Cullen Babington Hughes Pty Ltd v Maximizer Software Solutions Pty Ltd [No 2] - [2013] WADC 111

JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CIVIL

LOCATION: PERTH

CITATION: CULLEN BABINGTON HUGHES PTY LTD -v- MAXIMIZER SOFTWARE SOLUTIONS PTY LTD [No 2] [2013] WADC 111

CORAM: PRINCIPAL REGISTRAR GETHING

HEARD: 21 JUNE 2013

DELIVERED : 17 JULY 2013

FILE NO/S: CIVO 50 of 2012

BETWEEN: CULLEN BABINGTON HUGHES PTY LTD
Applicant
AND
MAXIMIZER SOFTWARE SOLUTIONS PTY LTD
First Claimant
SOE SOFTWARE PTY LTD
Second Claimant

Catchwords:

Procedure - Question of law - Preliminary issue

Legislation:

Rules of the Supreme Court 1971 O 31 r 2, O 32 r 4

Result:

Application dismissed

Representation:

Counsel:

Applicant:     No appearance
First Claimant               :     Mr J Maclauren
Second Claimant           :     Mr C G Thorpe

Solicitors:

Applicant:     Cullen Babington Hughes
First Claimant               :     Somerville Legal
Second Claimant           :     HHG Legal Group

Case(s) referred to in judgment(s):

BCBC Singapore Pte Ltd v PT Bayan Resources TBK [No 2] [2012] WASC 321
Cullen Babington Hughes Pty Ltd v Maximizer Software Solutions Pty Ltd [2012] WADC 119

PRINCIPAL REGISTRAR GETHING: In late 2008 Maximizer Software Solutions Pty Ltd engaged SOE Software Pty Ltd to write a computer program known as 'Maestro'. It was intended by Maximiser and SOE that Maestro be used by agreement between Maximizer, Jamcracker Inc (a US company) and Telstra Limited to generate revenue from customers of Telstra. There was no formal agreement between the parties as to payment to SOE in respect of SOE's development of Maestro. There were ongoing problems with the program and a dispute arose between the parties. SOE was not paid. SOE was reluctant to provide a fully functioning program until it was paid. Maximizer was reluctant to pay for the program until it was fully functional.
In January 2011, Mr Rick Cullen, a director of Cullen Babington Hughes Pty Ltd (CBH), facilitated mediation between Maximizer and SOE. The mediation resulted in the parties executing a deed of release dated 17 January 2011 (Deed). Pursuant to the Deed, Maximiser agreed to (and did) pay $85,000 into the trust account of CBH.
A dispute then arose as to which of the parties was entitled to be paid the money in CBH's trust account. By interpleader proceedings commenced in this court on an originating summons, CBH paid the sum of $85,000 into court. CBH says it was entitled to do this pursuant to the Deed. By orders made on 11 June 2012 CBH was excused from further attendance in the proceedings.
The dispute has been the subject of a number of directions hearings before me. As a result of directions made, on 15 May 2013 Maximizer filed an application for certain issues to be identified as preliminary issues and, in the alternative, for summary judgment against SOE. This decision is on Maximizer's application.
The key question for determination is whether there is an issue or series of issues which are appropriate for preliminary determination.

