Greg Rowe Pty Ltd v Hill [No 2]
[2012] WADC 157
•7 NOVEMBER 2012
JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CIVIL
LOCATION: PERTH
CITATION: GREG ROWE PTY LTD -v- HILL [No 2] [2012] WADC 157
CORAM: DAVIS DCJ
HEARD: ON THE PAPERS
DELIVERED : 7 NOVEMBER 2012
FILE NO/S: CIV 3520 of 2010
BETWEEN: GREG ROWE PTY LTD
Plaintiff
AND
CHRISTINA ISABELLE SARAH HILL
First DefendantJULIA LOUISE HILL in her capacity and as trustee for the Platill Trust
Second Defendant
Catchwords:
Practice and procedure - Orders previously made for the setting aside of default judgment against defendants on conditions - Failure by defendants to comply with conditions - Application for extension of time within which to comply with conditional orders and to vary orders - Principles on an application to extend time for compliance with conditional orders - Principles relating to unrepresented litigants - Merits of the defendants' defence and counterclaim - Further information provided on quantum of defendants' claim against the plaintiff - Earlier settlement of the claim with another tortfeasor - Release of that tortfeasor operates as a release of the plaintiff
Legislation:
Rules of the Supreme Court 1971 O 3 r 5
Result:
Defendant's application dismissed
Representation:
Counsel:
Plaintiff: Mr A Rowe
First Defendant : In person
Second Defendant : In person
Solicitors:
Plaintiff: Rowe Bristol Lawyers
First Defendant : Not applicable
Second Defendant : Not applicable
Case(s) referred to in judgment(s):
Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175
Baxter v Obacelo Pty Ltd (2001) 205 CLR 635
Deloitte Touche Tohmatsu v Cridlands Pty Ltd [2003] FCA 1413; (2003) 204 ALR 281
FAI General Insurance Co Ltd v Southern Cross Exploration NL (1988) 165 CLR 268
Greg Rowe Pty Ltd v Hill [2012] WADC 104
Hancock Family Memorial Foundation Ltd v Fieldhouse (2005) 30 WAR 398
Mees v Sherwood Nominees Pty Ltd t/as Wovodich Engineering [2009] WADC 65
Minogue v Human Rights and Equal Opportunity Commission (1999) 166 ALR 129
MTQ Holdings Pty Ltd v Lynch [2007] WASC 49
Nau v Kemp & Associates Pty Ltd t/as Active Working Solutions [2010] NSWCA 164; (2010) 77 NSWLR 687
Osgood v Wham [2007] WASCA 178
Rajski v Scitec Corporation Pty Ltd (Unreported, New South Wales Court of Appeal, Kirby, Samuels, Mahoney JJA, 16 June 1986)
Ruffino v Grace Bros Pty Ltd [1980] 1 NSWLR 732
Semenov v Pirvu [2011] VSC 605
State of Queensland v JL Holdings Pty Ltd (1997) 189 CLR 146
Tobin v Dodd [2004] WASCA 288
DAVIS DCJ: On 5 July 2012, I allowed the defendants' appeal from a decision of the deputy registrar made on 3 October 2011 dismissing the defendants' application to set aside a default judgment entered against them by the plaintiff on 4 August 2011. My reasons for the decision in the appeal and the orders which I made are contained in Greg Rowe Pty Ltd v Hill [2012] WADC 104. Given the history of these proceedings and in order to do justice to the plaintiff, I ordered that the default judgment be set aside only if two conditions were met by the defendants.
The defendants did not comply with the conditions which I made on 5 July 2012 and now seek an extension of time within which to do so.
The background facts to this matter are, briefly, that in July 2007 the defendants engaged the plaintiff to carry out project management services for the development of an aged person's facility in South Yunderup. That development was on land originally owned by both defendants but subsequently registered, on 27 August 2007, in the name of the second defendant only, as trustee for the Platill Trust. The first defendant was a beneficiary of that trust. In June 2008 it was discovered that the engineer engaged for the project had failed, in his plans for the project, to take into account 1:100 flood plain levels for the Murray River located approximately 100 m to the north of the development. The plaintiff continued to carry out project management services pursuant to its contract with the defendants, which was varied to include work relating to the rectification works after the discovery of the mistake by the engineer and also providing assistance to the second defendant's solicitors (at the time) to prepare a claim against the engineer. In November 2010 the plaintiff issued this action to recover payment of its project management fees for those services. After the defendants failed to file a defence, the plaintiff obtained judgment, by default, for the total sum, including interest, of $105,000.88.
