Esanda Finance Corporation Ltd v Connell Wagner (Vic) Pty Ltd

[1991] FCA 297

JUDGMENT No. a97/ .?!!,h,+

NOT FOR CIRCULATION

IN THE FEDERAL COURT OF AUSTRALIA	)
SOUTH AUSTRALIAN DISTRICT REGISTRY )	)
1
GENERAL DIVISION	) No. G43 of 1990
BETWEEN:
ESANDA FINANCE CORPORATION LIMITED

Applicant

RECEIVED	- and -
0 5 1UN 1991
CONNELL WAGNER (VICL

PRINCIPAL PTY LTD

Respondent

REASONS FOR DECISION

Coram: von Doussa J

15 May 1991

The applicant seeks leave to discontinue these proceedings pursuant to 0.22 r.2(l)(d) of the Federal Court Rules which provides that proceedings can be discontinued at any time with the leave of the court. The applicant seeks an order that the discontinuance be without liability to pay the respondent's costs.

clear from the pleadings, although on one view the claim was	in the order of $400,000 - $500,000. There have been a number
of interlocutory applications, and the pleadings are now closed. It is for that reason that 0.22 rr.2(l)(a) and (b) do not apply.
The respondent opposes the order sought. Argument today discloses a difference of opinion between the parties over the meaning and intent of correspondence between them in March and April this year.
There was discussion between the parties in March 1991, and at one conference solicitors for the respondent expressed the view that the applicant had no claim against it and that the proceedings in due course would fail. This statement was followed by a letter dated 28 March 1991 from the respondent's solicitors to the applicant's solicitors which said, relevantly :

These proceedings were commenced on 18 May 1990 and
assert a claim for damages under s.82 of the Trade Practices
1974 based on alleged misleading and deceptive conduct
arising out of the role of the respondent, a consulting
engineer, in relation to the construction of premises in the
Northern Territory. The amount of the damages claimed is not

"As discussed at that conference our client maintains its

view that your client has no claim against it.

expended by our client in the defence of this claim but	Significant sums in the way of costs have already been
our client is prepared to bear the costs incurred to date if your client forthwith discontinues its action."

The applicant's solicitors replied by letter dated 17 April

1991 saying :

"We are instructed by our client to accept the offer made
therein.

We shall prepare and forward to you for endorsement of consent and filing Notice of Discontinuance within the next few days."

The applicant's solicitors then prepared a notice of discontinuance which they signed and sent to the respondent's solicitors with a request that the notice be signed on behalf of the respondent. I presume the request for the signature was to gain the consent of the respondent so that the proceedings could be discontinued pursuant to 0.22 r.Z(l)(c).

The letter from the applicant's solicitors enclosing the notice of discontinuance said :

"We enclose in duplicate Notice of Discontinuance signed by us which, subject to what appears below, we request you sign and then file with the court thus concluding the terms of settlement.

Subsequent to our acceptance of the offer you informed us during a telephone conversation on 18 April 1991 that your client would prefer to conclude this matter by having it brought on again before the court and by consent dismissed with no order as to costs. This, as we explained, is not the basis on which this matter has been

settled. "

the respondent's solicitors said that their client's intention

In the telephone communication between the parties referred to

had been that the discontinuance would amount to a complete settlement, and release from the proceedings. On the other hand the applicant's solicitors said that their client understood the proposal to be that the proceedings would merely be discontinued with the applicant having a right to commence further proceedings at a later date if it saw fit. In that respect attention should be drawn to 0.22 r.7, which provides :

"A discontinuance under this Order as to any cause of action shall not, subject to the terms of any leave to discontinue, be a defence to a proceeding for the same, or substantially the same, cause of action."

The court is now invited by the applicant to express the view that the letter of 28 March 1991 contained an offer, which has been accepted, which by its terms meant that the applicant could discontinue the proceedings, without liability for costs, and retain the right thereafter to take further proceedings if it saw fit.

The respondent on the other hand says that subsequent communications between the parties makes it clear that the parties were never ad idem. There has been no agreement between them. Therefore, the court should consider the application of the applicant to discontinue independently of the correspondence.

As the argument demonstrates, there are two views open -

by the court, or alternatively there is no agreement at all.	either that there is an agreement that must now be construed
In my view, it makes no difference to the outcome of the present application which of those views is correct.
If it is a matter of construing an agreement constituted by the acceptance of the offer contained in the letter of 28 March 1991 1 am in no doubt that the proper interpretation is that the respondent offered to forego substantial costs already incurred in relation to the proceedings in exchange for a release from any further action, that is for a release not only from the proceedings presently on foot, but from any further proceedings for the same or substantially same cause of action.

It would be commercially unrealistic to suggest any other interpretation. The notion that one should strictly read the letter according to its terms and give a technical meaning to the discontinuance proposed which reflects 0.22 r.7 is, with respect to those who advance it, far fetched. There would be no commercial justification for such an of £er. Reasonably understood in the context of these proceedings and the discussion which had preceded it, the letter does not bear that meaning.

If the letter is to be applied as a binding arrangement between the parties, in my view the order of the court should be that leave be given to the applicant to discontinue the proceedings without liability as to costs, but on the condition that the discontinuance be a bar to further	proceedings for the same or substantially the same cause of	action.
Alternatively, if the letters do not constitute a binding agreement the matter is at large. I would only make an order giving leave to discontinue without a liability for costs, on two conditions :
(1) that the respondent consented to waiving costs to which

it would otherwise be entitled under 0.22 r.3, and

(2) that the discontinuance would thereafter be a bar to

further proceedings for the same or substantially same
cause of action.

Having expressed these views, I think in fairness to the applicant's position I should give the applicant the opportunity to consider whether it wishes to proceed with the application for leave to discontinue or take some other course of action.

I will stand the matter over.

I certify that this and the
preceding pages are a
true copy of the Reasons

for Decision of Mr Justice

von Doussa

Dated: 15- lq4i

Counsel for the applicant : Mr R F A Wills

Solicitor for the applicant	: Finlaysons
Counsel for the respondent	: MS J Cliff
Solicitor for the respondent	: Mouldens
Date of hearing	: 15 May 1991