The Deed and subsequent events

Relevantly for present purposes, the Deed provided that:
(a)the parties would use their best endeavours to cause Maestro to be accepted by Jamcracker and Telstra, to cause Maestro to be used by customers of Telstra and to cause Maestro to generate revenue for Maximizer from its use by Jamcracker and Telstra;
(b)Maximiser was to pay $85,000 into the trust account of CBH;
(c)after the payment in (b) was made, SOE was to use its best endeavours to provide to Maximizer, as soon as was reasonably possible, a version of Maestro suitable for the purposes in (a);
(d)Maestro was to be deemed to have been accepted on the earlier of when Telstra and Jamcracker stated in writing that it would be offered generally to customers of Telstra or the date on which was in fact offered generally to customers of Telstra;
(e)on acceptance, CBH was to pay the amount in (b) to SOE;
(f)if the amount in (b) was not paid out by a 'sunset date', one half of the amount in (b) was to be paid out to each party;
(g)the sunset date was defined as the date of service of a notice pursuant to clause 4.1 of the Deed, which could be served either if there was no acceptance within six months of the date of the Deed or if a party delayed with its obligations under the Deed;
(h)the parties would enter into an escrow agreement with Assurex Escrow Limited pursuant to which SOE would lodge a copy of the source code with Assurex and SOE would provide a copy of the source code to Maximizer 90 days after acceptance; and
(i)the parties mutually released each other from all claims, save for those arising under the Deed (cl 8).
Maximizer paid the $85,000 into CBH's trust account.
On 30 August 2011 Maximizer served a notice on SOE pursuant to clause 4.1 invoking the sunset period, and claiming $42,500, being half the $85,000 in the CBH trust account. On 1 September 2011 SOE advised CBH that it had notified Maximizer that they were in breach of the Deed and that it required the $85,000 to be kept in CBH's trust account. On 2 September 2011, Maximiser wrote to CBH requesting payment of the $42,500. By letter to CBH dated 5 October 2011 Maximiser's lawyers made a demand for payment of the $42,500 from CBH. CBH responded indicating an intention to pay the money into court and commence interpleader proceedings if the dispute was not resolved.
The dispute was not resolved and the interpleader proceedings were eventually filed on 26 March 2012.

Procedural history

An issue arose following the commencement of the proceeding as to whether there was a dispute as to the entitlement to the money in CBH's trust account so as to justify the payment of the $85,000 into court. Clause 3.2.3 of the Deed provided in relation to the money in CBH's trust account that:
If there is a dispute as to the entitlement to such money, the trustee shall be at liberty to pay such money into court.
In a published decision, Deputy Registrar Harman held that there was sufficient evidence to justify the proposition asserted by SOE that there was a dispute as to entitlement to the money held by CBH, and that it ought to be paid into court: Cullen Babington Hughes Pty Ltd v Maximizer Software Solutions Pty Ltd [2012] WADC 119.
In November 2012, directions were made for:
(a)the money in CBH's trust account to be paid into court;
(b)SOE to file a statement of claim;
(c)Maximiser to file a defence;
(d)SOE to file a reply; and
(e)discovery.
On 17 December 2012 the amount of $87,682.12 (being the $85,000 plus interest) was paid in the District Court. CBH's costs were subsequently agreed and paid out of the funds paid into court.

The pleadings as they currently stand

SOE filed its statement of claim on 14 March 2013. In relation to the underlying dispute, the current statement of claim relevantly provides:
(a)in or about November 2008, Maximizer and SOE entered into an agreement to develop a software application called Maestro;
(b)the agreement was partly oral and partly in writing;
(c)Maximizer would pay SOE the cost of labour used to write the software at the rate of $85 per hour;
(d)Maximizer would pay SOE profit on the use of its resources at the rate of $165 per hour;
(e)the total number of hours worked at the direction of Maximizer by servants or agents of SOE was 1,063.25 hours;
(f)the cost of the work performed pursuant to the contract was $90,376.25 (being 1,063.25 hours x $85 per hour) plus GST;
(g)the total profit due pursuant to the contract was $85,060 plus GST; and
(h)Maximizer has failed to pay the amounts in (f) and (g).
There is then a second claim pursuant to which it is said that Maximizer is estopped from denying that it would:
(a)pay the cost of SOE's software developers; and
(b)either pay SOE's overhead and profit for the work performed or grant it a proportion of the profit generated by Maestro.
Two further estoppel claims are also pleaded.
There is then an alternative plea that from June 2009 SOE and Maximizer entered into a partnership to develop Maestro. It is then said that in breach of its fiduciary duty to SOE, Maximizer failed to pay its share of the partnership expenses.
Finally, there is a plea that Maximizer engaged in misleading and deceptive conduct in breach of the then Trade Practices Act 1974 (Cth) s 52.
SOE seeks damages or alternatively equitable compensation in the amount of $228,874.32. It also seeks orders in the alternative in relation to the partnership.
Nowhere in the current statement of claim does SOE make any claim in relation to the money paid into court.
A draft defence from Maximizer is annexed to an affidavit before me. From the draft defence, it is apparent that Maximizer proposes to plead the Deed as a complete bar to SOE's claim. Nowhere in the defence does Maximizer make a claim in relation to the money paid into court.
SOE has annexed a draft reply to an affidavit before me. From the draft reply it is apparent that SOE proposes to plead that there was a breach of the Deed which enabled the parties to exercise rights and claims accruing to them prior to the execution of the Deed. From the draft reply, it is also evident that SOE proposes to plead that Maximizer breached the Deed in that it:
(a)failed to enter into the agreement with the escrow provider;
(b)failed to take any steps to cause Maestro to be accepted by Jamcracker and Telstra;
(c)failed to make any endeavour to cause Maestro to be offered for the general use by the customers of Telstra;
(d)failed to arrange to meet with representatives of Telstra and Jamcracker to demonstrate Maestro or gain their agreement of Maestro to be offered generally to customers of Telstra; and
(e)failed to keep SOE informed in relation to its compliance with the obligations under the terms of the Deed and failed to provide evidence of any attempts to comply with its obligations under the Deed.
The draft reply also contains a pleading that the failure of Maximizer to perform its obligations under the Deed constituted a repudiation of the Deed, which SOE has accepted.
SOE further states that the release pleaded in the Deed was limited to:
(a)matters related to the subject matter of the Deed;
(b)matters not entailing breaches of the Deed; and
(c)claims arising in the present or future from the date of the Deed.
It then pleads that on a true construction of the Deed, the pleaded dispute between the parties does not relate to the subject matter of the Deed.
Finally, SOE also proposes to plead that is has invoked the 'sunset' provisions in the Deed with the effect that the Deed is rescinded.