In the appeal from the deputy registrar's dismissal of the defendants' application to set aside that judgment the defendants argued, among other things, that they had a good defence and counterclaim because the plaintiff had been negligent in carrying out the project management services.
I allowed the appeal to set aside the orders of the deputy registrar for the reasons set out in my decision on only one of the grounds of defence and counterclaim raised by the defendants, namely that there was an arguable counterclaim by the defendants against the plaintiff on the basis that it should have picked up the problems with the engineer's plans earlier.
One of the reasons I made the order for the setting aside of the default judgment on conditions was because I had a number of concerns about the quantum of the proposed counterclaim and I had been unable to properly assess the likely quantum of the claim. From all the information I had, the engineer was the party with the primary liability for the defendants' claimed losses. The claim against the plaintiff would be governed by the proportionate liability provisions of the Civil Liability Act 2001 (WA) and the evidence in the appeal suggested that both an offer had been received and a settlement reached with the engineer. In a letter of 18 May 2010 the second defendant had written to the plaintiff, she stated that the claim against the engineer had been 'compromised severely by the questions of partial liability' of the plaintiff. There was no evidence provided by the defendants concerning the claim against the engineer, the amount of the claim made, what allowance had been made for what was termed the 'partial liability' and what, if any, offer had been received or settlement reached with the engineer: see Greg Rowe Pty Ltd v Hill (my reasons for decision in the appeal) [63], [96] ‑ [101], [118].
I also found that the defendants had not been open and transparent in their application to the court on a number of matters as I identified in my reasons for decision in the appeal, [98] – [101], [108] – [110], [118], [123], [124].
The orders that I made were set out in my reasons for decision in the appeal [134] and were as follows:
3. The judgment against the first and second defendants in default of defence entered on 4 August 2011 be set aside upon the defendants' compliance with the following conditions:
(a) the defendants file and serve a defence and counterclaim on or before 4pm Friday 3 August 2012; and
(b) the defendants pay the sum of $105,000.88 into court on or before 4pm Friday 31 August 2012.
4. The defendants have liberty to apply, on or before Friday 3 August 2012, to vary the sum to be paid into court pursuant to Order 3(b). Any such application is to be supported by affidavit providing full particulars of:
(a) the actual rectification costs for the property at South Yunderup, Western Australia, as project managed by the plaintiff;
(b) each defendant's current financial position;
(c) the current financial position of the Platill Trust;
(d) the claim which was made against the engineer, J R Bradley Consulting, and what efforts the defendants made to pursue that claim;
(e) the proceeds of judgment or settlement (if any) received by either or both of the defendants (either in their personal capacity or on behalf of the Platill Trust) from the engineer, and the terms of any settlement reached with that engineer including any proportionate liability agreed with the engineer.
The payment of the judgment sum of $105,000.88 was in my view necessary because of the fact that the defendants had not been open and transparent in their application to the court and I had been unable to assess the quantum of their claim: see my reasons for decision in the appeal [124] – [127]. The information set out in order 4(a), (d) and (e) was to enable this court to make some assessment of the likely quantum of the defendants' claim - a relevant factor in determining whether there should be any variation of the amount to be paid into court: see my reasons for decision in the appeal [129].
I made it clear both in my reasons for decision in the appeal and at the time I handed down my decision that if the defendants wished to apply to vary the sum to be paid into court, they had to make an application on or before Friday 3 August 2012. I also specified that the application had to be supported by affidavit and what the affidavit had to address. I stressed that the defendants had to make a full and frank disclosure of all of the matters set out in order 4 of my orders. I also stressed in my reasons [128] that it was very important that any payment, whether it was to be the whole of the judgment sum or only part of it (if the court was prepared to vary the sum), should be paid by the fixed date of 31 August 2012. The defendants' application to vary the sum to be paid into court had to be made well before the date by which I would order the judgment sum to be paid into court. As I stressed in [128] 'There must be no further delay on the part of the defendants in this action.'
When I delivered my reasons for decision in the appeal, I read out the contents of [128]. I went through the orders and checked with each of the defendants, who were not legally represented, that they understood the orders that I proposed to make.
There has now been further delay by the defendants in this action.
