| JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA LOCATION : PERTH CITATION : GROUND AND FOUNDATION SUPPORTS PTY LTD -v- GIANFRANCO CONSTRUCTIONS PTY LTD & ORS [2003] WADC 247 CORAM : COMMISSIONER REYNOLDS HEARD : 12 SEPTEMBER 2003 DELIVERED : 12 NOVEMBER 2003 FILE NO/S : CIV 2503 of 2000 BETWEEN : GROUND AND FOUNDATION SUPPORTS PTY LTD (ACN 009 432 964) Plaintiff
AND
GIANFRANCO CONSTRUCTIONS PTY LTD (ACN 053 450 712)
First Defendant
SPRINGS APARTMENTS PTY LTD (ACN 085 131 068)
Second Defendant
GIANFRANCO RASILE
Third Defendant
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Catchwords:
Application for stay of execution - Assignment of judgment debt - Whether or not assignment makes judgment debt subject to setoffs and counterclaims - Leave to issue execution - Whether special circumstances exist to justify a stay
Legislation: Income Tax Assessment Act 1937
Supreme Court Act 1935
Result: Application for stay of execution dismissed Representation:
Counsel:
Plaintiff : Mr P G Donovan
First Defendant : Mr A J Prentice
Second Defendant : No appearance
Third Defendant : Mr A J Prentice
Solicitors:
Plaintiff : McCallum Donovan Sweeney
First Defendant : Mossensons
Second Defendant : No appearance
Third Defendant : Mossensons
Case(s) referred to in judgment(s):
Clyne v Deputy Commissioner of Taxation (1981) 150 CLR 1
Southern British National Trust Ltd (in liq) v Pither (1937) 57 CLR 89
State Bank of Victoria v Parry [1989] WAR 240
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Case(s) also cited:
Cielo v M G Kailis Gulf Fisheries Pty Ltd (1991) 104 FLR 189
Deputy Commissioner of Taxation (NSW) v Chamberlain (1990) 93 ALR 729
Deputy Commissioner of Taxation v Briggs, unreported; SCt of WA; Library No 6634; 19 March 1987
Kayley v Hothersall & Ors [1925] 1 KB 607
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Introduction 1 Before me for determination is an application by the third defendant ("Rasile") by way of chamber summons dated 18 August 2003 seeking an order that execution of the consent judgment dated 2 December 2002 entered herein be stayed as against Rasile until further order and that the costs of the application be reserved. On 2 December 2002 an order for judgment was made and entered by consent pursuant to O 43 r 16(1) whereby it was ordered that the first defendant, ("Gianfranco Constructions"), and Rasile pay the plaintiff ("GFS Pty Ltd") the sum of $115,000 inclusive of costs and disbursements and interest thereon at 6 per cent per annum from 25 February 2002. The application is opposed by GFS Pty Ltd.
Relevant history 2 GFS Pty Ltd is a sub-contractor in the construction industry carrying out geo-technical foundation work. In or about April 2000 GFS Pty Ltd entered into a sub-contract with Gianfranco Constructions to carry out retaining and foundation work on a multi-storey building to be built at Lots 7 and 8 Bennett Street, East Perth ("the site"). Pursuant to that sub-contract GFS Pty Ltd was to be paid for its work by Gianfranco Constructions. The second defendant, Springs Apartments Pty Ltd ("Springs Apartments"), was the owner and developer of the site. The works were completed by GFS Pty Ltd in or about May 2000 but Gianfranco Constructions failed to pay GFS Pty Ltd any amount at all for the work done pursuant to the contract. Springs Apartments agreed to pay the fee payable to GFS Pty Ltd for the work performed by GFS Pty Ltd and paid part of the contract price pursuant to that agreement. 3 GFS Pty Ltd alleged in these proceedings that Gianfranco Constructions and Springs Apartments had failed to pay the balance of the contract price and were indebted to GFS Pty Ltd in the sum of $109,178.50. The matter was listed for trial in this Court on 25 to 28 February 2002 inclusive. 4 GFS Pty Ltd initially commenced proceedings against Gianfranco Constructions and Springs Apartments. Rasile, a director and the principal of Gianfranco Constructions was joined as the third defendant by consent on 25 February 2002.