Maximizer's application

By orders made on 24 April 2013, by 15 May 2013, Maximizer was to file and serve either a defence or an application for summary judgment or for the trial of a preliminary issue.
By application dated 15 May 2013, Maximizer sought:
(a)the identification of a preliminary question of law (pursuant to Rules of the Supreme Court 1971 (WA) (RSC) O 31 r 2) or preliminary question (pursuant to O 32 r 4) as to the effect of the Deed; or
(b)summary judgment against SOE on the claim; or alternatively,
(c)an order for payment out of court of the $42,500 plus interest and costs.
The preliminary question identified is:
(a)whether the effect of cl 8.2 of the Deed of Release ('Deed') executed by the first claimant and the second claimant on 17 January 2011 is that it provides an answer, bar and defence to [SOE's] claim in these proceedings; and
(b)whether [SOE's] claim, if predicated upon releases in the Deed not applying or having effect, can proceed:
(i)in these interpleader proceedings; and
(ii) in any event, without an order or judgment that [Maximiser] is entitled to payment of the sum of $42,500.
Three questions are thus identified:
•Question 1: Is the effect of cl 8.2 of the Deed to provide an answer, bar and defence to the claim of SOE in the current proceedings.
•Question 2: Is SOE's claim (if predicated upon the releases in the Deed not applying or having effect) one that can proceed in the current interpleader proceedings.
•Question 3: Is SOE's claim (if predicated upon the releases in the Deed not applying or having effect) one that can proceed without an order or judgment that Maximiser is entitled to payment of the sum of $42,500.
In support of its application, Maximizer filed an affidavit by its solicitor Timothy Somerville, sworn 15 May 2013. In relation to the logistics of a trial in the usual manner, Mr Somerville states:
(a)the cost of defending the proceedings if they proceed to trial in the ordinary way will exceed $100,000;
(b)discovery will involve sifting through thousands of emails, time sheets and projects 'specs' between the parties;
(c) it is likely that early return subpoenas would need to be issued to a number of third parties, including Telstra and Jamcracker;
(d)Maximizer will need to call evidence from witnesses living in Sydney, Melbourne and Canada;
(e)expert evidence is likely to be required;
(f)most witnesses will be required to be flown to Peth and accommodated for at least one night; and
(g)the trial will last between five and seven days.
In opposition to the application, SOE filed an affidavit by its solicitor employed its lawyers, Colin Thorpe. In his affidavit, Mr Thorpe states that the questions posed by Maximizer cannot be determined without factual findings in relation to, inter alia:
(a)whether Maximizer complied with some or any terms of the Deed;
(b)what scope of any dispute Maximizer claims was settled by the Deed;
(c)whether the Deed was validly terminated;
(d)whether the Deed was automatically rescinded;
(e)which of the alternative pleaded factual matrices is to inform the court's construction of the Deed; and
(f)whether the Deed is void as a result of the various paradoxes it contains.
Mr Thorpe does not contest Mr Somerville's summary of the likely costs and scale of the trial.