The defendants have filed and served a defence and counterclaim but they did not do so by 4.00 pm on Friday 3 August 2012 as I ordered. In fact the defence and counterclaim was not filed until 16 August 2012.
The sum of $105,000.88 was not paid as ordered by 31 August 2012, nor was any application to vary that sum made by the defendants on or before 3 August 2012. There was an affidavit, or at least a document entitled 'affidavit' which was said to be made on 31 July 2012 by the first defendant, but was filed on 7 August 2012, which addressed her current financial position (as required by order 4(b)). The second defendant swore an affidavit on 6 August 2012, filed on the same date, 6 August 2012, which addressed only her financial situation (as required by order 4(b)) and the liabilities (but not the value of the assets) of the Platill Trust. There was no application filed with those affidavits.
The conditions on which the default judgment was ordered to be set aside have not been complied with.
By a letter dated 7 September 2012, the plaintiff's solicitors wrote to the court referring to the orders I had made on 5 July 2012, and the defendants' failure to either pay any monies into court pursuant to order 3(b) or make an application to vary the sum pursuant to order 4, and sought orders that the defendants' application to set aside default judgment be dismissed and the defendants pay the plaintiff's cost of the application.
It was not necessary for any such orders as sought in the letter from the plaintiff's solicitors to be made. The conditional order I made was self‑fulfilling – in other words, if the defendants did not comply with the conditions, the default judgment was not set aside.
The letter which the plaintiff's solicitors wrote to the court on 7 September 2012, being copied to the defendants, produced a response from the second defendant by a letter dated 10 September 2012 enclosing a chamber summons, stating:
I enclose an application for:
1.An extension of time to apply for a reduction in the amount to be deposited with the court.
2.To waive the amount to be paid to the court due to the financial situation of the defendants.
By letter dated 14 September 2012 my associate wrote to the parties advising that, unless either party wished to list the matter for hearing in order to make oral submissions, I proposed to determine the application by the defendants on the papers which included the defence and counterclaim and attached documents as filed on 16 August 2012, as well as the two affidavits of the defendants filed on 6 and 7 August 2012 respectively. The parties were to advise by 21 September 2012 if they agreed to the matter proceeding on the papers and to also provide any written submissions by Wednesday 26 September 2012.
Both parties have agreed that I should proceed to determine the defendants' application by chamber summons dated 10 September 2012 on the papers. Written submissions have also been provided to me by the plaintiff's solicitors.
The legal principles on an application to extend time for compliance with a conditional order
It is not unusual for courts to make conditional orders which come into effect on the occurrence of a contingency.
The court does have the power to extend time for compliance with a conditional order, even though the time for compliance has expired: see O 3 r 5 of the Rules of the Supreme Court 1971, FAI General Insurance Co Ltd v Southern Cross Exploration NL (1988) 165 CLR 268; MTQ Holdings Pty Ltd v Lynch [2007] WASC 49 and Mees v Sherwood Nominees Pty Ltd t/as Wovodich Engineering [2009] WADC 65 [31] – [36].
The principles to be applied on an application to extend time in this situation were set out by Master Newnes (as he then was) in MTQ Holdings Pty Ltd v Lynch [55], [56]. While that case dealt with an application to extend time for compliance with the terms of a springing order, the principles in my view would extend to any order made on conditions. The factors to which the court will normally have regard are:
1.The circumstances in which the order came to be made.
2.The reason for non‑compliance with the order.
3.The prejudice to the defaulting party if the time were not extended.
4.The prejudice to the other party if the time were extended.
5.The merits of the action (or defence and counterclaim), there being no point in resuscitating a case that is devoid of merit.
There is not one factor or set of factors which is prescriptive of a particular result. All relevant matters must be balanced and the weight to be given to each will depend on the circumstances of the case. Ultimately in considering the exercise of the discretion, the question must be asked 'what does justice in all its notions or sense of it that are relevant, require in the circumstances of this case?': Hancock Family Memorial Foundation Ltd v Fieldhouse (2005) 30 WAR 398 [103], [150], [166]; MTQ Holdings Pty Ltd v Lynch [50].
Circumstances in which the order came to be made
The circumstances in which I made the orders of 5 July 2012 are set out fully in my reasons for decision in the appeal, which I have summarised above.
