Dennehy v Reasonable Endeavours Pty Ltd
[2001] VSC 447
•23 November 2001
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION
No. 2063 of 1991
| GRAEME PETER DENNEHY | Plaintiff |
| v. | |
| REASONABLE ENDEAVOURS PTY. LTD. | Defendant |
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JUDGE: | PAGONE, J. | |
WHERE HELD: | MELBOURNE | |
DATES OF HEARING: | 29 AND 30 OCTOBER, 9 AND 16 NOVEMBER 2001 | |
DATE OF JUDGMENT: | 23 NOVEMBER 2001 | |
CASE MAY BE CITED AS: | DENNEHY v. REASONABLE ENDEAVOURS PTY. LTD. | |
MEDIUM NEUTRAL CITATION: | [2001] VSC 447 | |
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CATCHWORDS: Leave to execute after six years – Rule 68.02(4) – Reasons for delay - Entitlement to proceed – Accord and satisfaction – Arrangement making execution unjust or inequitable – Onus of proof.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr. J. Delany | Minter Ellison |
| For the Defendant | Mr. G.T. Bigmore and Mr. S. Minahan | Septimus Jones & Lee |
A. Issues in the proceeding
This is an appeal pursuant to Rule 77.05 from the orders made by Master Wheeler on 1 October 2001 granting to the respondent leave to issue a warrant of execution to enforce the judgment of Ormiston, J. made on 28 November 1991. The nature of the appeal from the Masters’ Order is by re-hearing de novo (see Rule 77.05 (7)) and, in this case, concerned issues of the credit of witnesses who had given evidence before the Master and subsequently gave evidence before me.
The application by the plaintiff/respondent for leave to issue a warrant of execution was made under Rule 68.02 (1). That rule prevents the issue of a warrant of execution without the court’s leave in circumstances which include those found in this case; namely, where six years have elapsed since the judgment took effect: Rule 68.02 (1) (a). The power to grant leave resides in Rule 68.02 (1) and, so found, confers a broad discretion upon the court. Rule 68.02 (4), however, requires that an application for leave be supported by evidence on affidavit showing a number of matters. It is common ground between the parties that the matters, which the plaintiff/respondent needs to show in this application are those identified in sub-paragraphs 68.02(4)(a) (the amount due, including interest on the date of the application), 68.02(4)(b) (the reasons for the delay), 68.02(4)(e) (that the applicant is entitled to proceed to execution on the judgment) and 68.02(4)(f) (that the person against whom execution is sought is liable to execution on the judgment); conversely, it is common ground that sub-paragraphs 68.02(4)(b), (c), and (d) do not apply in this case.
The plaintiff’s evidence before commencement of the hearing was that in three affidavits and their exhibits: namely, an affidavit of Graeme W. Briggs, dated 29 June 2000, and the two affidavits of Mathew John Annells, dated 8 May and 9 October 2001 respectively. The defendant’s evidence before commencement of the hearing was that in the exhibits and affidavits of Graeme Peter Dennehy. That evidence was added to by the oral evidence and the additional exhibits tendered at the hearing before me.
B. Amount Due
There was no dispute between the parties concerning the quantum of the amount due. The orders of Ormiston, J. on 28 November 1991 were that the defendant pay the sum of $339,719.26 and the plaintiff’s costs of and incidental to the proceeding: see Exhibit MJA 1 to Annell’s affidavit of 8 May 2001. It was common ground that the defendant had paid the sum of $100,000 on 12 December 1997, and the amount calculated (and not contested) as being due as at 3 May 2001, was $610,348.35: see paragraph 4 of Annell’s affidavit of 8 May 2001.
C. Reasons for delay
The judgment of Ormiston, J. is enforceable for 15 years, and the Court’s leave to execute upon it was not required if judgment had been sought within six years of the judgment taking effect. It follows that the plaintiff did not need to seek leave before about 28 November 1997. This proceeding for leave, which was initially heard by the Master, was commenced some three and a half years later than the expiration of the initial six year period, namely, by summons dated 8 May 2001. It was made in the context of attempts having been taken by the plaintiff to seek payment of the judgment debt from at least about the second half of 1997; that is, within the initial six year period.