Question 1

Question 1 posed by Maximizer is whether the effect of cl 8.2 of the Deed is to provide an answer, bar and defence to the claim of SOE in the current proceedings. Maximizer seeks to have this question tried either as a question of law pursuant to RSC O 31 r 2 or as a preliminary issue pursuant to RSC O 32 r 4.
The power to order the determination of a preliminary question of law is found in RSC O 31 r 2, which provides:
2.Preliminary question of law, orders as to
(1)If it appears to the Court that there is in any cause or matter a question of law, which it would be convenient to have decided before any evidence is given or any question or issue of fact is tried, or before any reference is made to a referee or an arbitrator, the Court may make an order accordingly, and may direct such question of law to be raised for the opinion of the Court, either by special case or in such other manner as the Court may deem expedient.
(2)All such further proceedings as the decision of such question of law may render unnecessary may thereupon be stayed.
Rules of the Supreme Court O 32 r 4 provides:
4.The Court may order that any question or issue arising in a cause or matter whether of law or fact or partly of law and partly of fact, and whether raised by the pleadings or by agreement of the parties or otherwise be tried separately from any other question or issue whether before at or after the trial or further trial of the proceedings, and may direct that a case and the question or issue for decision be stated.
The law in relation to both provisions is conveniently summarised in the following observations by Pritchard J in BCBC Singapore Pte Ltd v PT Bayan Resources TBK [No 2] [2012] WASC 321 [24] ‑ [27] (footnotes omitted). Her Honour's comments were in the specific context of whether to refer a question to the Court of Appeal pursuant to Supreme Court Act 1935 (WA) s 43(1), the observations as to O 31 r 2 and O 32 r 4 being relied on as being apposite to that context:
24.There are also numerous authorities, both in this State and in other Australian jurisdictions, which discuss the sorts of factors relevant to the exercise of the Court's discretion under O 31 r 2 and O 32 r 4 (or their equivalents) to try a preliminary question in advance of other issues in a proceeding. In my view, the factors which are relevant to the exercise of the Court's discretion under O 31 r 2 and O 32 r 4 are also relevant to the exercise of discretion under s 43 of the SC Act.
25.Having regard to the terms of s 43 of the SC Act, and to the terms of O 31 r 2 and r 7 RSC, and in the light of these authorities, it is apparent that the Court has a wide discretion as to whether to reserve a case, or refer a preliminary question of law, to the Court of Appeal. The exercise of the discretion will require a consideration of all of the circumstances of the particular case and it is not possible, nor desirable, to attempt to set out an exhaustive list of the factors which would warrant the exercise of the discretion.
26.Nevertheless, the following factors are among those which may be relevant to the exercise of the discretion:
(i)The starting point is that as a general rule, all issues of fact and law should be determined at the one time. The preliminary determination of a point of law (whether by a Court of Appeal, or by the primary judge) while perhaps no longer an exceptional course, is nevertheless a significant departure from the usual way of proceeding, and the discretion to proceed in that way should be exercised with commensurate caution.
(ii)The reservation of a question to the Court of Appeal should be confined to a question which would finally dispose of the action as a whole, or an identifiable cause of action within it, and should be confined to a question which is able to be determined on established or agreed facts;
(iii)The nature of the question will also be relevant. If, for example, the question involves the development of common law principles, rather than the application of well-established principles, it may be inappropriate to consider the question in the context of an 'artificially constricted' body of facts (namely those the parties agree are necessary for the determination of the preliminary or reserved question), rather than in the context of all of the facts which may be found following a trial of the issues.
(iv)A question should not be reserved for the Court of Appeal if it does not (or does not clearly) arise, or no longer arises, in the case (for example, if the trial court has determined the question itself or if the question is no longer in issue before the trial Court, so that the question is moot) or if the utility of the proceedings is in doubt;
(v)That a case may be (or may be said by the parties to be) one involving a question of difficulty, or of great importance to the parties, or of public importance, or a question in relation to which there is a conflict of authority on the point, or where the question will perhaps inevitably be taken to the Court of Appeal (on appeal), will be relevant, but the existence of these factors, whether individually or collectively, do not inevitably warrant the reservation of the question for the Court of Appeal;
(vi)The Court of Appeal is primarily an appellate court and to by-pass the primary judge is to deprive the Court of Appeal of the benefit of a first instance judgment;
(vii)Since the introduction of the present system of case management, the practical advantages which may flow from the determination of one or more issues tried separately have assumed a greater importance. Although these considerations are of primary importance in the trial division of the Court, they are not wholly irrelevant to the exercise of discretion under s 43 of the SC Act or O 31 r 2 and r 7 RSC. The considerations include whether the determination of a preliminary or separate question will contribute to the saving of time and cost by substantially narrowing the issues for trial, will dispose of the action in its entirety, or will significantly increase the prospect of settlement of the balance of the action. At the same time, it is appropriate to consider how best the limited resources of the Court as a whole should be utilised, and whether the question is one which is appropriate to consume the time and resources of the Court of Appeal.
27.The power of a trial judge to deal with a question as a preliminary or separate question, whether pursuant to O 31 r 2 or O 32 r 4 RSC similarly involves the exercise of a wide discretion. Again, that discretion falls to be exercised having regard to all of the circumstances of the particular case, and it is not possible, nor desirable, to attempt to set out an exhaustive list of the factors which would warrant the exercise of the discretion. Factors of the kind to which I have referred in points (i), (iii), (v) and (vii) above may be relevant to the exercise of discretion by a trial judge pursuant to O 31 r 2 or O 32 r 4 RSC. Additional factors which may also be relevant to the exercise of that discretion, include the following:
(viii)If the facts said to be relevant to the preliminary or separate question are not agreed, it will be relevant to consider whether there will be any significant overlap between the evidence adduced on the hearing of the separate question and at trial, and whether the determination of the separate question will prolong rather than shorten the litigation, bearing in mind the fact that savings in time and expense can prove illusory and the process can generate other problems, such as interlocutory appeals and consequent delays;
(ix)In addition, in considering the nature of the question proposed for determination as a preliminary question, a further relevant consideration will be whether that question concerns the Court's jurisdiction to deal with the issues in dispute. The determination of that question may sometimes be possible via a preliminary question heard separately from the other issues in dispute, although that is not always possible or appropriate.