The reason for the non‑compliance with the order
The only reason for non‑compliance provided by the defendants relates to the failure to comply with the order for payment into court and is set out in the letter from the second defendant accompanying the chamber summons of 10 September 2012 where she said:
We now realise that this should have all been submitted together but we are not lawyers and are having to currently represent ourselves due to the financial situation …
After enclosing the application, the second defendant went on to say:
If these are successful, we will be seeking litigation funding to take this forward.
I request that you take into consideration our situation and inability to afford a lawyer when assessing whether to allow this chamber summons.
I am not able to accept the explanation that the defendants did not realise that 'this should have all been submitted together'. In my reasons for decision in the appeal [122] I addressed each of the defendants' health and I made findings relating to the defendants' education, intelligence, ability to function and make meaningful submissions. The defendants are both well educated and have been involved in court processes in this action now for some time. Both defendants have shown that they have the capacity to understand these legal proceedings. They have previously filed applications by way of chamber summons while they have been unrepresented – in fact, the second defendant prepared and filed a chamber summons dated 23 February 2012 seeking an extension of time for the filing of the appeal. Further, my reasons for decision in the appeal and the orders I made are clear. An application had to be filed, supported by affidavit.
My reasons for decision in the appeal, as well as what I stated in court before making the orders, also made it clear that there was to be no further delay by the defendants.
I find that there is no adequate explanation for the delay.
There is also no explanation as to why the litigation funding which has been mentioned in the second defendant's letter of 10 September 2012 has not already been sought. The defendants have had plenty of time, since 5 July 2012, to take the matter up with a litigation funder.
The fact that the defendants are not legally represented does not excuse the defendants from compliance with the orders of this court. All parties, whether legally represented or not, must have regard to court processes and orders. As stated by McLure JA in Osgood v Wham [2007] WASCA 178 [20], the court has the duty and power to protect the integrity of its processes once they are set in motion.
In the appeal and in making my orders of 5 July 2011, I took into account the fact that the defendants were self represented and the general principles governing the role of the judge in civil proceedings involving an unrepresented litigant as set out in Tobin v Dodd [2004] WASCA 288 [13] ‑ [18]. In taking into account these principles I allowed a generous time within which the defendants had to comply with the orders.
In the discussion by EM Heenan J in Tobin v Dodd [14], he adopted what the Full Court of the Federal Court of Australia had said in Minogue v Human Rights and Equal Opportunity Commission (1999) 166 ALR 129 [28]. In that case and many other cases, the following statement by Samuels J in Rajski v Scitec Corporation Pty Ltd (Unreported, New South Wales Court of Appeal, Kirby, Samuels, Mahoney JJA, 16 June 1986) has been referred to with approval:
In my view, the advice and assistance which a litigant in person ought to receive from the court should be limited to that which is necessary to diminish, so far as this is possible, the disadvantage which he or she will ordinarily suffer when faced by a lawyer, and to prevent destruction from the traps which our adversary procedure offers to the unwary and untutored. But the court should be astute to see that it does not extend its auxiliary role so as to confer upon a litigant in person a positive advantage over the represented opponent ... At all events, the absence of legal representation on one side ought not to induce a court to deprive the other side of one jot of its lawful entitlement ... An unrepresented party is as much subject to the rules as any other litigant. The court must be patient in explaining them and may be lenient in the standard of compliance which it exacts. But it must see that the rules are obeyed, subject to any proper exceptions. To do otherwise, or to regard a litigant in person as enjoying a privileged status, would be quite unfair to the represented opponent.
In the circumstances of this particular case, I am of the view that if the effect of the conditional orders I made can be avoided by the defendants relying on the fact that they are not legally represented, the authority of the court will be undermined and the defendants would enjoy a privileged status which would be quite unfair to the plaintiff.
I consider that the defendants' inadequate explanation for their non‑compliance with the orders of 5 July 2012 is a weighty factor against allowing an extension of time to the defendants.
Prejudice to the defendants if time is not extended
I accept that if time is not extended and I dismiss their present application for an extension of time to comply with the orders I made on 5 July 2012, the defendants would be prejudiced. The prejudice would be significant if it was not open to them to commence fresh proceedings because the limitation period for the bringing of any claim against the plaintiff has expired.
It has not been submitted by the defendants that if time was not extended, any attempt to issue fresh proceedings against the plaintiff would be time barred. A consideration of the nature of the claim and the provisions of the Limitation Act 2005 (WA) s 13 suggests that the defendants' counterclaim is not yet time barred. This is not a case, therefore, where the defendants would be 'shut out' of litigating their counterclaim.
