Byrne v Javelin Asset Management Pty Ltd
[2016] VSCA 214
•13 September 2016
SUPREME COURT OF VICTORIA
COURT OF APPEAL
S APCI 2015 0133
| GERARD LAURENCE BYRNE | Applicant |
| v | |
| JAVELIN ASSET MANAGEMENT PTY LTD | Respondent |
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| JUDGES: | HANSEN, FERGUSON and McLEISH JJA |
| WHERE HELD: | MELBOURNE |
| DATE OF HEARING: | 1 September 2016 |
| DATE OF JUDGMENT: | 13 September 2016 |
| MEDIUM NEUTRAL CITATION: | [2016] VSCA 214 |
| JUDGMENT APPEALED FROM: | [2015] VSC 491 (Judd J) |
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CONTRACT – Deed of settlement – Representative proceedings – Deed varied terms of loans between group members and respondent – Clause 5.18.2 provided that proof of amount owing under loans ‘sufficiently evidenced by an affidavit’ from respondent’s solicitor – Whether respondent required to prove that loan principal was advanced – Whether agreement settling representative proceedings required to be construed beneficially in favour of group members – Dobbs v National Bank of Australasia Ltd (1935) 53 CLR 643; Permanent Trustee Co Ltd v Gulf Import & Export Co [2008] VSC 162, considered.
EVIDENCE – Loan statements provided by director of respondent exhibited to solicitor’s affidavit – Whether statements constituted ‘business records’ – Evidence Act 2008 s 69.
PRACTICE AND PROCEDURE – Respondent not party to one of several representative proceedings resolved by deed of settlement – Whether respondent could acquire rights against group members under deed of settlement – Supreme Court Act 1986 ss 33V, 33ZB, 33ZF.
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APPEARANCES: | Counsel | Solicitors |
| For the Applicant | Mr P D Corbett QC with Mr D L Bailey | Hunts’ Lawyers |
| For the Respondent | Mr M P Costello | HWL Ebsworth Lawyers |
HANSEN JA
FERGUSON JA
McLEISH JA:
The applicant entered into three loan agreements with Great Southern Finance Pty Ltd (‘GSFL’) to fund his investment in certain managed investment schemes called the 2007 and 2008 High Value Timber project, the 2007 and 2008 Diversified Olives Income project and the 2006 and 2007 Wine Grape Income project respectively. GSFL’s interest in those loans was assigned to the respondent by way of a sale of debt agreement dated 31 March 2009.
The enforceability of various loan agreements involving the Great Southern group was challenged in 16 group proceedings instituted under pt 4A of the Supreme Court Act 1986. Each proceeding related to a different project undertaken by the group, including the three projects in which the applicant had invested. The applicant was a group member in each of the proceedings related to those projects. The respondent was a defendant in two of those proceedings, but was not joined as a defendant in the proceeding relating to the Wine Grape Income project. All 16 proceedings were heard together during 2012 and 2013, and the respondent participated in the trial.
The proceedings were settled by execution of a deed of settlement on 23 July 2014. On 11 December 2014, Croft J made orders approving the deed of settlement pursuant to s 33V of the Supreme Court Act 1986.[1] The respondent appeared at the settlement approval hearing. The applicant was among a group of investors that appeared at the hearing and objected to the deed of settlement.
[1]Clarke v Great Southern Finance Pty Ltd (rec and mgr apptd) (in liq) [2014] VSC 516.
The deed of settlement entitled the respondent, in default of specified steps being taken by a borrower, to enter judgment against that borrower in respect of the borrower’s loan balance, together with interest and an amount representing the respondent’s costs. The deed provided that proof of the amount owing would be sufficiently evidenced by an affidavit from the respondent’s solicitor. In reliance on the deed and an affidavit sworn by its solicitor, on 26 March 2015 the respondent filed an originating motion seeking judgment against the applicant in respect of the loans for all three projects. A judge in the Commercial Court gave judgment in favour of the respondent on 17 September 2015. The present application for leave to appeal in respect of that judgment was filed on 18 December 2015.
The applicant contends that the trial judge misconstrued the settlement deed and ought to have required the respondent to establish not only the amount it alleged was owing to it by the applicant, but also that moneys were advanced to him by GSFL to the applicant so as to create any indebtedness in the first place. The applicant further contends that the deed of settlement was not binding upon him in respect of the amount claimed in relation to the Wine Grape Income project, as a result of the respondent not having been a party to the proceeding concerning the loans for that project.
For the reasons that follow, it was not necessary for the respondent to establish that advances had been made to the applicant. The evidence of the solicitor was sufficient to establish the respondent’s entitlement to judgment, in the absence of evidence to the contrary, and the deed of settlement was binding upon the applicant in respect of all three projects notwithstanding that the respondent was not a party to the proceeding in respect of one of those projects. Leave to appeal should be refused.