Going back to Question 1, cl 8 of the Deed contains mutual releases, and provides:
8.1Maximizer hereby releases SOE, its servants and agents from any claim relating to the subject matter of this deed, other than a claim for breach of this deed, or for a breach of the said agreement with Assurex.
8.2SOE hereby releases Maximizer, its servants and agents from any claim relating to the subject matter of this deed, other than a claim for breach of this deed, or for a breach of the said agreement with Assurex.
Claim is defined in cl 1 to mean:
… in relation to any person or entity, a claim, action, proceeding, judgment, damage, loss, cost, expense or liability incurred by or to or made or recovered by or against the person however arising and whether present, unascertained, immediate, future or contingent. However, a 'claim' does not include a right or obligation arising under this Deed.
It is readily apparent from the terms of RSC O 31 r 2 that the power is to be used where there is a question of law which can be determined prior to evidence being given or issues of fact tried. This is not a case falling within RSC O 31 r 1 in which the parties have agreed a question of law for determination based on agreed facts.
Question 1, going to the effect of cl 8.2, contains an implicit premise, namely that cl 8.2 of the Deed is still binding on SOE. If cl 8 of the Deed is no longer binding on SOE, then the question stated is hypothetical and does not serve to narrow the issues between the parties or significantly shorten the number of trial days required.
There are two main arguments proposed to be made by SOE in its draft reply to the effect that the Deed is no longer binding on it:
(a)Maximizer breached the Deed in circumstances constituting a repudiation of the Deed, which SOE accepted; and
(b)the Deed was rescinded pursuant to cl 3.3 of the Deed by operation of the sunset procedure.
Each of these issues raises questions of fact.
Given that:
(a)the answer to the proposed preliminary question will not resolve the issue of whether SOE's claim is barred pursuant to cl 8 of the Deed, as it does not address whether the Deed is still binding on SOE; and
(b)the answer to the question of whether cl 8 of the Deed is still binding on SOE involves questions of fact,
the first question is not suitable for determination as a question of law pursuant to RSC O 31 r 2.
From a case management perspective, in the present case the only justification for the trial of an preliminary issue or of a question of law is if it resolves all (or substantially all) the issues arising under the Deed so that the action may proceed to trial on the issues in SOE's statement of claim without the court needing to inquire whether the causes of action in the statement of claim are barred due to the operation of the Deed.
SOE's assertion that the Deed was rescinded pursuant to cl 3.3 by operation of the sunset procedure, would involve a fairly narrow factual inquiry, one that could be undertaking on affidavits.
The same cannot be said of the second argument, that Maximizer breached the Deed in circumstances constituting a repudiation of the Deed, which SOE accepted. Given the scope of the issues identified above [22] and [32], the factual inquiry will be extensive. The trial of Question 1 as a preliminary issue would need to receive evidence on not only about the dealings between Maximizer and SOE, but between Maximizer and Assurex, Telstra and Jamcracker. My sense is that this will inevitably lead to a trial of potentially four or five days. Prior to the trial, there would need to be discovery on the issues and perhaps early return subpoenas. In my view, this is not a factual inquiry suitable for determination by way of a preliminary issue pursuant to RSC O 32 r 4.