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5 By letter dated 25 January 2002 Cahill Billington, the solicitors for Gianfranco Constructions and Rasile ("Cahill Billington") made an offer to GFS Pty Ltd to settle the matter. The letter was sent to GFS Pty Ltd's then solicitors Taylor Smart ("Taylor Smart"). Thereafter there were various communications by and between Cahill Billington and Taylor Smart which resulted in a settlement and the eventual filing of the consent to judgment pursuant to O 43 r 16(1).
6 The settlement was reached in February before the scheduled commencement of the trial on 25 February 2002. The consent judgment was signed by Neil Billington, a partner of Cahill Billington ("Mr Billington") on behalf of Gianfranco Constructions and Rasile on 25 February 2002. On that date the solicitors for the respective parties appeared before the court and orders were made inter alia that Rasile be joined as the third defendant, the claim against Springs Apartments be dismissed and the claim by GFS Pty Ltd against Gianfranco Constructions and Rasile was adjourned sine die. Rasile maintained that GFS Pty Ltd had contractual relations with him and not Gianfranco Constructions. 7 It can be noted that there was some delay between the settlement being reached on 25 February 2002 and the judgment being entered on 2 December 2002. Such delay was the result of one of the conditions of settlement that the consent judgment was to be held in escrow until the earlier of nine months from the date of the settlement and four weeks from either judgment being entered in Supreme Court action CIV 2286/2001 ("the Supreme Court action") or Rasile reaching an agreement with Springs Apartments. 8 The Supreme Court action concerns a claim by Rasile against Springs Apartments for the sum of approximately $1.829 million amongst other relief being the amount which Rasile alleges is outstanding on the building contract entered into by him for the multi-storey development at the site. 9 During the course of these proceedings and prior to the consent judgment being entered GFS Pty Ltd and Springs Apartments reached an agreement whereby inter alia GFS Pty Ltd would agree to its claim against Springs Apartments herein being dismissed. The terms of such agreement were later reduced to writing and incorporated into a deed of settlement and release dated 28 March 2002 ("the deed of settlement"). 10 The deed of settlement provided inter alia that in consideration of and subject to the dismissal, Springs Apartments granted to GFS Pty Ltd a
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put option to require Springs Apartments to acquire the judgment debt from GFS Pty Ltd in accordance with the terms and conditions of the deed of settlement. GFS Pty Ltd subsequently attempted to exercise the put option. When it did Springs Apartments was unable to pay the exercise price pursuant to the put option. 11 On 29 November 2002 a deed of variation was entered into by and between GFS Pty Ltd and Springs Apartments which provided inter alia for the assignment of the judgment debt to Springs Apartments. Pursuant to the assignment contained in the deed of variation, a notice of assignment dated 29 November 2002 was issued on behalf of Springs Apartments to Rasile. 12 No money was ever paid by Springs Apartments to GFS Pty Ltd in relation to the deeds and the assignment. Further, neither of Gianfranco Constructions and Rasile have paid any money whatsoever in relation to the consent judgment to GFS Pty Ltd or Springs Apartments. 13 On 13 December 2002 Springs Apartments issued a bankruptcy notice against Rasile in respect of the consent judgment. Rasile applied to set aside the bankruptcy notice in the Federal Magistrates' Court. Springs Apartments agreed to orders that the bankruptcy notice be set aside. It seems that Springs Apartments was concerned about the validity of the assignment as the notice of assignment was given on 29 November 2002 which pre-dated the entry of the consent judgment on 2 December 2002. 14 Thereafter another bankruptcy notice was issued in respect of the consent judgment and served on Rasile on 11 February 2003. This second bankruptcy notice was issued by GFS Pty Ltd. The then solicitors for Rasile contacted Taylor Smart, the solicitors for GFS Pty Ltd, and advised that this second bankruptcy notice would be opposed on the basis that GFS Pty Ltd had assigned the judgment debt to Springs Apartments. GFS Pty Ltd was concerned about the question of the validity of the assignment and so it withdrew this second bankruptcy notice. 15 Thereafter a deed was entered into by and between GFS Pty Ltd and Springs Apartments on 3 March 2003 by which Springs Apartments assigned the judgment debt back to GFS Pty Ltd. The parties entered into this deed for the purpose of putting an end to all uncertainties in relation to the consent judgment, the initial assignment and the bankruptcy notices. On 6 March 2003 a notice of assignment pursuant to the deed dated 3 March 2003 was served on Rasile by post. Thereafter Rasile
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continued in his failure to pay the judgment debt and so GFS Pty Ltd issued another bankruptcy notice in relation to the consent judgment. Rasile has applied to the Federal Magistrates' Court to set aside this latest bankruptcy notice on grounds inter alia that it is an abuse of process. That application is yet to be heard and determined by the Federal Magistrates' Court. 16 Rasile has applied to set aside the consent judgment by issuing a fresh writ being District Court action 1821/2003. GFS Pty Ltd accepts that Rasile has acted correctly as a matter of procedure by applying to set aside the judgment in this way but opposes the application and has entered an appearance to the writ.
