filed on 31 May 2018, the first defendant effectively denied the plaintiff’s allegations.
The proceeding was stayed as against second and third defendants
By summons dated 30 January 2018, the second and third defendants sought a stay of all matters in dispute between them and the plaintiff pursuant to cl 10.5 of a management consultancy services agreement and s 8(1) of the Commercial Arbitration Act 2011 (Vic). By orders made by Elliott J on 27 April 2018, the proceeding was struck out as against the second and third defendants with a right of reinstatement, and no order as to costs.[2]
[2]By consent of the plaintiff and the second, third and fourth defendants.
The proceeding was referred to mediation
On 31 August 2018, Elliott J made orders fixing the proceeding for trial, and referring it to mediation in the meantime.
At the mediation on 1 November 2018, the parties (being relevantly the plaintiff, the first defendant and the fourth defendant) agreed to settle the matter and entered into a deed of settlement and release dated 1 November 2018 (terms of settlement).[3]
[3]First Dedini affidavit, exhibit BD-1.
Following the mediation, the parties informed the Court that they sought orders, by consent, dismissing the proceeding against each of the first defendant, and the fourth defendant respectively, in each case with a right of reinstatement reserved to the plaintiff, and with no order as to costs. On 9 November 2018, orders were made accordingly, by consent, on the papers.
The plaintiff’s summons seeking reinstatement and entry of judgment
Relief sought by the plaintiff
In its summons, the plaintiff seeks orders ‘by consent’ that:
a) the proceeding be reinstated as against the [first d]efendant;
b) there be judgment for the [p]laintiff in the sum of $205,000;
c)the costs of the application, and any costs associated with the reinstatement of the proceeding, be paid by the [first d]efendant on an indemnity basis; and
d)the [first d]efendant pay interest at the rate for the time being fixed under s 2 of the Penalty Interest Rates Act 1983 [(Vic)] on the whole amount of the judgment debt of $205,000.00 then outstanding to be calculated from the date of default in making payment under the [terms] of settlement…
The plaintiff’s summons was listed for directions on 24 April 2020. In advance of the directions hearing, the parties informed the Court that they had agreed upon a timetable for completion of the steps required in advance of the summons being heard, and requested that the Court fix a date for the hearing. On 23 April 2020, orders were made by consent, on the papers, giving effect to the agreed timetable and fixing the summons for hearing on 16 June 2020.
In support of its application, the plaintiff filed an affidavit of Ms Brooke Dedini, the solicitor for the plaintiff, sworn on 8 April 2020 (first Dedini affidavit) and a further affidavit of Ms Dedini sworn on 15 June 2020 (second Dedini affidavit). It also filed an outline of submissions on 29 May 2020 and further submissions on reinstatement for judgment on 9 June 2020.
The first defendant failed to file, within the time frames fixed by the 23 April 2020 orders, any affidavit material or outline of submissions in opposition to the relief sought by the plaintiff in its summons. However, at noon or thereabouts on 15 June 2020, being the day prior to the hearing, the first defendant, with assistance from the self-represented litigant’s co-ordinator, sought to file a short affidavit which was ‘sworn or affirmed’ earlier that day (the Freshwater affidavit).[4] The Freshwater affidavit was accepted for filing but on the basis that the first defendant would need to seek leave to rely upon it at the hearing and the plaintiff would have an opportunity to respond. The second Dedini affidavit (mentioned above) was filed in response to the Freshwater affidavit.
[4]At the hearing, Mr Freshwater confirmed that the affidavit was affirmed before a police officer at the North Melbourne police station.
Also on 15 June 2020, the first defendant’s (former) solicitors, Russell Kennedy, filed a notice of ceasing to act.
The hearing of the application on 16 June 2020
The hearing of the summons proceeded on 16 June 2020 by way of an audio-visual and audio link, each of the parties having consented to that course. Mr N Andreou of counsel appeared on behalf of the plaintiff, and the first defendant appeared in person.
At the outset of the hearing, counsel for the plaintiff informed the Court that the plaintiff did not oppose the first defendant relying on his late-filed affidavit provided that the plaintiff be permitted to rely on the second Dedini affidavit filed in response. The first defendant stated that he was content with that course, whereupon each of the affidavits of Ms Dedini and the Freshwater affidavit were received in evidence.
Counsel for the plaintiff commenced by adopting the written submissions that had been filed, and he then proceeded to summarise the plaintiff’s position. In essence, counsel submitted that on the basis of the material that has been filed, it is appropriate for the Court summarily to enforce the compromise reached by the parties (as recorded in the terms of settlement) through the existing proceeding, and the Court can be satisfied that justice can be done by invoking the procedure that was approved by the Full Court in Roberts.[5] He observed that:[6]
There are no extraneous matters or substantive questions arising that would render this an inappropriate course. In particular, there is no dispute about the unconditional terms of settlement, whether they are valid and binding, or whether the first defendant (‘Mr Freshwater’) has defaulted on his obligations.