The deed of settlement
The deed of settlement was executed by various parties, including members of the Great Southern group (including GSFL), directors of Great Southern group companies, the respondent, the ‘BEN Parties’[2] and the lead plaintiffs in the group proceedings.
[2]Being Bendigo and Adelaide Bank Ltd, and various other companies.
The deed recited, among other things, that the respondent had purchased certain loans from GSFL, that the lead plaintiffs sought declarations that the Loan Deeds, as defined, were void and unenforceable, and that the respondent alleged the contrary. The ‘Loan Deeds’ were relevantly defined to include the ‘Loan Agreements the subject of the Group Proceedings’ entered into between the lead plaintiffs and group members and GSFL, which ‘were subsequently assigned’ by GSFL to the respondent. The ‘Loan Agreements’ were in turn relevantly defined to mean ‘the loan agreements under which monies were advanced’ to scheme members to finance their interest in the relevant managed investment schemes.
Clause 4 of the deed of settlement dealt with the settlement of claims involving the respondent and the ‘BEN Parties’. It relevantly provided:
4SETTLEMENT OF CLAIMS INVOLVING BEN PARTIES AND JAVELIN
4.1On and from the Approval Date,[3] all Claims against the BEN Parties and Javelin and any of their respective Related Bodies Corporate will be settled as follows:
[3]Defined to mean the date upon which settlement approval was granted. As mentioned at [3] above, approval was granted on 11 December 2014.
…
4.1.3Javelin will agree to vary the terms of the Loan Deeds of the Lead Plaintiffs and Group Members whose Loan Deeds were assigned to Javelin (collectively, Javelin Borrowers) in accordance with clause 5, whether or not a Javelin Borrower has ceased making repayments.
4.1.4The Lead Plaintiffs for and on behalf of themselves and all Group Members acknowledge and admit the validity and enforceability of the Lead Plaintiffs’ Loan Deeds and the Group Members’ Loan Deeds.
…
4.1.6Each of the Lead Plaintiffs acknowledges and admits their liability to the BEN Parties to pay the Loan Balance under their Loan Deeds.
…
4.1.10The Lead Plaintiffs for and on behalf of themselves and on behalf of all Group Members release the BEN Parties and their Related Entities and Javelin and its Related Entities from all Claims.
…
4.1.12Each of the Lead Plaintiffs for and on behalf of themselves and on behalf of all Group Members and each of the M+K Counterclaim Claimants agree that they will not bring or pursue, or procure that a third party bring or pursue, a Claim against the BEN Parties or their Related Entities and Javelin and its Related Entities.
4.1.13Each of the BEN Parties and their Related Entities and Javelin and its Related Entities may plead this Deed as a bar or defence to any claim or action (including a claim for costs) brought by any of the Lead Plaintiffs, the Group Members or the M+K Counterclaim Claimants relating to a Claim.
The applicant’s loan was assigned to the respondent; he was therefore a ‘Javelin Borrower’ as defined in cl 4.1.3.
Clause 5 dealt with variation of the terms of the Javelin Borrowers’ loans. By cl 5.1, ‘[f]or the purposes of clauses 5.2 to 5.19, a Javelin Borrower’s loan balance is the current loan balance as at 1 May 2014 (Javelin Loan Balance)’. Clause 5.2 required a Javelin Borrower to elect, within 28 days of the ‘Approval Date’, between three options as to repayment of their loan. Clauses 5.4–5.15 outlined these options. A borrower who made an election was entitled to a discount on their loan balance, the quantum of which would depend on which option they chose. The consequences of not making an election were dealt with in clause 5.3:
5.3If a Javelin Borrower fails to make an Election within the time prescribed in clause 5.2 above:
5.3.1no discount on the Javelin Loan Balance owing and no variation to loan terms will be offered and the Javelin Borrower will be deemed to acknowledge and accept the original loan terms and will make monthly loan repayments based on their Javelin Loan Balance over the remaining original loan period at the original interest rate and in the manner otherwise prescribed by the Loan Deed (Original Loan Terms);
5.3.2the Javelin Borrower must complete and sign a new direct debit authority and provide to Javelin within 21 days from the date on which an Election otherwise had to be made.
Clauses 5.16–5.19 dealt with default:
Default
5.16Should a Javelin Borrower fail to make a payment or otherwise default in the performance of any of the terms at clauses 5.4 to 5.15 above (expressly including a default of the Original Loan Terms if clause 5.3.1 applies and/or the failure to provide a direct debt authority as required by clause 5.3.2), such event or events will constitute a default.
5.17If such default is not rectified within 7 days of Javelin giving notice to the relevant Javelin Borrower, Javelin will be entitled to make application to enter judgment against that Javelin Borrower (Default Judgment Provision).