Legal principles on a stay application 17 Applications to stay the execution of a judgment may be made pursuant to O 46 r 6, O 47 r 13 or the court's inherent jurisdiction. Order 46 r 6 has no application in this particular case because it only applies when the matters relied upon by the applicant for the stay have occurred since the date of the judgment. In this particular case Rasile claims that the consent judgment should be set aside because it was obtained as a consequence of a fraudulent misrepresentation, a mistake and misleading and deceptive conduct. Therefore the alleged events relied upon by Rasile all occurred prior to the consent judgment. 18 Applications to stay pursuant to the court's inherent power to stay execution may only be made on grounds relevant to the stay of the enforcement proceedings rather than on grounds which may bear on the validity or correctness of the judgment which is being enforced. See State Bank of Victoria v Parry [1989] WAR 240 at 244. The allegations of a fraudulent misrepresentation, a mistake and misleading and deceptive conduct go to the validity or correctness of the judgment rather than the stay of the enforcement proceedings. Therefore it seems to me that the relevant power to stay execution of the consent judgment in this particular case is that provided in O 47 r 13 which provides as follows: "[47.13] Power to stay execution 13(1) The Court, if satisfied by the judgment debtor or other person liable to execution under a judgment or order –
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may stay the execution for such period and on such terms as the Court thinks fit." 19 In this particular case Rasile's application to stay execution is not based on any inability from any cause to pay the money. Thus the legal basis for his application to stay execution can be narrowed down to O 47 r 13(1)(a). Pursuant to this provision the discretion to grant a stay can only be exercised if the Court is satisfied that "by reason of special circumstances it is inexpedient to enforce the judgment".
The grounds relied upon to support the application 20 The grounds relied upon by the applicant have not been formally numbered or prioritised in any particular way. However, it seems to me that they can be properly dealt with in the following order. First, that GFS Pty Ltd has not obtained leave to issue execution pursuant to s 141(2) of the Supreme Court Act 1935 ("the SC Act"). Secondly, that the assignment of the judgment debt from Springs Apartments back to GFS Pty Ltd carries with it all set-offs and counterclaims that Rasile may have against Springs Apartments and thirdly, that Rasile has a good claim against GFS Pty Ltd that the consent judgment be set aside. 21 In essence the first ground mentioned is that GFS Pty Ltd has not satisfied a necessary condition precedent to issue execution on the consent judgment. Each of the second and third grounds mentioned are essentially relied on as constituting "special circumstances" although the applicant's submissions were not couched in those terms. 22 I note that while Rasile has previously questioned the validity of the assignment by GFS Pty Ltd to Springs Apartments on the basis that it was entered into prior to the consent judgment being entered the submissions made on his behalf on this application are based on the assignment being valid. In my opinion the decision on this application does not turn on the
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validity of that assignment. Therefore it is not necessary for me to determine its validity to properly determine this application. 23 If the assignment by GFS Pty Ltd to Springs Apartments is of no effect then the assignment by Springs Apartments back to GFS Pty Ltd has no valid foundation and is also of no effect. In that case the history of the assignments would be irrelevant and GFS Pty Ltd would simply continue to be entitled to issue execution. If the assignment by GFS Pty Ltd to Springs Apartments is valid then in my opinion the later assignment by Springs Apartments back to GFS Pty Ltd does not shackle GFS Pty Ltd with any set-off or counterclaim that Rasile may have against Springs Apartments. I will proceed on the basis that both assignments are valid without deciding the point. 