[5][1956] VLR 555.
[6]Plaintiff’s submission on reinstatement, at [3].
The first defendant opposed the relief sought. His position, as set out in the Freshwater affidavit, was to the effect that the airseeder he undertook to purchase from the plaintiff under the terms of settlement was not maintained in good order and condition and had been modified from its original condition such that he has ‘in fact been sold a mechanically unsound, structurally compromised and expensive piece of scrap metal that [he has] been unable to use.’[7] However, Mr Freshwater stated that he is ‘more than happy to finalise the money owing to the plaintiff’ once the condition of the airseeder is rectified and ‘presented in the condition as it was described in the settlement.’[8]
[7]Freshwater affidavit, at p 2.
[8]Ibid.
Against that background, it is convenient to turn to the terms of settlement.
Terms of settlement
The terms of settlement[9] were made between the plaintiff and the first defendant only, against the background of the current proceeding, and ‘[s]olely for the purpose of avoiding the further cost and uncertainty of litigation’.[10] Clause 2.2 stated that ‘[t]he parties have agreed to settle all Claims[11] arising in or in respect of the Proceeding on the terms and payments referred to below.’
[9]A copy of the terms of settlement appears as exhibit BD-1 to the first Dedini affidavit.
[10]First Dedini affidavit, exhibit BD-1, recital C.
[11]The expression ‘Claims’ is defined in cl 1.1(c) to mean, ‘unless the subject matter or the context otherwise requires’, ‘any claim, demand, cause of action, suit, liability or proceeding, notice of contribution, including the claims made in the Proceeding, made against the person concerned, however it arises and whether it is present or future, fixed or unascertained, actual or contingent.’
Clause 3 of the terms of settlement is headed ‘Payment by Freshwater to AXF’ (AXF being the plaintiff). Clause 3.1 provides that the first defendant must pay to the plaintiff ‘the sum of $360,000 (Settlement Sum) in the instalments set out in paragraph 3.2’, by way of electronic funds transfer to the trust account of the plaintiff’s solicitor.
Clause 3.2 provides that the instalments must be paid in equal monthly instalments of $15,000 on the first business day of each calendar month, commencing 3 December 2018, save that the first defendant ‘may prepay any part of such Settlement Sum and then become entitled to a moratorium on payment insofar as a pre-payment has been made to [the plaintiff].’
In the event that the first defendant fails to pay any part of the Settlement Sum in accordance with cll 3.1 and 3.2, cl 3.3 of the terms provides as follows:
3. Payment by Freshwater to AXF
. . .
3.3In the event that [the first defendant] fails to pay any part of the Settlement Sum in accordance with clauses 3.1 and 3.2 when it falls due and, after 5 Business Days’ written notice of default has not remedied the default, the whole of the Settlement Sum together with interest which remains unpaid shall immediately become due and payable (without any demand therefore) and [the plaintiff] shall forthwith be at liberty to:
(a)apply ex parte to the Court in which the Proceeding is issued for orders and judgment in the Proceeding in accordance with this clause;
(b)reinstate the Proceeding against [the first defendant];
(c)enter judgment by consent against [the first defendant] for:
(i)the whole amount of the Settlement Sum then outstanding;
(ii)the costs of the application and any costs associated with the reinstatement of the Proceeding; and
(iii)interest at the rate for the time being fixed under section 2 of the Penalty Interest Rates Act (Vic) 1983 on the whole amount of the Settlement Sum then outstanding calculated from the date of default in making payment under these Terms of Settlement to the date of the judgment;
(d)conclusively prove the default of [the first defendant] and the amount of the Settlement Sum then outstanding, together with interest, by an affidavit of the solicitor for [the plaintiff] based on information and belief and tender to the Court, without further proof of authentication, these Terms of Settlement as conclusive evidence of the irrevocable consent of [the first defendant] to judgment being entered in the Proceeding.
Clause 3.4 of the terms of settlement provides that the parties consent to orders being made that the proceeding be dismissed against the first defendant with a right of reinstatement reserved to the plaintiff. Clause 3.5 requires the parties to ‘cooperate with each other to promptly file minutes of such orders with the Court in the Proceeding.’
Clause 4 of the terms of settlement deals with the ‘airseeder’ (which was a subject of the plaintiff’s complaint in the proceeding). Clause 4 provides that upon the first defendant paying a total of $110,000.00 of the Settlement Sum, the plaintiff shall permit the first defendant to take possession of and title to its airseeder, as follows: [12]
[12]First Dedini affidavit, exhibit BD-1, cl 4.