Question 2

Question 2 is whether SOE's claim (if predicated upon releases in the Deed not applying or having effect) can proceed in these interpleader proceedings. This is a case management question, not a question of law suitable for determination by way of trial of a question of law or a preliminary issue.
The case management powers available to me are sufficiently wide enough to convert the interpleader proceedings into what is in effect an action commenced by writ, provided only that orders to this effect would be 'just to make … to facilitate the case being conducted and concluded efficiently, economically and expeditiously': District Court Rules (DCR) r 24(1). Case management orders may be made on the hearing of an application: DCR r 26.
In my view there are three reasons why case management orders converting this case to what is in effect a case commenced by writ would fall within DCR r 24(1):
(a)CBH's has agreed to be bound by the decision of the court and has bowed out of further participation in the case – notionally, it should stay as a party, perhaps as the first plaintiff;
(b) the dispute preceding the Deed, as set out in the statement of claim, and the dispute postdating the Deed, as set out in the reply, are part of a continuum of the same dispute – SOE's development of Maestro for Maximiser; and
(c)I can identify no particular prejudice to Maximizer of having the Deed issues and the issues set out in the statement of claim dealt with in the one action, as opposed to the inevitability of SOE filing a fresh action if it is not allowed to proceed with the claims set out in the statement of claim in the present action.
Accordingly, case management orders should be made effectively converting the interpleader application to an action commenced by writ.

Question 3

Question 3 is whether SOE's claim (if predicated upon the releases in the Deed not applying or having effect) can proceed without an order or judgment that Maximiser is entitled to payment of the sum of $42,500.
The third question needs to be reviewed in the context of cl 3.2 and cl 3.3 of the Deed, which provide:
3.2The parties shall cause the sum referred to in Clause 3.1 to be dealt with as follows.
3.2.1Upon the acceptance date, it shall be paid to SOE;
3.2.2On the sunset date, one half thereof shall be paid to each party, and
3.2.3If there is a dispute as to entitlement to such money, the trustee shall be at liberty to pay such money into court.
3.3Upon the sunset date,
3.3.1This deed shall be rescinded, and
3.3.2Subject to clause 3.2.2, and to the other provisions of this clause 3.3, each party shall have all legal rights they would have had, if this deed had not been entered into.
Clause 4 provides:
4.SUNSET
4.1If there has been no acceptance within a period of 6 months from the date of this deed, then either party may serve written notice on the other, referring to this Clause 4.1.
4.2If a party delays in complying with its obligations under this deed, as a result of which the acceptance date is delayed, that party may not serve notice under Clause 4.1 until the expiry of an additional period after the period referred to in Clause 4.1 equal to the period of that delay.
Maximiser is only entitled to payment out of the half the money currently paid into court under cl 3.2.2 of the Deed. The Deed does not provide any other mechanism for Maximizer to be entitled to this money, nor was any other mechanism suggested to me in submissions. Clause 3.2.2 only becomes operative if the sunset date provision is activated. Evidence would be required as to the steps Maximizer took to activate the sunset date provision, including on whether it filed a valid notice pursuant to cl 4. This rules out the third question being a question of law falling within RSC O 31 r 2.
In relation to whether Question 3 could be determined by way of preliminary issue pursuant to RSC O 32 r 4, the key issue is the extent of the factual inquiry required in order to answer the proposed question.
In order to find that Maximizer was entitled to payment out of half of the money paid into court pursuant to cl 3.2.2 of the Deed, Maximizer would firstly have to persuade the trial judge, following the reception of evidence and testing of that evidence through cross‑examination, that it filed a valid notice pursuant to cl 4 of the Deed. Maximizer would then need to establish either that:
(a)it did not breach the Deed as asserted by SOE in a manner constituting a repudiation of the Deed, entitling SOE to terminate it; or
(b)any breaches it is found to have made of the Deed did not have the consequence of disentitling it to the return of half of the money it paid.
As set out in relation to Question 1, this will inevitably lead to an extensive factual inquiry, one not suited to determination by way of a preliminary issue.
For the reasons set out above, I am not satisfied that there is an issue between the parties that is appropriately the subject of a trial of a preliminary issue.
I am thus of the view that Maximizer's is not entitled to the orders sought in par 1 of its application dated 15 May 2013.