The precise circumstances in which judgment was obtained was the subject of some dispute in this proceeding. The fact is that the judgment is stated to have been given by Ormiston, J. by consent. The order records both that fact and that the defendant’s solicitor had attended court to consent to the judgment. The defendant, Mr. Dennehy, swore an affidavit that he "did not in fact become aware of it until [he met Mr. Briggs] in Hong Kong in 1996." Mr. Briggs was a director and chief executive officer of the plaintiff. I must say that I find Mr. Dennehy’s explanation barely credible in light of the contemporaneous documentary evidence. At the time when judgment was obtained, Mr. Dennehy had been living, or at any rate was, somewhere overseas. The proceedings had been set down for trial and there appears to have been some correspondence between opposing solicitors about the exchange of witness statements pending commencement of the hearing. Mr. Dennehy was expected to travel to Melbourne to attend the hearing. On 22 November 1991, the defendant's solicitors wrote to the plaintiff’s solicitors stating, amongst other things, that they had only just received fresh instructions in a short conversation with their client after not having heard from him for some months. Mr. Dennehy’s solicitors evidently thought that he had been speaking on a mobile phone from Canada. In any event, on 26 November 1991, Mr. Dennehy’s solicitors informed the plaintiff’s solicitors that at about 2.00 p.m. on that day their client had given them instructions about -
"the extent of agreement to consent orders being signed in the current proceedings."
They went on to suggest that the proceeding be adjourned but that suggestion seems not to have been taken up and in fact did not occur. It appears that Mr. Dennehy’s solicitor signed minutes of orders at 5.50 p.m. on 26 November, but that on the following day there was a suggestion that she may not have had instructions to do so. In cross-examination Mr. Dennehy could not recall whether he "ever gave final instructions to the lawyers" but added:
"and why would I be coming to Australia for this matter if I had given final instructions."
This observation seems significant in light of the fact that Mr. Dennehy did not in fact come to Australia to attend the hearing and seems to have had nothing more to do with the proceeding immediately thereafter: in other words, there appears to be clear and unmistakable conduct that somehow or other he must have thought that the proceeding had come to an end. He had been coming to Melbourne for the hearing, but it did not eventuate and he did not come.
There was some attempt by the plaintiff to obtain payment in the following year, but contact with him was lost in late 1992, at a time when it was thought (with some reason) that Mr. Dennehy was residing outside Australia. It was also thought by the plaintiff that the judgment debt was not able to be recovered at that time. In February 1995, the plaintiff ceased to trade and at that time the judgment debt was the plaintiff’s only asset. On 21 February 1995, application was made to deregister the plaintiff and it was dissolved on 28 August 1995.
A chance meeting occurred between Mr. Dennehy and Mr. Briggs in a Hong Kong airport lounge in June 1996. That was promptly followed by a successful application in the latter part of 1996 for the plaintiff company to be reinstated. Subsequently a bankruptcy notice was served upon Mr. Dennehy on 25 March 1997. This, of course, all occurred within the first six year period from the entry of judgment. It is indeed significant to my mind that one of the steps taken within the six year period was the application to reinstate the plaintiff company, which had as its only asset the substantial debt owed to it upon the judgment. Another significant factor was that soon after the reinstatement of the plaintiff, there was an immediate attempt to secure payment of the judgment debt by the issue of a bankruptcy notice upon Mr. Dennehy.
On 21 November 1997, the plaintiff and the defendant executed terms of settlement ("the settlement agreement") in relation to the judgment and the bankruptcy proceedings. I will return later to consider the effect of those terms, but at this stage I note only that within (if only just) the initial six year period, there was an agreement between the plaintiff and the defendant for the judgment debt to be paid. The recitals in the settlement agreement record the judgment debt due as being $339,719.26 plus substantial interest and costs. Clause 1 to the settlement agreement record corresponding promises to pay and accept $500,000 by three unequal instalments in full settlement of the judgment debt, interest and costs. The first instalment was paid, although not on time. No other amount was paid by Mr. Dennehy. The second instalment to be paid under the settlement agreement was due on 19 December 1997 and did not eventuate; nor did the third, which was due on 30 June 1998.
At about the time of the settlement agreement, the parties also agreed to an arrangement by which some securities owned or controlled by Mr. Dennehy would be administered by companies connected with Mr. Briggs, and therefore, associated with the plaintiff. I will return to that arrangement later. At this stage, it will suffice to note that there was an arrangement between the parties and that they gave it some effect. There is no doubt that there have been dealings with securities pursuant to some arrangement between Mr. Dennehy and interests connected with the plaintiff. However, in October 1999 further bankruptcy proceedings were commenced against Mr. Dennehy by the plaintiff. Two months earlier Mr. Briggs had become aware that during the previous year some of the securities which had been held by a company under his control had been sold without his knowledge. Whatever other impact that may have had, it is clear that this event altered the comfort, which the plaintiff could feel about its debt being secured for payment.