24 Section 141(2) of the SC Act relevantly provides as follows: "(2) In the following cases, namely: (a) where 6 years have elapsed since the judgment or date of the order, or any change has taken place by death or otherwise in the parties entitled or liable to execution; [(b) deleted] (c) … (d) … the party alleging himself to be entitled to execution may apply to the Court or a Judge for leave to issue execution accordingly; and the Court or Judge may, if satisfied that the party so applying is entitled to issue execution, make an order to that effect, or may order that any issue or question necessary to determine the rights of the parties shall be tried in any of the ways in which any question in an action may be tried. In either case such Court or Judge may impose such terms as to costs or otherwise as shall be just." 25 Order 47 r 3(1), O 47 r 3(2)(c) and O 47 r 3(3) of the Supreme Court Rules ("the SC Rules") provide as follows:
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26 In relation to O 47 r 3(3) the following is set out by Seaman in his commentary on the SC Rules: "[47.3.3]Change of parties by assignment An assignee of a judgment has no absolute right to execute upon it and the court will normally only be concerned to see that he or she is entitled as a matter of legal right to issue execution: In the Estate of Carter; Re Ascot Timber Co Pty Ltd v Carter [1928] VLR 290 at 292; (1928) 34 ALR 199; Solic Bertossa [1969] VR 594 at 595. The assignee must show that he or she is the assignee of the whole of the judgment debt: Forster v Baker [1910] 2 KB 636 at 641, 642. However, in exercising its discretion as to how far execution should issue on the application of an assignee, the court may have regard to set-offs or counterclaims which the judgment debtor may have against him or her: Kayley v Hothersall [1925] 1 KB 607 at 613, 615." 27 Counsel for Rasile has argued as follows. GFS Pty Ltd was initially entitled to issue execution as of right. However, it surrendered that right by assigning the judgment debt to Springs Apartments. On assigning the judgment debt GFS Pty Ltd no longer had any interest or right to the judgment debt. Springs Apartments could not have issued execution
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against Rasile without first obtaining the leave of the court pursuant to s 141(2) of the SC Act. Springs Apartments never obtained such leave. Further, if such leave was sought the court could have regard to set-offs and/or counterclaims which Rasile had against Springs Apartments. Rasile is currently claiming approximately $1.829M from Springs Apartments in the Supreme Court action which is close to being entered for trial. The assignment of the judgment debt from Springs Apartments back to GFS Pty Ltd is subject to the set-off and/or counterclaim to which Rasile is entitled against Springs Apartments. GFS Pty Ltd cannot now be in a better position than Springs Apartments was against Rasile. Further, this history constitutes a change in the parties entitled to issue execution as provided in s 141(2) of the SC Act. 28 In my opinion s 141(2) of the SC Act does not apply in this case. The consent judgment was entered in favour of GFS Pty Ltd and it is GFS Pty Ltd that has issued execution against Rasile. For the purposes of s 141(2) no change has taken place in the party entitled to execution. All that the section requires is that the party at the point in time when execution is issued is the same party in whose favour the judgment was entered. The section is not concerned with any changes that may have occurred by way of assignment or otherwise in between. 29 In this particular case one does not get to consider the history of the assignments in the context of exercising discretion pursuant to s 141(2) of the SC Act because the section simply does not apply. In my opinion the issue as to whether or not GFS Pty Ltd is now shackled with any set-off and/or counterclaim that Rasile may have against Springs Apartments because of the assignment from Springs Apartments to GFS Pty Ltd falls to be determined separate to the issue of whether s 141(2) of the SC Act applies. I now turn to deal with that issue. 30 Counsel for Rasile has submitted that GFS Pty Ltd as assignee of the judgment debt from Springs Apartments takes the debt subject to the Supreme Court action and therefore subject to any set-off and/or counterclaim that Rasile may have against Springs Apartments. In support of that proposition counsel referred to the following passage from the judgment of Mason J as he then was in Clyne v Deputy Commissioner of Taxation (1981) 150 CLR 1 at 20. "The rule that an assignment is subject to equities has been described as a paramount rule (Redman v Permanent Trustee Co of NSW Ltd). The effect of the rule is that an assignee of a non-negotiable chose in action acquires no greater right than