I need to bear in mind that where an order for dismissal does no more than effect a situation in which fresh proceedings may be brought (involving additional expense and duplication of court time) then the administration of justice may well be served by a power to reinstate these current proceedings: FAI General Insurance Co Ltd (288) (Gaudron J). That is, however, subject to a consideration of all of the other factors relevant to the whether or not I should exercise my discretion to extend time.
Prejudice to the plaintiff if time is extended
In my reasons for decision in the appeal [119] I identified prejudice to the plaintiff. The plaintiff had incurred considerable costs in proceedings against the defendants to enforce the judgment and thus was prejudiced by the delay. There has undoubtedly been further prejudice to the plaintiff by reason of the additional delay by the defendants since my orders of 5 July 2012.
It has been recognised, and courts now take into account, the strain which litigation may place on the parties to it and the natural desire of most litigants to be freed from the anxiety, distraction and disruption which litigation causes. That is not a consideration limited to natural persons. Because justice cannot be measured solely in monetary terms, costs orders are not necessarily an adequate balm to the other party: State of Queensland v JL Holdings Pty Ltd (1997) 189 CLR 146, 170 (Kirby J), see also Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175 [100] – [101] (Gummow, Hayne, Crennan, Kiefel and Bell JJ). In the particular circumstances of this case, I consider that if an extension of time is granted to the defendants, there will be prejudice to the plaintiff which cannot be wholly ameliorated by a costs order.
The merits of the plaintiff's case
The affidavits from the defendants do not set out the actual rectification costs for the South Yunderup property, or the situation with the claim against or settlement with the engineer, as required by orders 4(a), (d) and (e) of the orders of 5 July 2012.
In par 18 of the defence and counterclaim filed on 16 August 2012, however, it is stated that a total of $450,000 was received from the engineer's insurers in three tranches, with the final payment in April 2010. There are also two documents referred to and attached to the defence and counterclaim dealing with the claim against the engineer to which I have had regard:
(a)Summary of Position as at 24 February 2010, which is actually entitled 'Claim against J R Bradley Consultants – Summary of Position as at 24 February 2010. I will refer to this as the 'Claim Summary'.
(b)The deed of settlement and release between the engineer and the second defendant. The parties to the settlement deed are the second defendant, both in her personal capacity and as trustee for the Platill Trust (defined in the deed as 'the Claimants') and the engineer (defined in the deed as 'Bradley').
The Claim Summary appears to be a comprehensive record of the rectification costs for the development at South Yunderup as well as other consequential costs and expenses incurred. The Claim Summary sets out a number of items with information for each item including the original quantum of the claim, the comments made by the solicitors acting for the engineer (in particular, whether or not the claim was accepted), the defendant's solicitors' comments (which includes whether the position on an item as set out by the solicitors for the engineers is accepted by the second defendant) and a column setting out the 'Revised Quantum of Claim'.
In her affidavit of 28 September 2011 in support of the appeal, the second defendant deposed to the fact that the failure to provide for the 1:100 year flood levels 'cost in the region of $750,000 to re-do, increased the length of the project by 18 months, which resulted in increased interest costs, damage to the marketing image of the project and consequent deterrence to sales': see my reasons for decision in the appeal [43]. The Claim Summary includes items for re-doing works, interest costs attributable to delay (which delay is recorded as 13 months and not 18 months as claimed by the second defendant in her affidavit in the appeal), marketing and advertising costs and other costs, including project management fees and legal costs relating to assessing and quantifying the claim. The total for all items in the Claim Summary (including GST) is $739,951.72. The total amount for the Revised Quantum of Claim including GST is $638,205.36. The Claim Summary casts considerable doubt on the credibility and reliability of the second defendant's claims in her affidavit evidence before this court in the appeal.