5.18Should the Default Judgment Provision be enlivened:
5.18.1Javelin will be entitled to enter judgment for the Javelin Loan Balance (as defined at clause 5.1 of this Deed) prior to the application of any discount less any amounts received after 1 April 2014, plus interest from the date of default and indemnity costs of and incidental to the default and the application to enter judgment;
5.18.2Proof of the amount owing will be sufficiently evidenced by an affidavit from Javelin’s solicitors; and
5.18.3On Settlement Approval, this Deed will constitute each Javelin Borrower’s irrevocable and unequivocal consent to judgment.
5.19For the purposes only of enforcing the Default Judgment Provision, Javelin will be entitled to make application to enter judgment in either Victoria or Western Australia, at its discretion.
The proceeding to enforce the deed of settlement
By letters dated 11 December 2014 (the ‘Approval Date’ as defined in the deed of settlement), the respondent notified the applicant of the settlement approval and informed him that he was required to make the election described above. To that end, the letters enclosed election notices for the applicant to fill in and return. The applicant did not return the notices.
As a result, on 13 January 2015 the respondent wrote to the applicant stating that, pursuant to the terms of the deed of settlement, he was required to begin making monthly loan repayments based on his remaining loan balance at the original interest rate and to provide new direct debit authorities for each loan by 29 January 2015. Direct debit authority forms were enclosed with the letters.
The applicant did not return the direct debit authorities, and on 3 February 2015 the respondent issued notices of default under cl 5.17 of the deed of settlement. The default was not rectified.
As mentioned, on 26 March 2015 the respondent filed an originating motion seeking judgment on the applicant’s three loans, together with interest and indemnity costs. The supporting affidavit sworn by its solicitor deposed to the deed of settlement and the deed by which GSFL’s loans were assigned to the respondent, and exhibited both deeds. The solicitor gave evidence, based on information from a director of the respondent who was familiar with the books and records and loan files of the respondent, that the applicant had applied to GSFL for loans to fund proposed investments in the relevant managed investment schemes and that ‘on or before 30 June 2007’ GSFL advanced to the applicant loan sums in the following amounts:
(a) 2007 and 2008 High Value Timber project: $126,333.33;
(b) 2007 and 2008 Diversified Olives Income project: $551,795.83; and
(c) 2006 and 2007 Wine Grape Income project: $393,983.34.
The solicitor further swore, on the basis of information from the same director, that statements of account generated from the respondent’s electronic business records for the period after the respondent purchased the loans from GSFL (on 31 March 2009), and which reflected the movement on the applicant’s loan accounts since that date showed the following balances owing:
(d) 2007 and 2008 High Value Timber project: $126,990.84;
(e) 2007 and 2008 Diversified Olives Income project: $549,625.63; and
(f) 2006 and 2007 Wine Grape Income project: $397,134.45.
The statements of account were exhibited to the affidavit.
The matter was heard by the trial judge on 5 August 2015. On 17 September 2015, he published his reasons for ordering judgment against the applicant.[4]
[4]Javelin Asset Management Pty Ltd v Byrne [2015] VSC 491 (‘Reasons’).
The judge’s reasons record that the applicant resisted judgment on three grounds: first, because the respondent had not established its right to sue for the loans as there was no evidence that it had paid the price for the assignment of debt under the sale of debt agreement; secondly, because the respondent had not established that money had been advanced to the applicant by GSFL under the loan agreements; and thirdly, because the respondent had not been joined in the group proceeding relating to the Wine Grape project, and therefore had no ‘legitimate role’[5] in participating in the settlement as it related to that project. The second and third of these grounds, but not the first, are pressed on the present application.
[5]Ibid [15].
The trial judge rejected all these arguments and gave judgment for the respondent in the sum of $1,073,750.92.[6] The judge ultimately made orders that the respondent have judgment in the sum of $1,138,190.69 (inclusive of interest) and that the applicant pay the respondent costs in the sum of $30,000.
[6]Ibid [16]–[23].
Proposed grounds of appeal
The application for leave to appeal lists several proposed grounds. The grounds fall into two categories: those relating to the sufficiency of the evidence of debt and those relating to the Wine Grape proceeding.
The evidence of debt grounds
The grounds that impugn the respondent’s evidence of debt are as follows:
1.The learned trial judge erred at [18] of the reasons for judgment delivered 17 September 2015 by finding that evidence from the respondent’s solicitor of an amount owing by the applicant to the respondent was adequate proof of the necessary material facts required to prove the respondent’s claim in the proceeding.
2.The learned trial [judge] should have held that the evidence of the respondent’s solicitor alone was inadequate to prove that a debt was due and owing to the respondent by the applicant.
