CBA v Sky Empire Pty Ltd
[2011] VSC 591
•20 September 2011
| IN THE SUPREME COURT OF VICTORIA |
AT MELBOURNE
No. 6454 of 2005
BETWEEN
| COMMONWEALTH BANK OF AUSTRALIA (ABN 48 123 123 124) | Plaintiff |
| v | |
| SKY EMPIRE PTY LTD (ABN 23 100 147 868) | First named Defendant |
| LUPCO SLAVESKI | Second named Defendant |
| STOJNA SLAVESKA | Third named Defendant |
| SNEZANA SLAVESKA | Fourth named Defendant |
| AND BETWEEN | |
| SKY EMPIRE PTY LTD (ABN 23 100 147 868) | First named Plaintiff by counterclaim |
| LUPCO SLAVESKI | Second named Plaintiff by counterclaim |
| STOJNA SLAVESKA | Third named Plaintiff by counterclaim |
| SNEZANA SLAVESKA | Fourth named Plaintiff by counterclaim |
| - and - | |
| COMMONWEALTH BANK OF AUSTRALIA (ABN 48 123 123 124) | Defendant by counterclaim |
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JUDGE: | Robson J | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 20 September 2011 | |
DATE OF JUDGMENT: | 20 September 2011 | |
CASE MAY BE CITED AS: | CBA v Sky Empire Pty Ltd & Ors | |
MEDIUM NEUTRAL CITATION: | [2011] VSC 591 | |
DEED OF COMPROMISE – Rule 15.08 – Whether 15.08 is enlivened - Principles governing approval of deed – Deed approved – Order 15 of the Supreme Court (General Civil Procedure) Rules 2005 (Vic)
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APPEARANCES: | Counsel | Solicitors |
| For the plaintiff and the defendant by counterclaim | Mr SJ Maiden | Gadens Lawyers |
| No appearance for the first named defendant and first named plaintiff by counterclaim | ||
| For the second named defendant and second named plaintiff by counterclaim | In person | |
| For the third and fourth named defendants and third and fourth named plaintiffs by counterclaim | Mr L Glick SC |
HIS HONOUR:
This is an application to approve a deed of compromise.
This proceeding was commenced by the Commonwealth Bank of Australia (CBA) against the defendants by writ filed on 7 June 2005. In the proceeding CBA claims, amongst other things, the following:
(a) possession of the following three properties:
(i)the land described in certificate of title volume 8186 folio 701 and known as 66/66A Heyington Avenue, Thomastown;
(ii)the land described in certificate of title volume 8914 folio 483 and known as 10 Whitehall Place, Lalor; and
(iii)the land described in certificate of title volume 8352 folio 977 and known as 10 May Road, Lalor;
(the Properties)
(b) payment of the sum of $926,792.44;
(c)payment of interest on the amount of $680,524.92 from 19 February 2008 to the date of payment or judgement, both dates inclusive, at the rate of 16.05% per annum from the Defendants; and
(d)payment of interest on the amount of $246,267.52 from 19 February 2008 to the date of payment or judgement, both dates inclusive, at the rate of 8.97% per annum from the Defendants.
Sky Empire has filed a defence and counterclaim in the proceeding seeking, amongst other things, the following:
(a)a declaration that it is not indebted to CBA for the amount claimed by the CBA;
(b)an order for relief pursuant to s 87 of the Trade Practices Act 1974 (Cth) in relation to the loan facilities it obtained from CBA; and
(c) an order for damages and equitable compensation (unquantified).
Mr Slaveski has filed a defence and counterclaim in the proceeding seeking, amongst other things, the following:
(a)a declaration that he is not indebted to CBA for the amount claimed by CBA;
(b)a declaration that CBA’s mortgages over the properties do not secure the amounts claimed by CBA;
(c)an order for relief pursuant to the Fair Trading Act 1999 (Vic) and the Trade Practices Act 1974 (Cth); and
(d) an order for damages and equitable compensation (unquantified).
Stojna and Snezana Slaveska have filed a defence and counterclaim in the proceeding seeking, amongst other things, the following:
(a)an order that CBA is not entitled to enforce against them any mortgage, guarantee, loan or other security document made by them after December 2001 in respect of advances or an increase in advances made by CBA to Sky Empire, Lupco Slaveski or Stojna Slaveska;
(b)a declaration that CBA acted unconscionably and in contravention of provisions of the Trade Practices Act 1974 (Cth) and the Australian Securities & Investment Commissions Act 2001 (Cth); and
(c)orders for relief under the Fair Trading Act 1999 (Vic) and the Trade Practices Act 1974 (Cth).
By a compromise entered into on 19 September 2011 the parties propose to release each other from any claim or liability of any kind arising out of any facts existing, or acts or omissions occurring, at any time prior to the date of execution of the compromise and propose to discontinue the original proceeding and the counterclaims with no order as to costs.