The Claim Summary records the engineer's acceptance of the full amount claimed for the following items of loss:
1
Surveying (item 4 in the Claim Summary)
$3,000.00
2
Fencing (item 5)
$48,897.74
The Claim Summary records the acceptance by the engineer of part of the following items claimed, with the reasons why only part of the claim is accepted, as follows:
Item
Services
Original Quantum of Claim
Engineer's Solicitors' comments
Second Defendant's Solicitors' Comments
Revised Quantum of Claim
1
Project Management – Greg Rowe & Associate
$63,138.25
Accepted at $48,400 only
All costs which have been claimed are solely referable to J R Bradley's [the engineer's] conduct and would not have been incurred in any event
$71,314.00
2
Civil Works – Bouvard Earthmoving
$203,529.57
Accepted at $169,764.57 only. Allowance to be made for costs which would have been incurred in any event, namely Item 4.5 – spread, compact and trim additional fill
Accepted by Julia Hill
$169,764,57
3
Civil Engineering
– CID Consultants
$47,300.00
Accepted at $30,000.00 only. Costs are significantly more than those originally quoted by [J R Bradley]. Some of these costs would have been required in any event.
[Engineer's solicitors] specify which costs would have been incurred in any event.
$47,300.00
7
Water and sewer headworks – Water Corporation
$60,752.72
Accepted at $4,000.00 only. Only allowed nominal figure for delay costs.
Claim is based on J R Bradley's negligence in failing to allow for these charges in original costings. Julia Hill has not made any allowance for these costs as a result of J R Bradley's negligent advice, but contrary position may be correct.
$4,000.00
9
Interest – Police & Nurses Credit Society
$132,716.63
Accepted at $21,024.63 only. Finance issues not attributable to J R Bradley.
Claim is for total interest charges incurred during 13 month delay to Project. Additional claim for interest on costs of remedial works (less $200,00 received from insurer) from end of delay to finalisation of claim.
$132,716.63
10
Legal services – Jackson McDonald
$18,599.72
Accepted at $10,000.00 only. Full claim is excessive given Jackson McDonald's involvement and work done.
Claim is reasonable given work required to assess and quantify the claim. Additional claim of $17,193.28 for [second defendant's solicitors'] costs.
$35,793.00
11
Structural Engineering – Ventura Homes
$14,705.00
Not accepted. Required in any event.
Original engineering services unusable due to change in design. Further costs to be incurred by purchasers as opposed to Julia Hill
$0.00
12
Marketing and Advertising
$50,000.00
Accepted at $10,000 only. No significant damage due to delay.
Significant advertising and marketing will be required to lift the profile of the Project following the delay. $37,357 incurred in advertising and marketing up to 30 June 2009 most of which has been wasted as a result of the delay.
$37,357.00
As can be observed from what I have set out (which reproduces the Claim Summary with some editing of names), the first item claimed is the plaintiff's project management fees. The second defendant also accepted the contentions made by the solicitors for the engineer relating to items 2 and 7 and conceded (or did not pursue) item 11.
The only other items which were not accepted by the engineer, either wholly or in part, and were still maintained by the second defendant, were the following:
Item
Services
Original Quantum of Claim
Engineer's Solicitors' comments
Second Defendant's Solicitors' Comments
Revised Quantum of Claim
6
Quantity Surveying – Ralph Beatie Bosworth Pty Ltd
$4,300
Not accepted. Further explanation required
Reports required as a condition of each drawdown of loan. Additional reports required as a direct result of additional works due to J R Bradley's negligence
$4,300
8.
Geotechnical services – Douglas Partners
$25,743.75
Not accepted. Costs would have been incurred in any event
Services incorrectly performed by J R Bradley and had to be redone by Douglas Partners
$25,743.75
The settlement deed recites the following facts:
AIn or around May 2007, Bradley, who is an engineer, was engaged by the Claimants to provide civil engineering services for their retirement village development located at Banksia Mews South Yunderup (Project).
BBetween June 2007 and June 2008, Bradley provided civil engineering services to the Claimants. The services included advising and providing engineering drawings in relation to earthworks, sewerage, drainage and road platforms for the Project.
CIn or around June 2008, the Claimants engaged CID Consultants to provide an independent engineering review of the Project.
D.CID provided a review which suggested Bradley had failed to, among other things, design the Project in accordance with a 1:100 year flood plan level as required by the Shire of Murray.
EIn or around June 2008, the Claimant terminated Bradley's services in respect of the Project.
FIn or around September 2008, the Claimants issued a demand to Bradley for compensation for loss and damages suffered as a result of Bradley's allegedly negligent civil engineering services provided in respect of the Project (Claim).
GThe parties have agreed, without any admission of liability by either of them to settle the claim on the terms of this Deed.