3.Further, the learned trial judge should have held that, as a matter of construction of clause 4.1.4 of the Deed, group members had not acknowledged or admitted that moneys had in fact been advanced to group members pursuant to the Loan Deeds and that proof of that fact was required by the respondent.
4.Further the learned trial judge should have held as a matter of construction that clause 5.18.2 of the Deed did not reduce the respondent’s burden of proof of establishing on admissible evidence that a loan had in fact been made in accordance with the Loan Deeds and was due and owing to the respondent.
5.The learned trial judge erred at [18] of the reasons for judgment in finding that the requirements of s 69 of the Evidence Act 2008 (Vic) had been satisfied by the respondent when seeking to tender business records to establish the debts claimed.
6.The learned trial judge should have held that there was no evidence, or no reliable evidence, so as to satisfy the requirements of s 69(2) of the Evidence Act 2008 (Vic) and he should have ruled the documents tendered as hearsay, inadmissible or not admissible as proof of the facts asserted.
7.The learned judge erred at [18] and [23] of the reasons for judgment in finding that clause 5.18.2 of the Deed permitted the respondent to enter judgment against the applicant on the evidence of the respondent’s solicitor alone.
8.The learned trial judge should have found as a matter of law that clause 5.18.2 of the Deed did not entitle the respondent to prove its case conclusively against the applicant as it sought to do summarily because the Deed was not an agreement inter partes between the respondent and the applicant so as to oust the jurisdiction of the Court to require proper proof of the respondent’s claim (cf [Dobbs] v National Bank of Australasia Ltd (1935) 53 CLR [643] at 654).
9.The learned trial judge erred in entering judgment for the respondent against the applicant for the sum of $1,073,750.92 on the evidence before him and ought to have ordered that the proceeding not be determined summarily pursuant to an Originating Motion in Form 5C and on the evidence of the respondent’s solicitor alone, including evidence made on information and belief.
10.The learned trial judge should have refused the respondent’s application to enter judgment and exercised his discretion pursuant to section 64 of the Civil Procedure Act 2010 to order that there be a further trial on the merits.
Grounds 1 to 4 and 7 to 10 — evidence required by deed of settlement
The applicant submitted that it was incumbent on the respondent to prove not only the balance that appeared in the applicant’s loan accounts, but also that there was any indebtedness to the respondent. He submitted that the deed of settlement did not contain any acknowledgement of the indebtedness of Javelin Borrowers to the respondent. A contrast was drawn with cl 4.1.6, by which the lead plaintiffs acknowledged and admitted their liability to the BEN Parties to pay their loan balances.
The applicant submitted that cl 5.18.2 facilitated proof only of the balance owing. He contended that, while the deed concerned a commercial subject matter and commercial parties, it should not be construed according to the ordinary rules governing commercial contracts because the applicant was only bound as a result of the deeming effect of the Supreme Court Act rather than through negotiations between the applicant and the respondent as parties. For that reason, cl 5.18.2 was to be read, in case of ambiguity, in a manner beneficial to the applicant. Further, the question of the validity of the GSFL loans was not a matter that had been litigated in the group proceedings and, it was contended, that question could not be regarded as having been determined by the deed of settlement of those proceedings in circumstances where the binding force of the deed flowed from the legislation governing the relevant proceedings.
On these grounds, the applicant submitted that nothing in cls 5.16–5.19 displaced the onus on the respondent to prove the making of the loans, the advancing of moneys by GSFL to give rise to the alleged indebtedness, the amount due and the respondent’s standing to claim the debts.
On the applicant’s construction, cl 5.18.2 had the effect of allowing the solicitor to provide the evidence necessary to establish the loan balance. Clause 5.18.2 did not, however, relax the requirement that the loan balance be proved by, for example, providing that evidence given in a particular form would constitute conclusive proof of both the making of the loan and the outstanding balance. The applicant contrasted cl 5.18.2 with Dobbs v National Bank of Australasia Ltd,[7] in which the contract provided that a certificate signed by a bank manager ‘shall be conclusive evidence of the indebtedness at such date of the customer to you’.
[7](1935) 53 CLR 643 (‘Dobbs’).
The respondent contended that the judge had no choice but to order judgment in its favour. The respondent had sued on the deed of settlement, not the underlying loan agreements. It was a premise of the deed of settlement that there was an enforceable loan agreement under which loan moneys had been advanced. The provisions of the deed of settlement confirmed the position. In particular, the admission in cl 4.1.4 as to the ‘validity and enforceability’ of the loan deeds constituted an admission that loans had been made and that the respondent had standing to sue for recovery of the amounts owing under them.