Rule 68.02(4)(b) requires the plaintiff to support its application by an affidavit showing the reasons for the delay. The defendant maintains that the plaintiff has failed to explain the delay in seeking to enforce the judgment. I do not agree. The purpose of the requirement is to put the Court in the position of being able to assess whether it should grant the leave being sought. Delay due to abandonment of rights or indifference to them would tend against the grant of leave. The purpose of the requirement is not simply for a tardy judgment creditor to be embarrassed by a statement of the delay. A mere statement of inactivity might amount to a statement of delay, and on one view of the word "reasons" such a statement might even be said to show the reasons for the delay. The plaintiff seeking leave needs to show reasons for the delay which, as the Rule states, supports the application. In this case the plaintiff, in my view, has done so. It has provided an explanation which supports the grant of leave by showing, in this case, an initial inability to enforce the judgment (through no fault of the plaintiff), a subsequent prompt attempt to recover upon the judgment and a course of dealing with the defendant that sought to accommodate his requests and situation in order to ensure payment. The plaintiff had lost contact with the defendant for many years and it was thought, on reasonable grounds, that Mr. Dennehy was residing outside Australia. Attempts to enforce judgment were made promptly after contact was resumed soon after the chance meeting in Hong Kong. Thereafter any delay is explained by the comfort provided by the securities which were held by interest associated with the plaintiff.
D: Entitlement to proceed against the defendant
The matters raised in sub-paragraphs (e) and (f) of Rule 68.02(4) may conveniently be dealt with together as was done by the parties. Put simply, the contention for the defendant was that the plaintiff is not "entitled to issue execution" because -
"there has been some arrangement entered into between [it] and the judgment debtor which would make it inequitable or unjust for execution to issue."
The words I have quoted come from the defendant’s submissions which in turn quote from Solic v. Bertossa [1969] V.R. 594. The principal foundation of this submission was based upon the settlement agreement and the administration of securities together with the conduct alleged against the plaintiff (albeit indirectly through Mr. Briggs and interests associated with him) in relation with the dealings with the securities, which had come under the control of Mr. Briggs and related entities after the settlement agreement was entered into.
Menhennitt, J. in Solic v. Bertossa [1969] V.R. 594, considered the meaning of the expression "entitled to issue execution" appearing in an earlier version of what is now found in Rule 68.02. At 595, his honour said:
"The expression 'entitled to issue execution' in its ordinary meaning, I think, means entitled as a matter of legal right to issue execution. … Bearing in mind that meaning of the word 'entitled', it appears to me that the purpose of O.42, r.23, is to give the person against whom the judgment has been given an opportunity of having the judge investigate whether the applicant is still entitled to issue execution, but no more."
It was in that context that his Honour referred, by way of further support, to the decision of Hood J in Hammon v. Kampfhenteel [1895] 21 V.L.R. 202 where his Honour had said at 203 that in a situation where six years had elapsed -
"the defendant might be able, amongst other things, to show that there has been some arrangement entered into between him and the judgment debtor which would make it inequitable or unjust for execution to issue."
I do not consider that the terms of the settlement agreement itself amounts to an arrangement which would make it unjust or inequitable for the plaintiff to issue execution against the defendant. They do not, in my view, amount to an accord and satisfaction of the judgment debt. On the contrary any satisfaction of the judgment debt was only to occur upon completion of the payment. Clause 2 of the settlement agreement specifically deals with any release in terms that make it clear that the judgment debt was not being sacrificed for a contractual bargain to accept a lesser sum. The settlement agreement may have given Mr. Dennehy the opportunity to be relieved of a debt for a higher amount by payment of a lesser amount but I do not construe the terms of the settlement agreement as contemplating that the judgment debt was to be compromised unless and until the lesser amount was fully paid. That has not occurred.
Mr. Bigmore Q.C., who appeared for the defendant with Mr. Minahan, submitted that the proper construction of the settlement agreement was as an agreement by the plaintiff to accept the defendant’s promises contained therein (partly executed and partly executory) in conditional satisfaction of the debts concerned, rather than an agreement by the plaintiff to accept nothing less than full performance. In my view, that is not the proper construction of the agreement. It is true that the agreement contains promises by the defendant, but in my view, the proper construction of the settlement agreement is that the plaintiff agreed to accept performance of the promises, rather than the mere giving of the promises, in conditional satisfaction of the debts concerned. It was also submitted for the defendant that the settlement agreement was characterisable as an "accord and conditional satisfaction" not as an "accord executory", and that the plaintiff had erroneously submitted that the defendant must establish an "accord and satisfaction" when (so it was said) establishment of an "accord and conditional satisfaction" is sufficient. If this construction of the settlement agreement is accepted for the purposes of argument, the question still left unanswered is what the settlement agreement so construed "is sufficient" for. If the proper construction of the settlement agreement leaves in force the judgment debt, a finding that its proper construction is that it is an "accord and conditional satisfaction" results in the settlement agreement being but one factor to take into account in the exercise of the Court's discretion in deciding whether to grant leave. Whether a settlement agreement properly characterised as an "accord and conditional satisfaction" will be sufficient to prevent leave to issue execution after six years must depend upon all of the circumstances relevant to the "accord and conditional satisfaction". In my view, the circumstances surrounding the performance of the settlement agreement would not justify a conclusion that it would be inequitable or unjust for execution to issue in the circumstances which obtain. The settlement agreement itself has not been performed by the defendant according to its terms. The best that may be said on behalf of the defendant is that some other arrangement was entered into in relation to the holding of securities but his conduct in relation to those securities does not give me confidence that equity or justice is on his side.