Case management issues

The present case is procedurally complex. This complexity arises in the context of a claim asserted by SOE to be in the order of $230,000. Proportionality issues loom large. I consider it necessary for me to make a suite of case management orders to 'facilitate the case being conducted and concluded efficiently, economically and expeditiously': DCR r 24(1).
In this context, I also need to consider Maximizer's claim for summary judgment, set out in par 2 of its application dated 15 May 2013. It seeks judgment against SOE in the amount of $42,500 plus interest and costs, $42,500 being half the amount it paid to CBH pursuant to the Deed.
SOE's statement of claim does not presently include a claim for payment to it of the money paid into court (being the balance of the money paid to CBH), either in whole or in part. In the draft reply, it pleads:
Deed was Rescinded
21.It was a condition of the Deed that if there was no acceptance in the period of 6 months from the Deed, then either party could serve a notice on the other which would bring about the 'sunset date'.
Particulars
Clause 4.1 of the Deed and the definition of 'sunset date'.
22.On 30 August 2011, the Defendant purported to give notice pursuant to Clause 4.1 of the Deed.
23.It was a condition of the Deed if a party delays in complying with its obligations under the Deed as a result of which the acceptance date is delayed, that party may not serve a notice under Clause 4.1.
Particulars
Clause 4.2 of the Deed
24.By reason of the breaches of the Deed pleaded herein, the Defendant caused an indeterminate delay in reaching the acceptance date.
25.Pursuant to clause 4.2 of the Deed the Defendant was by its delay, incompetent to issue a notice triggering the 'sunset date'.
26.On 31 August 2011, the Plaintiff gave notice in writing to the Defendant triggering the sunset date pursuant to the Deed and setting out inter alia:
a.that the obligations under the Deed had come to an end;
b.that the Defendant had not performed its obligations under the Deed;
c.that the Plaintiff reserved all of its rights with respect to its unpaid invoices.
27.It was a term of the Deed that on the sunset date the Deed shall be rescinded and inter alia the Plaintiff would have all legal rights it would have had if the Deed had not been entered into.
Particulars
Clause 3.3 (and associated subclauses) of the Deed of Release.
28.Clause 3.3.1 is not subject to any other clauses of the Deed.
29.It was an implied term of the Deed that clause 3.2.2 was subject to clause 3.2.3 in circumstances where there was a dispute between the parties.
Particulars
The term is necessary to resolve the contradiction between clause 3.2.3 and 3.2.2 in the event that there is a dispute between the parties on the sunset date. It further resolves the contradiction between the operation of clause 3.3.2 and 3.2.3 in the event that there is a dispute on the sunset date.
The term is necessary to give business efficacy to the Deed and is so obvious as to go without saying.
SOE's position is that the amount paid into court needs to stay in court until such time as the dispute as to the entitlement to this money is determined.
However, Maximizer not yet made a formal claim over any of the money paid into court by filing a defence. On the material before me, including the draft defence, Maximiser appears to me to be presenting an inconsistent position. This turns on cl 3.2 and cl 3.3 of the Deed, which are quoted above [53].
On the one hand, in the present application, Maximizer asserts that the sunset notice provision in cl 4 of the Deed has been validly invoked, seeking the return of one half of the money it paid to CBH pursuant to cl 3.2.2.
On the other hand, in its defence, Maximizer it purports to take advantage of the waiver in cl 8 of the Deed, asserting it to be a complete bar to SOE's claim. This appears to ignore the words of cl 3.3.2 that upon the sunset date, the Deed is rescinded and 'each party shall have all legal rights they would have had, if the deed had not been entered into'.
It is not apparent to me how Maximizer can make both the claims in paragraphs [66] and [67]. Any defence raising an inconsistent pleading would be stuck out as being embarrassing.
The next thing that needs to occur in the action is that Maximiser should be required to file a defence.
It may be that in the defence Maximizer will accept that the sunset procedure has been validly invoked and that the Deed has been rescinded pursuant to cl 3.3.1, and then claim the return of half the money paid into court pursuant to cl 3.2.2. If this occurs, Maximizer could then press its application for summary judgment in relation to the money paid into court. It should be given an opportunity to do so. However, my preliminary view is that any summary judgment awarded would need to reflect cl 3.2.2, requiring one half of the money to be paid out to each party. There could be a specific reservation in the judgment allowing the parties to argue at the trial of the action as to how the money should be characterized for the purposes of the dispute set out in the statement of claim. A surface level analysis would suggest that it be characterized as part payment by Maximizer of any amounts found to be owing by it to SOE. However, as there is no need for me to determine this issue, it should be left to the trial judge.
If Maximizer in its defence accepts that the Deed has been rescinded pursuant to cl 3.3.1, and that the waiver in cl 8.2 falls away, it seems to me that the substantive issues identified in the statement of claim may proceed to trial without the parties requiring the court to adjudicate on the issues set out in the draft reply. This would save many days of trial time.
If Maximizer can come up with a way of consistently pleading the positions set out above [66] and [67], and this pleading survives the inevitable challenge by SOE, then my preliminary view would be that it would be difficult for Maximizer to successfully claim summary judgment in relation to part of the moneys currently paid into court. This is for the reasons set out above in relation to Question 3 above [52] – [58].
SOE's proposed reply also contains an apparent inconsistency. On the one hand it proposes to plead that it validly invoked the sunset procedure (par 26). This triggers the obligation in cl 3.2.2 for the money to be paid out equally to the parties. However, it then proposes to plead that there is a dispute as to the entitlement to the moneys, such that cl 3.2.2 is not operative. Given its plea that the sunset notice process was validly invoked, it is not apparent to me what the dispute is.
My preliminary view of the proposed pleadings is that the only basis either party can consistently plead that the sunset notice was validly invoked is if both cl 3.2.2 and cl 3.3.2 are given effect to.