The respondent contended that provisions such as cl 5.18.2 are ‘contractual provisions in aid of proof’.[8] It relied on Permanent Trustee Co Ltd v Gulf Import & Export Co (‘Gulf Import’) for the proposition that, where there is a clause that describes a particular form of evidence as ‘sufficient evidence’ of a debt, the tendering of such evidence establishes ‘both the legal existence and amount of the … debt’.[9] In its submission, cl 5.18.2 meant that the affidavit of the respondent’s solicitor was prima facie evidence of the debt owing by the applicant, and that the burden was on the applicant to disprove its indebtedness. Because the applicant had pointed to no such evidence, the judge was bound to act on the evidence advanced under cl 5.18.2.
[8]Malika Holdings Pty Ltd v Stretton (2001) 204 CLR 290, 293 [5] (Gleeson CJ).
[9][2008] VSC 162 [85] (Hansen J).
The resolution of these grounds of appeal turns on the proper construction of the deed of settlement, and in particular cl 5.18.2.
The applicant’s submission that cl 5.18.2 should not be construed in accordance with the ordinary principles applicable to commercial contracts and should be construed beneficially in his favour cannot be sustained. The deed of settlement was executed by a large number of parties in order to resolve litigation on a substantial scale involving the investment of very large sums of money in a series of managed investment schemes. If anything relevantly turns on the designation ‘commercial’, it is plain that, at least in so far as the actual parties who executed the deed are concerned, that designation is apt. Even accepting for present purposes that the binding force of the deed, in so far as group members other than the executing parties are concerned, flows from statute rather than from the deed itself, it cannot be the case that the deed merits a different description or, more fundamentally, that it attracts a different interpretation, in its application to those group members. If that were so, then provisions of the deed of settlement could conceivably bear different meanings in their application to plaintiffs on the one hand and group members on the other. That would be a very surprising consequence. There is a single deed of settlement, binding on a large range of persons, and it must be construed by reference to ordinary principles of construction of written instruments.
The fact that the deed emerged from proceedings in which certain matters were, and others were not, in issue, does not dictate any special approach to its construction. That is a commonplace occurrence when litigation is settled. As the respondent submitted, it would be wrong to approach the deed on the basis that it is to be assumed that it goes no further than to resolve issues that were previously in dispute in the group proceedings. Instead, the scope of the proceedings might be relevant in the construction of aspects of the deed, as part of the context in which it was executed. The circumstance that, as the applicant submitted, the existence of the loans in question was not litigated in the group proceedings is therefore a matter to be taken into consideration in applying ordinary principles of construction of contracts.
The objective approach to contractual interpretation requires reference to the ‘text, context (the entire text of the contract as well as any contract, document or statutory provision referred to in the text of the contract) and purpose’.[10] When cl 5.18.2 is read in its context and by reference to its purpose, the applicant’s arguments fail.
[10]Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104, 116 [46] (French CJ, Nettle and Gordon JJ); see also at 132 [109] (Kiefel and Keane JJ).
As to its text, cl 5.18.2 provides for proof of ‘the amount owing’. As a matter of ordinary language, the meaning of this expression cannot readily be confined to an account balance that is alleged to be owing. The expression refers both to an amount and the fact that it is owing. The applicant seeks to have it construed so as to refer to the amount alone. By reading ‘owing’ as if it meant ‘alleged to be owing’, the applicant in effect gives ‘owing’ no work to do.
Other provisions of the deed of settlement make it clear that the ordinary meaning of ‘the amount owing’ is its intended meaning. The ‘Javelin Borrowers’ are those lead plaintiffs and group members whose ‘Loan Deeds’ were assigned to the respondent. The ‘Loan Deeds’ in turn are the relevant ‘Loan Agreements’ the subject of the group proceedings entered into between the lead plaintiffs and group members and GSFL. Those ‘Loan Agreements’ were ‘the loan agreements under which monies were advanced’ to relevant scheme members. In other words, the whole premise of cl 5 is that it is dealing with persons to whom monies were advanced by GSFL, and whose loans were subsequently assigned to the respondent. It would be perverse in those circumstances if cl 5.18.2, which is a means of facilitating proof of indebtedness, did not extend to proof of the underlying premise of the clause.
Further, as the respondent submitted, cl 5.18.2 has to be read in the context of cl 5.18 as a whole. In particular, cl 5.18.3 provides for the deed to constitute each Javelin Borrower’s irrevocable and unequivocal consent to judgment. Clause 5.18.2 must be read as being intended to aid in the obtaining of judgment. The ‘beneficial’ construction urged by the applicant would have the opposite result. Reading cl 5.18.2 as enabling proof of both the amount that is owing and the indebtedness itself better achieves the clause’s purpose.
In light of these considerations, the fact that the group proceedings did not present for determination the question whether loans had in fact been advanced to group members is of little assistance in construing the deed of settlement. Given that the premise of the relevant provisions is that loans had been advanced, it is apparent that the parties resolved the proceedings on terms which travelled beyond the issues formally in issue in the litigation.