4. Airseeder
4.1Within 5 Business Days of [the first defendant] requesting from [the plaintiff] a tax invoice for the airseeder which is the subject of complaint at paragraph 71-76 of [the plaintiff’s] statement of claim dated 16 November 2017 (Airseeder), [the plaintiff] shall provide such tax invoice (including the compliance plate information) addressed to [the first defendant] or a nominee entity controlled by him in the sum of $110,000 inclusive of GST.
4.2Upon [the first defendant] making payment to [the plaintiff] of a total of $110,000 of the Settlement Sum:
(a)[the plaintiff] shall permit [the first defendant] to take possession of the Airseeder and title on the Airseeder shall pass from [the plaintiff] to [the first defendant] at that time;
(b)[the first defendant] shall promptly collect the Airseeder.
4.3From the date of these Terms of Settlement until [the first defendant] collects the Airseeder after title in the Airseeder passes to [the first defendant] under clause 4.1 or judgment is entered against [the first defendant] under clause 3.3, upon 24 hour prior notice to Mr Sean Wang of [the plaintiff] by SMS to phone number [### ### ###], [the plaintiff] grants to [the first defendant] an irrevocable, royalty free licence to attend the Kendorwal Farm at 2248 Tantanon Road, Mithoura, NSW during usual business hours where [the plaintiff] has stored the Airseeder for the sole purpose of effecting repairs to the Airseeder.
4.4[The first defendant] accepts the Airseeder in an “as is” condition as at the date of these Terms of Settlement.
As noted earlier, the first defendant’s opposition to the enforcement of the terms of settlement and entry of judgment in the proceeding arises in relation to the dealings with the airseeder.
Clause 5 provides that upon execution of the terms of settlement, the plaintiff and the first defendant release and discharge each other as follows:
5.1Upon execution of these Terms of Settlement, [the plaintiff] releases and forever discharges [the first defendant] from and against all Claims, actions, costs, demands whatsoever it has or may have or but for these Terms of Settlement may have had against [the first defendant] in respect of or otherwise arising out of or in any way connected to the facts or circumstances the subject of the Proceeding, including all claims for legal costs and other costs, any liability for GST or interest.
5.2Upon execution of these Terms of Settlement, [the first defendant] releases and forever discharges [the plaintiff] from and against all Claims, actions, costs, demands whatsoever he has or may have or but for these Terms of Settlement may have had against [the plaintiff] in respect of or otherwise arising out of or in any way connected to the facts or circumstances the subject of the Proceeding, including all claims for legal costs and other costs, any liability for GST or interest.
5.3Nothing in this clause 5 is intended to release any party from an obligation assumed under these Terms of Settlement.
5.4Nothing in this clause 5 is intended to release [the first defendant] from the costs order made against him in proceeding S Cl 2016 4746 made 1 August 2017.
Clause 6 deals with ‘Costs and Expenses’, cl 7 with ‘Severability’, and cl 8 with ‘No Assignment’. Clause 9 is headed ‘Plea in Bar’ and provides that the terms of settlement ‘may be pleaded to in any Court as a bar to any action, suit, claim, cause of action or proceeding commenced or at any time to be commenced by any party which is inconsistent with or contrary to these Terms of Settlement.’ Clause 10 provides that ‘time is of the essence’, and cl 11 contains a series of warranties and acknowledgments given or made between the parties, as follows:
11.1Each of the parties to these Terms of Settlement warrants and acknowledges to each other party that:
(a)they have had adequate opportunity to obtain competent legal and other professional advice concerning the terms of these Terms of Settlement;
(b)they have had the opportunity to negotiate the terms of these Terms of Settlement;
(c)they consider that the terms of these Terms of Settlement are fair in all the circumstances;
(d}they enter into these Terms of Settlement voluntarily and without duress; and
(e)the terms of these Terms of Settlement are binding upon each of them, according to the terms of these Terms of Settlement.
Clause 12 sets out a number of ‘General’ provisions. Relevantly, cl 12.1 states that the terms of settlement set out ‘the entire agreement between the parties in relation to the subject matter’ and cl 12.11 states that the terms of settlement are ‘governed by the law in force in Victoria’.
Events following entry into the terms of settlement
Following entry into the terms of settlement on 1 November 2018, the first defendant made the following payments into the plaintiff’s solicitor’s trust account:[13]
[13]First Dedini affidavit, at [3].
(a) $15,000.00 on 3 December 2018;
(b) $15,000.00 on 31 December 2018;
(c) $15,000.00 on 4 February 2019; and
(d) $15,000.00 on 4 March 2019.