The onus upon the applicant to show that it "is entitled to proceed to execution on the judgment" will usually be discharged by proof of the judgment and evidence on affidavit that some or all of it remains unpaid. In Solic v. Bertossa [1969] V.R. 594, Menhennitt, J. expressed the purpose of this aspect of the rule to be to give the judgment debtor the opportunity of having the judge investigate "whether the applicant is still entitled to issue execution, but no more" (my emphasis). The plaintiff before me has discharged that onus. The judgment is still in force, it is not statute barred, and only $100,000 has been paid.
An entitlement to proceed to execution on the judgment may be lost if the defendant is able to show "some arrangement entered into between him and the judgment [creditor] which would make it inequitable or unjust for execution to issue": Solic at 595 quoting from Hammon at 203. The onus to show this is borne by the defendant seeking to rely upon the existence of some identifiable arrangement that negative the plaintiff's entitlement.
In this case the defendant claims that such an arrangement is to be found. It was said that its parameters were found in a letter from Mr. Briggs to Mr. Dennehy dated 21 November 1997 and its enclosures. That letter confirms that an offer of payment of $500,000 would be acceptable to the plaintiff subject to: (a) the defendant's execution of the settlement agreement; (b) the initial payment of $100,000 on or before 28 March 1997; and (c) the restructuring of Mr. Dennehy's personal affairs "to place various assets under" the administration of interests associated with Mr. Briggs and the plaintiff to "commence before 15 December 1997, and at least partly completed before 31 December 1997."
The parties have given some effect to the arrangement described in that letter. The initial payment was made, albeit late. Some securities owned or held for the benefit of Mr. Dennehy were placed under the administration of companies controlled or associated with Mr. Briggs and the plaintiff: shares in a company called Rystar were placed with Victorian International Holdings Limited ("V.I.H.L.") and shares in a company called Terramin Resources Inc. were placed on trust in a fund known as the Magellan Superannuation Fund ("Magellan"). V.I.H.L. and Magellan were established through Mr. Briggs for Mr. Dennehy as a means of providing either security or comfort for discharge of the obligations to pay the balance of the $500,000 offered in November 1997.
I am not satisfied that what the defendant has said amounts to a sufficient conclusion that the arrangement was of a kind which would make it unjust or unequitable for execution to issue. I have some doubt about whether I can safely accept some of the evidence upon which Mr Dennehy would need to rely. Securities are still held by interest connected with Mr. Briggs pursuant to the arrangement which was entered into after the settlement agreement. Those shares include a parcel in a Canadian company known as Terramin Resources Inc., which Mr. Dennehy said in cross-examination constituted a valuable parcel of shares in that company. Mr. Dennehy made it clear in cross-examination that he did not wish to sell those shares or authorise the sale of them for the payment of the judgment debt. Indeed, the fact is that however much Mr. Dennehy may purport to rely upon either the settlement agreement, or the arrangement pursuant to which securities have been given, the fact is that he has made no attempt to pay the judgment debt either upon its own terms or upon the terms of the settlement agreement, or upon the terms of the arrangement which he alleges should prevent the issue of a warrant of execution. On any view of the arrangement, it involved the payment of a further $400,000. The dates due for those payments have long since passed. The highest that Mr. Dennehy can put the arrangement now (that is, as varied) is that it is a forbearance to demand payment for so long as the securities are still in an administration controlled by Mr. Briggs, but Mr. Dennehy cannot point to an undertaking to forbear from recovery in such terms and makes no offer to pay; that is, he makes no offer to perform one of the promises which is part of the arrangement which he maintains should prevent leave from being granted. It seems to me that in these circumstances leave to issue should be granted.
Accordingly, I dismiss the defendant's appeal from the Master's order and confirm that the plaintiff have leave to issue a warrant to execute the judgment of Ormiston, J. I order also that the defendant pay the plaintiff's costs.
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