It is true, as the applicant submitted, that the acknowledgment of the validity and enforceability of the Loan Deeds in cl 4.1.4 does not expressly acknowledge the making of advances to the Javelin Borrowers and falls short of the acknowledgement of liability to pay loan balances which the lead plaintiffs gave to the BEN Parties under cl 4.1.6. But, as the respondent contended, this difference must itself be read in context. The Javelin Borrowers were afforded concessions in cl 5 not extended to the borrowers from the BEN Parties. This is one likely explanation for the difference in approach. In another sense, the difference supports the respondent’s construction of cl 5.18.2. That is because, liability not having been expressly admitted by the Javelin Borrowers, it is readily understandable why the parties would have provided for a means of proof of that liability, which cl 5.18.2 offers on the respondent’s construction.
As indicated, the applicant sought to draw a distinction between cl 5.18.2 and the clause in Dobbs which referred expressly to ‘evidence of the indebtedness’. In truth, however, ‘indebtedness’ is simply another way of describing the ‘amount owing’. As to the clause in Dobbs, which was a ‘conclusive evidence’ provision, the High Court said this:[11]
The bank could recover without the production of a certificate if, by ordinary legal evidence, it proved the actual indebtedness of the customer. But the clause, if valid, enables the bank by producing a certificate to dispense with such proof. It means that, for the purpose of fixing the liability of a surety, the customer’s indebtedness may be ascertained conclusively by a certificate. It was contended, however, for the appellant that, upon its true construction, the clause did not make the certificate conclusive of the legal existence of the debt but only of the amount. It is not easy to see how the amount can be certified unless the certifier forms some conclusion as to what items ought to be taken into account, and such a conclusion goes to the existence of the indebtedness. Perhaps such a clause should not be interpreted as covering all grounds which go to the validity of a debt; for instance, illegality, a matter considered in Swan v Blair. But the manifest object of the clause was to provide a ready means of establishing the existence and amount of the guaranteed debt and avoiding an inquiry upon legal evidence into the debits going to make up the indebtedness.
[11](1935) 53 CLR 643, 651 (Rich, Dixon, Evatt and McTiernan JJ) (emphasis added) (citations omitted).
The Court’s observations in respect of the Dobbs clause apply with equal force to the expression ‘amount owing’ in cl 5.18.2.
It follows that cl 5.18.2 is to be read as facilitating proof of both the existence and the amount of a group member’s indebtedness. The words ‘sufficiently evidenced’ have the same operation as the expression ‘sufficient evidence’ was held to have in Gulf Import. Its object was:[12]
to provide a means by which the [respondent] could, by tendering a certificate, establish both the legal existence and amount of the [applicant’s] debt, unless it is proved that the matter or sum referred to in the certificate is false.
[12][2008] VSC 162 [85] (Hansen J).
In those circumstances, it was not necessary for the respondent to descend into detail as to the specific source of the indebtedness and, in particular, to prove the making of advances to the applicant. The existence of the debt could be proved more simply, by the ready means which cl 5.18.2 afforded. In any event, the solicitor’s affidavit deposed to advances having been made by GSFL. Clause 5.18.2 facilitated proof of that matter, if thought desirable, because proving the making of the advances was another way of proving that an amount was owing.
The solicitor’s affidavit was, pursuant to cl 5.18.2, sufficient to evidence that there were amounts owing by the applicant to the respondent in the total sum of $1,073,750.92. In the absence of any evidence to the contrary, the affidavit established proof of that fact and the judge was entitled to enter judgment accordingly. The applicant has not established any basis upon which the judge should have exercised his discretion under s 64 of the Civil Procedure Act 2010 to order that the matter go to trial. The proposed grounds contending to the contrary must be rejected.
Grounds 5 and 6 — Evidence Act 2008 s 69
As the respondent submitted, since the solicitor’s evidence as to the balances owing under the Loan Deeds, based on the information supplied by the respondent’s director, sufficed to establish the ‘amount owing’ in the absence of evidence to the contrary, it was not necessary for the respondent to adduce further evidence to that effect. However, as mentioned, the solicitor also exhibited statements of account provided by the same director. These statements had previously been supplied to the applicant with the letters of 11 December 2014.
It is therefore not strictly necessary to consider proposed grounds 5 and 6, which concern the admissibility of the statements of account. However, since the grounds were argued it is convenient to deal with them briefly.
Section 69 of the Evidence Act, which creates the ‘business records’ exception to the hearsay rule, relevantly provides:
Exception—business records
(1)This section applies to a document that—
(a)either—
(i)is or forms part of the records belonging to or kept by a person, body or organisation in the course of, or for the purposes of, a business; or
(ii)at any time was or formed part of such a record; and
(b)contains a previous representation made or recorded in the document in the course of, or for the purposes of, the business.