Counsel for CBA appear before the court to seek approval of the compromise of the action under Rule 15.08. Mr Maiden, for CBA, states that court approval is necessary because, in an unrelated proceeding before Kyrou J, Lupco Slaveski was found to be a person under a disability for the purposes of Order 15 of the Supreme Court (General Civil Procedure) Rules 2005 (Vic). As a result of this finding, Mr Slaveski’s wife, the Snezana Slaveska, was appointed his litigation guardian for the purposes of that proceeding. While the finding by Kyrou J does not apply to this proceeding, CBA, out of an abundance of caution, seeks the court’s approval for the compromise because under Rule 15.08 any compromise made by or on behalf of or against a person under disability is void unless it has the court’s approval. CBA submits that this is an absolute rule, not made by reference to any finding of disability or handicap in the proceeding in question, and therefore as a result of a finding having been made that Mr Slaveski was a person under disability in another proceeding, an application for approval needs to be made in this proceeding. It is unnecessary for me to decide whether the rule as written is absolute, as Mr Maiden submits, as the defendants do not take issue with the application for approval and in fact consent to it.
Counsel for Stojna and Snezana Slaveska set out for the court the content of the deed of compromise. As the deed is confidential, I will not repeat those details here.
Counsel for Stojna and Snezana Slaveska then set out the principles for assessing whether a compromise should be approved. Mr Glick SC submits that the question is not whether the compromise is reasonable but whether it is in the interests of the defendants to reject the offer and continue with the action.[1] Quoting from my judgment in Elderfield, where I in turn cite ‘Civil Procedure Victoria’, Mr Glick SC states that:
The major consideration is the degree to which the person under disability is at risk if the proceeding went to trial the result would be less favourable than what is offered in settlement.[2]
[1]Elderfield (by her litigation guardian Visentin) v Transport Accident Commission (TAC) [2010] VSC 116; [16].
[2]Ibid.
He goes on to quote from paragraph 17 in Elderfield where I say:
In Fisher v Martin[3] Rothman J of the Supreme Court of New South Wales examined the general principles applicable to the court’s approval of a settlement. He confirmed the protective nature and overriding principle of the court’s jurisdiction. He said:[4]
‘The jurisdiction of the Court is protective in nature and the overriding principle is that the Court will base the approval or disapproval upon the formation of an opinion that the agreement is or is not beneficial to the interests of the person under the incapacity. It is for the Court, not the parties, to determine whether the compromise will be beneficial to the person under an incapacity: Re Ley’s Trusts [1964] 1 WLR 640; Permanent Trustee v Mills[2007] NSWSC 336.’
[3][2008] NSWCA 1357.
[4]Ibid [29].
Mr Glick SC also points to the test in paragraph 18 of Elderfield where I again quote Rothman J:
Rothman J said that:[5]
‘... The test, it seems, must be whether it would be in the interests of the plaintiff to reject the Offer and continue the action in the hope of receiving a larger amount: see Karvelas (by her next friend) v Chikirow(1976) 11 ACTR 22 (per Blackburn J, as he then was).
[5]Ibid [35].
In paragraph 20 in Elderfield I accept the above test and go on to say:
In my view that question is relevantly answered by deciding whether or not, in my opinion, the certainty of obtaining the compromise sum is significantly outweighed by the uncertain prospect of obtaining more by rejecting the compromise after taking into account the risk of obtaining less.
Mr Glick SC submits that whether or not the settlement offer is reasonable is a matter for me to determine. He argues that the offer made to the defendants is such that, should this matter proceed to trial, there is a risk the defendants would not achieve a similar outcome. He submits that the result offered in the compromise is such that the defendants would have to be 100 per cent successful at trial in order to achieve it.
Mr Glick SC submits that it is in the defendants’ interests to have the compromise approved. He notes that Lupco Slaveski is unrepresented and therefore does not have legal costs, so he is not out of pocket in relation to this proceeding. Mr Glick SC also submits that the settlement itself if the result of a lot of work on behalf of all parties, and the terms of the settlement have been translated from English into Macedonian for the benefit of Stojna Slaveski. Mr Glick SC argues that, in order to avoid the possibility that the point be raised in the future, Rule 15.08 should apply in this case, and the defendants do not object to it applying.
I have not been shown the formal order made by this Court in the unrelated proceeding before Kyrou J where a litigation guardian was appointed for Lupco Slaveski. I accept that such an order was made. I accept that CBA is concerned that Rule 15.08 still applies to this, a completely separate proceeding. Rule 15.08 provides:
Where in a proceeding a claim is made by or on behalf of or against a person under disability, no compromise, payment of money or acceptance of an offer of compromise under Order 26, whenever entered into or made, shall so far as it relates to that claim be valid without the approval of the court.
Lupco Slaveski, the subject of the litigation guardian order in the unrelated proceeding before Kyrou J, appears before me in this matter. He informs me that he has been shown the draft minutes of the order being sought here today, and he consents to them.
Given the lengthy history of this matter and the sensible compromise that has been reached, it is in the interest of all parties that this Court not do anything to jeopardise the compromise. In those circumstances, the appropriate course is to preface Order 2 in this matter with the words ‘If Rule 15.08 applies to the compromise entered into by the second named defendant’, and then proceed to order ‘the compromise affected by the deed is approved under Rule 15.08’.
I find that the compromise is one which should be approved by this Court and I so approve it.
I will make orders in the terms of the draft minute of order which has been handed to me, and which I have amended as set out above in paragraph 17 of this judgment.
The Court places on the record its appreciation of the service provided by Mr Glick SC, Mr Maiden and Mr Alstergren to the Court in helping to resolve this difficult matter.
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