On 1 February 2019, the first defendant, by his (then) solicitor, sent an email to the plaintiff’s solicitor requesting that the plaintiff provide a tax invoice for the airseeder in accordance with cl 4 of the terms of settlement, addressed to her client’s nominee entity ‘Clear Creek Pastoral Co Pty Ltd’.[14] On 7 February 2019, the plaintiff’s solicitor provided the plaintiff’s tax invoice to the first defendant’s solicitor.[15]
[14]Second Dedini affidavit, exhibit BD-2.
[15]Ibid.
On 4 March 2019, the first defendant’s solicitor sent an email to the plaintiff’s solicitor informing her that the first defendant is financing the bulk of the cost of the airseeder and his financial arrangements are in place such that he ‘stands ready to make a forward payment of the Settlement Sum which will take him over the threshold to be entitled to take ownership of the airseeder.’ In those circumstances, the first defendant’s solicitor requested, inter alia, confirmation that the airseeder ‘remains in substantially the same state it was in at the date of execution of the Terms of Settlement’ and requested a photograph of the airseeder and a close up of the compliance plate information.[16]
[16]Second Dedini affidavit, exhibit BD-3.
On 7 March 2019, the plaintiff’s solicitor responded by email to the first defendant’s solicitor enquiring as to the amount the first defendant proposed to pay that will ‘take him over the threshold amount’ (of $110,000).[17] The first defendant’s solicitor responded by email later that day by confirming that she would seek instructions and revert accordingly.[18] By email sent on 18 March 2019, the first defendant’s solicitor followed up by advising the plaintiff’s solicitor that the first defendant would be financing $95,000.00 towards the airseeder, and she also sought a response to her email of 4 March 2020.[19]
[17]Ibid. Clause 4.2 provided that that upon the first defendant paying a total of $110,000.00 of the Settlement Sum, the plaintiff shall permit the first defendant to take possession of the airseeder and title on the airseeder shall pass from the plaintiff to the first defendant at that time.
[18]Ibid.
[19]Ibid.
On 19 March 2019, the plaintiff’s solicitor responded to the first defendant’s solicitor, attaching photographs of the airseeder and its compliance plate and providing the payout figures as requested.[20]
[20]Ibid. As at 7 March 2019, a payment of $57,932.56 was owing to the Commonwealth Bank and the balance of $37,067.44 was payable directly to the plaintiff’s nominated bank account.
On 1 April 2019 at 3.46pm the plaintiff’s solicitor emailed the first defendant’s solicitor confirming that settlement had taken place.
The plaintiff’s solicitor, Ms Dedini, deposes that on 8 April 2019, the first defendant made the following payments (totalling $95,000.00) to the plaintiff:[21]
(a) $58,260.89 to the plaintiff’s Commonwealth Bank of Australia Loan Account; and
(b) $36,739.11 to the plaintiff’s Westpac Banking Corporation bank account.
[21]First Dedini affidavit, at [10] and exhibit BD-4.
To that point in time, the amount of the Settlement Sum that the first defendant had paid through instalments amounted to $155,000.00.[22] Accordingly, Ms Dedini deposes that in those circumstances, under cl 3.2 of the terms of settlement, the first defendant was entitled to a moratorium in respect of the $15,000.00 monthly instalments for the months of April to September 2019 inclusive, and $5,000.00 of the October 2019 instalment.[23]
[22]First Dedini affidavit, at [11].
[23]First Dedini affidavit, at [12].
On 3 December 2019, however, no further payments having been made, the plaintiff’s solicitor emailed the first defendant’s solicitor and gave notice under cl 3.3 of the terms of settlement, requesting that the first defendant remedy the default.[24] On 10 December 2019, the plaintiff’s solicitor sent a further email to the first defendant’s solicitor advising that as no response had been forthcoming, she would contact the first defendant directly.[25]
[24]First Dedini affidavit, at [13] and exhibit BD-5.
[25]First Dedini affidavit, at [13] and exhibit BD-5.
On 10 December 2019, the plaintiff’s solicitor emailed the first defendant, giving him notice under cl 3.3 of the terms of settlement and requesting that he remedy the default. The plaintiff’s solicitor informed the first defendant that a total of $40,000 was owing under the Terms, being the balance of the October 2019 payment ($10,000) and the November and December 2019 payments ($30,000).[26]
[26]First Dedini affidavit, at [14] and exhibit BD-6.
Ms Dedini, deposes that the first defendant has not remedied the default and he has not made the payments that were due on 1 January 2020, 1 February 2020, 1 March 2020 and 1 April 2020.[27]
[27]First Dedini affidavit, at [15].
Against that background, by summons filed on 20 April 2020, the plaintiff sought to have the proceeding reinstated and for judgment and associated orders to be entered pursuant to the terms of settlement, using the summary procedure approved in Roberts.