(2)The hearsay rule does not apply to the document (so far as it contains the representation) if the representation was made—
(a)by a person who had or might reasonably be supposed to have had personal knowledge of the asserted fact; or
(b)on the basis of information directly or indirectly supplied by a person who had or might reasonably be supposed to have had personal knowledge of the asserted fact.
The applicant contended that the respondent did not tender any evidence as to the record-keeping of GSFL.[13] While the affidavit of the respondent’s solicitor exhibited purported statements of account for the period after the respondent acquired the loans from GSFL, she could not give evidence with respect to the original advances or the keeping of the accounts before the assignment. In relation to those asserted facts, there was no evidence capable of satisfying the requirement in s 69(2) of the Evidence Act that the statements of account were made ‘by a person who had or might reasonably be supposed to have had personal knowledge of the asserted fact’ or on the basis of information directly or indirectly supplied by such a person. Without those asserted facts, the evidence as to the period since the loans were acquired was based on no foundation and the statements should not have been admitted.
[13]See RB Lease Pty Ltd v Heron [2013] QCA 181 [19] (Holmes JA; Daubney and Peter Lyons JJ agreeing).
The respondent submitted that the statements were plainly a ‘business record’ as they ‘form[ed] part of the records belonging to’ the respondent ‘for the purposes of’ its business.[14] Section 69(2) was satisfied as the court was able to conclude, on the balance of probabilities, that the representation as to the sum owing by the applicant was made by, or on the basis of information supplied by, someone (who need not be identified) who ‘had or might reasonably be supposed to have had personal knowledge’ of that sum. In that regard, the court could draw inferences from the form of the document and the information that it contained (including, for example, the precision of that information[15]) as to whether the person who supplied that information ‘had or might reasonably be supposed to have had personal knowledge’ of it.[16]
[14]See Evidence Act 2008 s 69(1).
[15]See Wood v Inglis [2009] NSWSC 313 [5] (Brereton J).
[16]See Rickard Constructions Pty Ltd v Rickard Hails Moretti Pty Ltd [2004] NSWSC 984 [19] (McDougall J).
In our opinion, these grounds too must be rejected. Given that it was not necessary for the respondent to prove more than the fact that the applicant was indebted to it in the amounts specified, the statements of account were put forward only as evidence of that fact. They were not relied on to establish that there had been an advance made by GSFL or that the loan accounts had been maintained by GSFL after that time until the assignment of the loans to the respondent. In the circumstances, no question arose as to the personal knowledge of the respondent’s director about those matters. It is therefore unnecessary to consider whether inferences about the state of that knowledge might have been drawn. All that was required was that it might reasonably be supposed that the respondent’s director had personal knowledge that the applicant owed the respondent the amounts asserted. That requirement was met by the evidence, previously mentioned, that the director was familiar with the books and records and loan files of the respondent.
Grounds 11 and 12 — Wine Grape proceeding
The proposed grounds relating to the Wine Grape proceeding are as follows:
11.The learned judge erred in law at [21] of the reasons for judgment in finding it was not necessary for the respondent to be a party to the proceeding SCI 2011 04916 (the wine grape proceeding) to acquire rights under the Deed.
12.The learned trial judge should have held that the Court could not approve the Deed under the provisions of section 33V of the Supreme Court Act 1986 so as to make it binding on the applicant pursuant to section 33ZB of that Act where a party to the Deed was not a party to the relevant Group Proceeding. Accordingly the learned trial [judge] should have held that the Deed was not enforceable by the respondent against the applicant in respect of the debt claimed for the wine grape project and strict proof of the respondent’s claim for that debt was required.
The applicant submitted that the trial judge erred in finding that it was not necessary for the respondent to be a party to the Wine Grape proceeding in order for it to acquire rights under the deed of settlement. It was submitted that the deed of settlement was binding on group members only because of s 33ZB of the Supreme Court Act, and that the respondent could not obtain the benefit of that
provision in respect of a proceeding to which it was not a party. Accordingly, the applicant contended that the judge ought to have held that the deed of settlement was not enforceable against the applicant in respect of the debt relating to the Wine Grape project. Strict proof of the respondent’s claim for debt was therefore required.
The respondent submitted that the fact that it was not a party to the Wine Grape proceeding was simply not relevant because parties are free to compromise proceedings on terms extending beyond the pleaded issues. The fact that this was a settlement of group proceedings did not affect the analysis. Section 33ZB gave the settlement of all the group proceedings binding force as against the group members, and nothing more was required.
It can be seen that the parties were in agreement that s 33ZB makes a settlement approved by the Court binding on group members. It is necessary to set out that provision:
33ZB Effect of judgment
A judgment given in a group proceeding—
(a)must describe or otherwise identify the group members who will be affected by it; and
(b)subject to section 33KA, binds all persons who are such group members at the time the judgment is given.[17]
[17]Section 33KA relates to the powers of the Court concerning group membership.