Final orders

My preliminary view is that orders along the following lines are appropriate to give effect to the reasons and observations which I have made (referring to the parties by name for ease of reference):
1.the action be continued and progress to trial with CBH as the first plaintiff, SOE as the second plaintiff and Maximizer as the defendant, with the court heading and court file to be amended accordingly;
2.by [date] Maximizer file and serve a defence and any counterclaim;
3.by [date] SOE file and serve any reply and a defence to counterclaim;
4.the action be listed for a directions hearing on [date] at [time];
5.by no later than three business days prior to the hearing in par 4, each party is to file and serve:
(a)a table setting out any objections to any pleading filed by the other; and
(b)any request for further and better particulars;
6.par 1 of Maximizer's application dated 15 May 2013 be dismissed;
7.the balance of Maximizer's application dated 15 May 2013 be adjourned for further argument at the directions hearing listed in par 4;
8.in the event of default by any party for three business days in complying with any paragraph of this order, the party in default shall either:
(a)file and serve a consent order adjusting the timetable set out in this order; or
(b)request the court to list the action for a directions hearing; and
10.there be liberty to either party to request the court to list the action for an earlier directions hearing, the liberty to be exercised by letter to the court attaching a minute of proposed orders.
In the particular circumstances of this case, I would not consider it appropriate to allow SOE to defer filing any reply and defence to counterclaim until the resolution of any pleadings or particulars issues it may have with Maximizer's defence.
I will hear from counsel as to costs and the final form of the orders.