The first defendant’s response
The first defendant responded somewhat belatedly to the plaintiff’s application by filing the Freshwater affidavit on the day prior to the hearing. No outline of submissions was filed by him in accordance with the procedural timetable fixed by the Court, or otherwise.
In essence, Mr Freshwater deposes that having undertaken to purchase the airseeder from the plaintiff as part of the finalisation of the mediation, he was unable to collect it personally following the settlement in 2019 ‘[d]ue to extenuating circumstances with drought.’[28] Accordingly, he says he ‘engaged a friend to tow the airseeder from the plaintiff’s property in 2019 and store it on a [sic] another property until [he] was able to organise to pick it up.’[29] Further, he says that when he picked up the airseeder in early 2020, he ‘found it to be not in the condition that it was to be in and described, as agreed in the settlement of the mediation.’[30] Mr Freshwater deposes that ‘the airseeder is in extremely poor condition and requires a large amount of money to be spent on it to make it usable’ and that ‘there has also been modifications by way of holes drilled into the frame of the airseeder’ that he believes ‘will lead to a compromise in the structural integrity of the airseeder.’[31]
[28]Freshwater affidavit, at p 1.
[29]Freshwater affidavit, at p 1.
[30]Freshwater affidavit, at p 1.
[31]Freshwater affidavit, at pp 1–2.
In those circumstances, Mr Freshwater now contends that he has ‘been sold a mechanically unsound, structurally compromised and expensive piece of scrap metal that [he has] been unable to use.’[32] However, he says that he is ‘more than happy to finalise the money owing to the plaintiff’ once the airseeder is restored to the working condition ‘that [he] paid for and expected to be delivered.’[33]
[32]Freshwater affidavit, at p 2.
[33]Freshwater affidavit, at p 2.
Mr Freshwater also maintained that he has attempted to contact the plaintiff’s solicitor by telephone on three occasions and has left messages but none of them has been returned. He deposed that ‘this has made it very difficult to convey [his] disappointment and disbelief at the poor condition of the machinery.’[34] However, he fails to identify any time frame for when he contends these phone messages were left. Ms Dedini has responded to this allegation by stating to the effect that she denies having received any telephone messages from the first defendant to return his call nor have the firm’s receptionists received any such messages.[35]
[34]Freshwater affidavit, at p 1.
[35]Second Dedini affidavit, at [3]–[4].
Legal principles
Summary procedure to enforce terms of settlement
As noted earlier, here the plaintiff has invoked the summary jurisdiction most commonly identified with the 1956 decision of the Full Court of the Supreme Court of Victoria in Roberts,[36] by issuing a summons in the original proceeding seeking ‘what is, in effect, an order enforcing the agreement specifically’[37] instead of commencing a fresh proceeding for specific enforcement of the terms of settlement.
[36][1956] VLR 555.
[37]Ibid, at 561.
In Roberts, a proceeding was settled on terms which required the defendant to pay an agreed amount to the plaintiff. Upon default by the defendant, the plaintiff applied for reinstatement of the proceeding and moved to enforce the terms of the settlement deed. The trial judge (Dean J) ordered that judgment be entered. On appeal, the defendant argued that this required a new cause of action and so was beyond the scope of the extant proceeding. The Full Court disagreed and allowed summary enforcement in the exercise of its equitable jurisdiction.
In the leading judgment, Smith J described the summary procedure that in practice is used to enforce terms of settlement, as follows:[38]
[38]Ibid, at 562–563 (citations omitted).
(a)The Court would ordinarily leave a party to proceed by separate bill if the agreement involved matters extraneous to the suit compromised. And it regarded an agreement as falling within this general category (i) if it dealt with property as to which no question was raised in the suit, or (ii) if it provided for things to be done which went beyond the ordinary range of what the Court would order in such a suit, or (iii) if its enforcement involved giving effect to equities of a different nature from those involved in the suit, or (iv) if there were parties to the agreement who were not parties to the suit . . .
(b)On the other hand in cases not falling within this first general category the Court would ordinarily enforce the agreement in the suit compromised. In particular this was so if the agreement related solely to the conduct or prosecution of that suit, or to the staying or dismissal thereof, or to the granting of the whole or part of the relief claimed therein or to the doing of that which the suit was brought to enforce . . .
(c)For the purpose of deciding which of these two general categories a case fell within, the Court did not look merely at the particular obligations sought to be enforced. It looked also at the obligations of the applicant, so far as justice required that the application should not be granted without ensuring that they too would be performed . . . But it would disregard altogether obligations already fully performed . . . It may be observed that in order to ensure the performance of obligations by the applicant the Court could make an order conditional upon such performance . . . .