Section 33ZB does not expressly refer to settlements, as distinct from judgments. There is no equivalent provision in respect of settlements. However, s 33V provides:
33V Settlement and discontinuance
(1)A group proceeding may not be settled or discontinued without the approval of the Court.
(2)If the Court gives such approval, it may make such orders as it thinks fit with respect to the distribution of money, including interest, paid under a settlement or paid into court.
Section 3(1) of the Supreme Court Act defines ‘judgment’ to include an ‘order’. The parties contended that an order approving a settlement under s 33V is therefore a ‘judgment given in a group proceeding’ within the meaning of s 33ZB, with the result that when an order approving a settlement is made group members are bound, not only by the order, but by the settlement itself. There is obviously much to commend this result, as it is not to be supposed that the legislature contemplated that a settlement approved by the Court would not bind group members, in the same way as a judgment would have if the proceeding had not been compromised. That was also the view taken by Sackville J in Courtney v Medtel Pty Ltd [No 5].[18] At the same time, it is common for orders to be made declaring that a plaintiff, group members and other parties are bound by the settlement pursuant to s 33ZF, which provides for the Court to make any order it thinks ‘appropriate or necessary to ensure that justice is done in the proceeding’.[19] Alternatively, there are many instances, of which the present case is one, where the Court has made an order authorising a plaintiff to enter into and give effect to the settlement on behalf of group members.[20] Again, s 33ZF is an available source of power for such an order. In approving the present deed of settlement, Croft J ordered, among other things, that the plaintiffs in the group proceedings ‘have the authority’ of the group members ‘nunc pro tunc, to enter into and give effect to the deed of settlement and the transactions contemplated thereby for and on behalf of’ the group members.
[18](2005) 212 ALR 311, 321 [54].
[19]See, eg, Kirby v Centro Properties Ltd [No 6] [2012] FCA 650; Brisbane Broncos Leagues Club Ltd v Alleasing Finance Australia Pty Ltd [No 2] [2012] FCA 1112; Earglow Pty Ltd v Sigma Pharmaceuticals Ltd [2012] FCA 1496; Hadchiti v Nufarm Ltd [2012] FCA 1524; Pathway Investments Pty Ltd v National Australia Bank Ltd [No 3] [2012] VSC 625 [21] (Pagone J); Wepar Nominees Pty Ltd v Schofield [No 2] (2014) 99 ACSR 234, 245–6 (Besanko J); Brannaghan v Australian Security and Investigations (Tas) Pty Ltd [2015] FCA 415.
[20]See many of the above cases and also Camilleri v Trust Company (Nominees) Ltd [2015] FCA 1468; City of Swan v McGraw-Hill Companies Inc (2016) 112 ACSR 65, 75 (Wigney J).
In the circumstances, it is not necessary to decide whether, in the absence of an order such as those that might be made under s 33ZF, a settlement of a group proceeding is binding upon group members once approved by the Court, by operation of s 33ZB. It suffices that the present settlement was binding on group members by virtue of the orders made by the Court in this particular case.
The applicant’s argument is then that this binding force has the corollary that the settlement is only enforceable by parties to the group proceeding which was settled. Since the respondent was not a party to the Wine Grape proceeding, the argument runs, it cannot derive the statutory benefit of that settlement.
There are two reasons why this argument must be rejected. The first is that parties to a deed of settlement are bound by the settlement, once it is approved by the Court, by virtue of being parties to the deed. The respondent was so bound here. By the further operation of the statute, whether directly through s 33ZB or indirectly by orders made under s 33ZF, group members as well become bound to the deed of settlement. The terms of the deed then apply to the group members and the other parties to the deed take the benefit of the obligations which group members thereby owe. But the rights of other contractual parties as against group members flow from the deed which the Court has approved, not from such other contractual parties having been parties to the anterior proceeding. Their status as parties to the proceeding, or otherwise, is of no relevance. As the respondent submitted, persons who were not parties to the group proceeding at all may none the less be parties to the settlement of that proceeding.
The second reason is that it is not in doubt that the respondent was entitled to the benefit of the deed of settlement by virtue of its status as a party in group proceedings other than the Wine Grape proceeding. In that circumstance, there was no reason why, as part of the settlement of those proceedings to which the respondent was a party, the parties to the deed of settlement could not also settle other disputes, including disputes being litigated in proceedings to which the respondent was not a party. Having done so, the group members became bound by the settlement once the orders of the Court were made.
Conclusion
The respondent put before the judge sufficient evidence under cl 5.18.2 of the deed of settlement to sustain the relief it sought and was entitled to summary judgment accordingly. The application for leave to appeal should be refused.
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