By the settlement deed cl 1.1, the engineer agreed to pay $450,000 to the second defendant. Clause 1.2 of the deed provided that the payment of the settlement sum was to be paid by three instalments of $100,000 on 7 July 2009, $100,000 on 5 October 2010 ([sic] – I believe this should refer to 5 October 2009) and $250,000 by 29 March 2010. The first two instalments were recorded as 'payment completed'.
The settlement deed contains a release and indemnity from the second defendant to the engineer upon payments of the amounts in cl 1.2, as follows:
2.Release
2.1On payment of the amounts referred to at paragraph 1 above, the Claimants release and forever discharge Bradley from all actions, suits, claims, demands, costs, interest and other liabilities of any nature which the Claimants have or at any time may have, or, but for the execution of this document, could or might have had against Bradley (and its officers and employees or any of them), in connection with or incidental to the claim, or the circumstances recited or allegations arising out of or in any way connected with the Claim.
3.Indemnity
3.1The Claimants guarantee and agree to hold harmless and indemnify Bradley against all claims which have arisen or may arise in respect of the Claim or in any way in connection with the Claim by or on behalf of the Claimants.
This indicates to me that the $450,000 is in full and final settlement of the second defendant's claim.
The settlement deed does not, either expressly or by implication, reserve the second defendant's rights against other tortfeasors. The deed does not record any suggestion of partial or proportionate liability. The defendants have not produced any document which suggests that the settlement with the engineer was in any way 'compromised' because of the partial liability of the plaintiff in this action, as claimed in the second defendant's letter of 18 May 2010. The Claim Summary does not record any suggestion of partial or proportionate liability. One would expect that, if the plaintiff as project manager was considered to be a joint or several tortfeasor, this would have been raised by the engineer's solicitors when addressing the claim for the plaintiff's project management fees.
There is a principle of law that the court will not permit a person to obtain double satisfaction in respect of one loss. Settlement of a person's claim against one tortfeasor for the whole of the person's loss and damage will mean that the person cannot claim against another tortfeasor. This was explained in Baxter v Obacelo Pty Ltd (2001) 205 CLR 635 [46], [48] by Gleeson CJ and Callinan J:
… the significance of the contractual basis upon which a plaintiff settles with one tortfeasor, and its consequences as between the plaintiff and another tortfeasor, may be found both in the equitable principle which prevents double satisfaction, and in the common law principle that a plaintiff who has fully recouped the loss cannot obtain a further award of damages. If a plaintiff has agreed with one tortfeasor to accept a sum upon the basis that it will be received in full discharge of all claims for compensation for the loss or damage incurred by the plaintiff, it would ordinarily be unconscientious to pursue a further claim in relation to the same damage against another tortfeasor. And if a single loss has been fully recouped, there is no further remedy for a plaintiff to pursue.
…
If it would be unconscientious of the plaintiff to pursue a claim against another tortfeasor, or if the amount received pursuant to the settlement is, or ought to be regarded as, recoupment of the whole of the plaintiff's loss or damage, then action against another tortfeasor, whether in separate proceedings, or, where the other tortfeasor was a party to the original proceedings, by way of continuation of those proceedings, must fail. If, either expressly or by implication, a settlement agreement manifested a common intention of the parties to the agreement that the settlement sum was to be paid and received in full satisfaction of the rights of the plaintiff, against the defendant or anyone else, in relation to the loss or damage incurred, then, for both of those reasons, a further claim would fail …
The common law principles of double satisfaction where settlement is reached with one tortfeasor were confirmed in Nau v Kemp& Associates Pty Ltd t/as Active Working Solutions [2010] NSWCA 164; (2010) 77 NSWLR 687 [75] ‑ [79], [192], [266]. It is the position that the release of one tortfeasor will release all others if the relevant release was intended to operate as a full release of all liability for the claim: Baxterv Obacelo; Deloitte Touche Tohmatsu v Cridlands Pty Ltd [2003] FCA 1413; (2003) 204 ALR 281 [113].
As I have already observed, the settlement deed has no statement or provision which reserves the second defendant's rights against other tortfeasors. The Claim Summary, settlement deed and the correspondence I have referred to in my reasons for decision in the appeal, all indicate that the second defendant was legally represented at this time. The engineer was also legally represented. Before the settlement the second defendant or the engineer could have made demand to the plaintiff for contribution, but there is no evidence that they did so.