(d)If there was a substantial question to be determined as to what were the terms of the agreement, or as to whether it was valid or specifically enforceable, as for example where a substantial case was put forward of material mistake or of other circumstances such as would afford a defence to a suit for specific performance, a party would ordinarily be left to proceed by separate bill so that the matters raised might be fully investigated . . .
(e)The fact that the only outstanding obligation under the agreement of compromise was one for the payment of an ascertained sum of money did not preclude the Court from enforcing the agreement in the suit . . .
(f)Circumstances which might dispose the Court to enforce in the suit compromised an agreement which otherwise would not have been so enforced included—
(i)that the agreement contained an express stipulation that it should be made a rule of Court, or, presumably an express stipulation that an order for its enforcement should be made in the suit . . . ; or
(ii)that immediate interference was essential in order to give effect to the agreement.
Further, his Honour continued to observe that in order to decide whether justice can be done under the summary procedure, the Court must consider a variety of matters involving questions of degree. He said such matters ‘include the extent to which extraneous matters are involved, how substantial are the questions to be determined, to what extent questions of credibility are likely to arise, and whether pleadings and discovery may be desirable.’[39] Two further points his Honour mentioned were first, that if the action has been stayed or struck out, it must be ‘reinstated as an action for trial, before the agreement is enforced on motion in the action’.[40] Secondly, he said ‘an important consideration in determining whether the summary procedure should be adopted’ is that ‘the Court is not bound to give effect to such an agreement’; rather ‘[i]t has a discretion as to whether it will do so’.[41]
[39]Ibid, at 564.
[40]Ibid, at 565.
[41]Ibid.
The other members of the Full Court were of a similar view. In a joint judgment, Lowe and O’Bryan JJ stated that:[42]
Both on principle and in accordance with Victorian authorities we have no doubt that in certain simple cases an agreement for the compromise of an action may be enforced on a motion for judgment in the action itself in accordance with the agreed terms. If the action itself is still on foot, not having been stayed or discontinued or struck out or its normal progress otherwise interrupted; and if the claim in the action is for payment of a sum of money for one of the common counts, such as work and labour done, and the compromise is upon terms that the defendant pay to the plaintiff an agreed amount at an agreed date in full settlement of the plaintiff’s claim in the action, and with an agreement by the defendant that in default of payment the plaintiff may enter judgment for that amount and that the defendant will consent to such judgment, we entertain no doubt that this Court has jurisdiction on motion in the action to direct that judgment be entered for the agreed sum if the defendant makes default in payment —even if at that stage the defendant is, contrary to her agreement, no longer a consenting party.
[42]Ibid, at 557.
More recently, in Seachange Management Pty Ltd v Pital Business Pty Ltd,[43] the Victorian Court of Appeal summarised the ‘net effect of the authorities to this point’, stating that:[44]
. . . although the power summarily to enforce a compromise is discretionary and is wider now than once was the case, it is not to be invoked unless the court is ‘clearly satisfied that justice can be done’; and whether justice can be done is a question of degree. Consistently with the equitable origins of the power, one must weigh among other competing considerations the extent to which enforcement would involve extraneous matters, how substantial the questions to be determined as a precursor to enforcement may be, and procedural considerations like the desirability of pleadings and discovery and substantial cross-examination.
[43](2009) 23 VR 396 (Seachange).
[44]Seachange, at 408 [40] (Maxwell P and Nettle JA).
The power summarily to enforce a compromise, as outlined in Roberts and Seachange, has been exercised by the courts in Victoria in numerous cases.[45]
[45]See, for example: Barratt v Rees [2014] VSCA 327; Fuji Xerox Australia Pty Limited v Xtreem Pty Ltd & Ors [2017] VSC 333; Ugrinovski v Naumovski [2018] VSC 437; Wang v Malop Street Pty Ltd [2019] VSC 193; Rigoni Private Finance Pty Ltd v Sarar Australia and NZ Pty Ltd [2019] VSC 539.
Analysis and Conclusion
In the present case, the terms of settlement were entered into on 1 November 2018 at or following the Court ordered mediation of the proceeding. Each of the plaintiff and the first defendant was represented at the mediation by counsel and solicitors.
Relevantly, the parties agreed to settle the claims in the proceeding, effectively on the basis that the first defendant would pay the plaintiff the sum of $360,000, being the Settlement Sum, by way of instalments of $15,000 per month commencing on 3 December 2018. The parties also agreed that in the event of any default in payment, the whole of the Settlement Sum would become immediately due and payable and the plaintiff would be at liberty to apply ex parte to the Court for reinstatement of the proceeding and to enter judgment by consent.
The airseeder, which the plaintiff had alleged in the proceeding was defective and not fit for purpose, was also made the subject of express provision in the terms of settlement. In essence, the parties agreed that the first defendant could purchase the airseeder from the plaintiff and a mechanism was established under cl 4, whereby once payments to a threshold amount of $110,000 were made, which amount was to form part of the Settlement Sum, the plaintiff would permit the first defendant to take possession of the airseeder and title ’shall pass from [the plaintiff] to [the first defendant] at that time’.[46] To facilitate that course, under cl 4.3, the first defendant could then give notice to the occupants of the Farm in order to gain access and effect repairs to the airseeder, before collecting and removing it.
[46]Terms of settlement, cl 4.2(a).
Clauses 4.3 and 4.4 appear to have been drafted with a view to the allegations the plaintiff had made in the proceeding about the state of disrepair of the airseeder. Clause 4.3 anticipates the necessity to effect repairs to the airseeder to enable it to be moved, in that the clause expressly confers on the first defendant a ‘royalty free licence’ to attend the Farm during usual business hours ‘for the sole purpose of effecting repairs to the Airseeder’. Further, and importantly, under cl 4.4 the first defendant expressly ‘accepts the Airseeder in an “as is” condition as at the date of these Terms of Settlement’, being 1 November 2018.
In my view, in the present case, the position is, as counsel for the plaintiff submitted, that ‘there are no extraneous matters raised by the [first] defendant that go to the validity or the enforceability of the terms of settlement.’[47] The terms of settlement recite by way of introduction, that the parties have agreed to settle the proceeding ‘[s]olely for the purpose of avoiding the further cost and uncertainty of litigation’.[48] Clause 3 of the terms records the Settlement Sum and the instalment payments to be made by the first defendant to the plaintiff, and prescribes the consequences that follow in the event that the first defendant fails to pay any part of the Settlement Sum in accordance with cll 3.1 and 3.2. Importantly, the terms of settlement also included a mechanism for reinstatement of the proceeding, and for proving any default by way of a summary enforcement of the terms ‘by consent’. In addition, under cl 5, each of the parties ‘release[d] and forever discharge[d]’ the other ‘from and against all Claims, actions, costs, demands whatsoever [it or he] has or may have or but for these Terms of Settlement may have had against [the other] in respect of or otherwise arising out of or in any way connected to the facts or circumstances the subject of the Proceeding’.
[47]Transcript, 16.06.2020, at p 18 (Mr Andreou).
[48]Terms of settlement, recital C.
To date the first defendant has paid instalments totalling $155,000, and the balance of $205,000 remains outstanding. Having failed to pay the total sum agreed by way of compromise of the proceeding, the only matter now raised by the first defendant by way of response to the plaintiff’s claim concerns the airseeder that he elected to purchase pursuant to the terms of settlement. In essence, the first defendant states that when he ‘picked up the airseeder in early 2020’ he found the airseeder was ‘in an extremely poor condition’ and ‘there has also been modifications by way of holes drilled into the frame of the airseeder’.[49] He says that he ‘he would not have engaged to purchase it if [he] had known’ that the frame of the airseeder had been modified in this way.[50] However, cl 4.4 of the terms of settlement makes clear that the first defendant expressly accepted the airseeder in an “as is” condition as at the date of the terms of settlement, being 1 November 2018.
[49]Freshwater affidavit, at p 1.
[50]Freshwater affidavit, at pp 1–2.
In the course of his oral submissions, the first defendant acknowledged that at the time of purchase of the airseeder, being during February and March 2019, he was aware that the airseeder was defective and understood what those defects were. He said:[51]
At the time when we were purchasing the air seeder, we understood it to be defective. We understood what the defects were to be. We took that into account. We also went by the photos of the air seeder, which actually didn't - and having dealt with the air seeder earlier when we were engaged to manage the property for Xinyangfeng Fertilizers, I knew the exact condition the air seeder was in, so I took all of that into account.
[51]Transcript, 16.06.2020, at pp 19–20 (Mr Freshwater).
Further, the plaintiff’s solicitor deposes that shortly prior to completion of the purchase, the first defendant’s solicitor requested that the plaintiff provide ‘a photo of the airseeder and a close up of the compliance plate information.’[52] In response, the plaintiff’s solicitor provided four colour photographs, showing the compliance plate and the airseeder.[53]
[52]Second Dedini affidavit, exhibit BD-3, at email dated 4 March 2019.
[53]Second Dedini affidavit, exhibit BD-3, at email dated 19 March 2019.
Under the terms of settlement, upon payment of a total of $110,000 of the Settlement Sum, which took place in March 2019, property in the airseeder passed to the first defendant, and he was required to ‘promptly collect the Airseeder.’ The first defendant deposes that ‘[d]ue to extenuating circumstances with drought’, he engaged a friend ‘to tow the airseeder from the plaintiffs [sic] property in 2019 and store it on a [sic] another property until [he] was able to organise to pick it up.’[54] He did not pick up the airseeder from the other property until ‘early 2020’ and when he did so he says he ‘found it to be not in the condition that it was to be in and described, as agreed in the settlement of the mediation.’[55]
[54]Freshwater affidavit, at p 1.