Having regard to this and the other matters I have discussed above concerning the Claim Summary and the settlement deed, it is my view that the settlement deed shows that the second defendant was accepting the settlement sum in full satisfaction of the claim, which encompassed all costs and expenses arising from the engineer's negligence. The second defendant agreed with the engineer to accept a sum upon the basis that it would be received in full discharge of all claims for the loss or damage incurred as a result of the engineer's negligence. Accordingly, the settlement should be regarded as recoupment of the whole of the loss or damage arising from the discovery in June 2008, of the engineer's negligence, or what has been referred to as the engineer's 'mistake', in failing to take into account the 1:100 year flood plain levels. This is, in my view, confirmed by the fact that the settlement made allowance for some of the plaintiff's project management fees, which are of course the subject of this action.
I should observe that in par 19 of the defence and counterclaim filed by the defendants, it is pleaded that the defendants suffered a 'significant shortfall in extra costs incurred in view of the summary of position as at February 2010' and there is reference to a shortfall of $300,000. In fact, the 'shortfall' was only $188,205.36 (being the Revised Quantum of Claim of $638,205.36, less the settlement sum of $450,000).
The fact that the settlement reached with the engineer involved an element of compromise does not mean that the settlement sum was not intended to be paid, or received by the second defendant, in full satisfaction of the claim: Baxter v Obacelo [44]; Ruffino v Grace Bros Pty Ltd [1980] 1 NSWLR 732, 734; Semenov v Pirvu [2011] VSC 605 [35]. The critical question is whether the claim has been satisfied. On an objective construction of the settlement deed, my view is that the claim has been fully satisfied, with a release of the engineer, which is a full release of all liability for the claim. The release of the engineer accordingly releases any other tortfeasor, and operates as a release of the plaintiff in this action.
There is a further matter which I should mention. When the second defendant wrote her letter to the plaintiff on 18 May 2010, she knew that the claim against the engineer had been settled, the last payment having been made in April 2010. She also knew that the settlement sum included an allowance for the plaintiff's project management fees. She did not mention either of these matters in her letter. In fact, she stated that the claim against the engineer had been 'compromised' (in the sense of being affected), not only by questions of 'partial liability' but also because of the plaintiff's inability to provide required information from its files. Neither of these claims in the second defendant's letter is supported by the information in the Claim Summary and the deed of settlement.
The second defendant plainly made no payment of any of the plaintiff's project management fees which were recovered in the settlement with the engineer, and did not account for the sum of $48,400 which had been accepted by the engineer's solicitors in response to the second defendant's claim for those fees.
The settlement with the engineer raises a lack of merit in the defendants' defence and counterclaim. I am now not satisfied that the defendants have a real prospect of success in their defence and counterclaim against the plaintiff in this action, as they will be unable to establish loss or damage. In all of the circumstances I consider that it would be unconscientious for the defendants to pursue their counterclaim against the plaintiff in these proceedings, or indeed any claim against the plaintiff in any other (fresh) proceedings.
To put this in another way, and to make it perfectly clear to the defendants, had I been provided with the Claim Summary and settlement deed at the time of the hearing of the appeal, I would not have exercised my discretion to set aside the default judgment on conditions. I would have found that there was no purpose served by setting aside the judgment and I would have dismissed the defendants' appeal.
Weighing all factors and the justice of the case
After considering and weighing all factors which I have discussed in these reasons, I consider that I should give significant weight in the circumstances of this case to the following three factors, all of which weigh heavily against granting any extension of time to the defendants:
(a)the circumstances in which I made the orders of 5 July 2012;
(b)the inadequate explanation by the defendants for their non‑compliance; and
(c)the matters I have set out concerning the lack of merit in the defendants' counterclaim. The defendants should not be permitted any extension or variation of the orders I made on 5 July 2012 to enable the default judgment to be set aside. In the words of Newnes J in MTQ Holdings [56], there is no point in resuscitating a case that is devoid of merit.
In my view, justice in the circumstances of this case requires that the defendants be refused their application for an extension of time.
Orders
The application by the defendants by chamber summons dated 10 September 2012 must be dismissed.
The defendants should pay the plaintiff's costs of and incidental to this application to be taxed.
There is no need to make any further order. The default judgment has not been set aside because the conditions which I imposed in the orders made on 5 July 2012 have not been complied with. The default judgment obtained by the plaintiff against the defendants on 4 August 2011 still stands and the plaintiff is at liberty to proceed to enforce that judgment.
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