[55]Ibid.
The first defendant’s ‘complaint’ about the condition of the airseeder is of recent origin. There is no evidence of any concern having been raised by him at or about the time of settlement, or at the time of collection of the airseeder from the plaintiff’s Farm. Indeed, the plaintiff’s solicitor deposes that she has ‘not received any written correspondence from the [first defendant] regarding the condition of the [airseeder] until service of the Freshwater Affidavit’,[56] which took place on the afternoon before the hearing.
[56]Second Dedini affidavit, at [5].
The first defendant entered into the terms of settlement against the background of the allegations made in the proceeding, and in circumstances where he knew that the plaintiff had complained about the condition of the airseeder. Under those terms not only did he accept the airseeder in its “as is” condition, he also ‘release[d] and forever discharge[d]’ the plaintiff from any claims he may have ‘in respect of or otherwise arising out of or in any way connected to the facts or circumstances the subject of the Proceeding’.[57]
[57]Terms of settlement, cl 5.2.
In the circumstances, I am satisfied that it is appropriate for the Court to exercise its discretion and accede to the plaintiff’s request to exercise the power summarily to enforce the compromise entered into between the parties. In my view, the present case does not fall within the class of cases that Smith J identified in Roberts[58] as requiring a separate action to be brought; nor is it one where it is desirable that there be pleadings and discovery and extensive cross-examination. I am satisfied that by invoking the Roberts jurisdiction and exercising the power to enforce the compromise summarily in the existing proceeding will enable justice to be done in the present case.
[58]Referred to above, at paragraph (d) of the passage set out in paragraph [57].
In reaching that view I have also had regard to the obligations imposed on the Court by the Civil Procedure Act 2010 (Vic) (CPA). Under the CPA, the Court, when exercising any of its powers, must seek to give effect to the ‘overarching purpose’, which is to facilitate the just, efficient, timely and cost-effective resolution of the real issues in dispute.[59] Further, in making any order or giving any direction in a civil proceeding, the Court is required to further the overarching purpose by having regard to the following objects—[60]
[59]Section 8(1).
[60]Section 9(1).
(a)the just determination of the civil proceeding;
(b)the public interest in the early settlement of disputes by agreement between parties;
(c)the efficient conduct of the business of the court;
(d)the efficient use of judicial and administrative resources;
(e)minimising any delay between the commencement of a civil proceeding and its listing for trial beyond that reasonably required for any interlocutory steps that are necessary for—
(i)the fair and just determination of the real issues in dispute; and
(ii)the preparation of the case for trial;
(f) the timely determination of the civil proceeding;
(g) dealing with a civil proceeding in a manner proportionate to—
(i) the complexity or importance of the issues in dispute; and
(ii) the amount in dispute.
The Court may also have regard to matters such as ‘any prejudice that may be suffered by a party as a consequence of any order proposed to be made’[61] and ‘the extent to which the parties have had the benefit of legal advice and representation.’[62]
[61]Section 9(2)(f).
[62]Section 9(2)(g).
In the present case, the settlement was reached at or following a Court-ordered mediation. The claims made in the proceeding were compromised in the manner set out in the terms of settlement, and in circumstances where each party had the benefit of legal advice and representation. In the terms of settlement, the parties expressly agreed that in the event of default in payment the plaintiff would be at liberty to apply to reinstate the proceeding as against the first defendant and seek summary enforcement of the compromise. In those circumstances, the exercise of the power to enforce summarily the compromise entered into between the parties will, in my view, further the overarching purpose and demonstrably promote the objects of the efficient conduct of the business of the court and the efficient use of judicial and administrative resources, and the just determination of the civil proceeding.
For the foregoing reasons, I propose that orders of the kind sought by the plaintiff be made, reinstating the proceeding and entering judgment for the plaintiff for the sum of $205,000.00, being the whole amount of the Settlement Sum outstanding pursuant to cl 3 of the terms of settlement, together with interest thereon.
I will hear from the parties on the precise form of the orders to be made, and on the question of costs.
SCHEDULE OF PARTIES
| AUSTRALIAN XINYANGFENG FERTILIZER PTY LTD (ACN 607 433 652) | Plaintiff |
| -and- | |
| ANDREW ROBERT JAMES FRESHWATER | First Defendant |
| FG AGRI PTY LTD (ACN 167 234 424) | Second Defendant |
| DAVID CHARLES KNOWLES ANDERSON | Third Defendant |
| ANGELA MURPHY | Fourth Defendant |
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