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31 In my view Clyne's case can be distinguished from this case on the facts and it does not support Rasile's position. In Clyne's case Clyne was a taxpayer and on 9 July 1979 he was served with a notice of assessment by the Commissioner of Taxation ("the Commissioner") for $236,992 which was due and payable on 8 August 1979. Pursuant to the Income Tax Assessment Act ("the ITA Act") on 10 July 1979 the Commissioner served notices on a bank at which Clyne had three deposits totalling $70,000. The deposits were repayable to Clyne on 21 September 1979 and 9 and 20 April 1980 respectively. The notices to the bank by force of the ITA Act required the bank to pay so much of the deposits as they fell due to the Commissioner to satisfy the assessment if in the meantime Clyne had not paid the assessment. On 4 September 1979 Clyne assigned the deposits to a third party as security for future advances to be made by the assignee to Clyne. Notice of the assignment was given to the bank. 32 In Clyne's case the High Court held that the effect of the notices bound the bank to pay the deposits to the extent of the amount outstanding on the assessment to the Commissioner and per Mason, Aickin, and Wilson JJ … to prevent the taxpayer from assigning the debt so as to defeat the Commissioner's right to payment in accordance with the section. It is against this factual background that the above passage from the judgment of Mason J as he then was should be construed. It is a very different factual scenario to the one in this particular case. 33 In Clyne's case it was the subject matter of the assignment namely the deposits that was the subject of the notices served on the bank by the Commissioner. When Clyne assigned the deposits to a third party the deposits themselves were then subject to the claim by the Commissioner. That is not analogous to the situation in this case where the judgment debt whether it be in the hands of GFS Pty Ltd or Springs Apartments is not itself subject to any claim. Any claim by Rasile against Springs Apartments to the extent that he seeks payment of an amount of money
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from Springs Apartments to cover the amount payable by him to GFS Pty Ltd for the retaining and foundation work is a matter between Rasile and Springs Apartments. It is not a claim against the judgment debt as the Commissioner's claim was against the deposits in Clyne's case. 34 The following example was given by counsel for Rasile in support of his submission on this point. A sells a car to B. Whilst B owns the car it damages the car. A then repurchases the car from B. A does not receive the car back in pristine condition but receives the car back in the condition which B has left it. With respect this example does not reflect the factual circumstances in this particular case. The judgment debt itself has not been affected (damaged) in any way in the hands of Springs Apartments whereas in the example the car itself has been damaged in the hands of B. 35 In my opinion the following passages apply to the circumstances of this case. Paragraph 65 of Halsbury's Laws of England, 4th ed Vol 6 at 38 sets out the following: 36 In the text Assignment of Choses in Action in Australia, Clarke J G, Butterworths, 1972 the learned author set out as follows at 33: "41A Equities against intermediate assignor—The subject-to-equities rule refers only to equities available against the original assignor in respect to the chose in action itself, not to equities attaching to an intermediate assignor, so that, for example, if the only liability by way of set-off attaches to an intermediate assignor, the ultimate assignee can maintain his action freed from any equity. It would seem however that an original defect in title of an assignor, if it affects also the title of an intermediate assignor, may be transmitted with the result that an ultimate assignee is subject thereto, notwithstanding that the defect was attached to the title of an intermediate assignor."
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37 Judicial support for the position as set out above in par 65 of Halsbury's Laws of England can be found in Australia in the judgment of Latham CJ in Southern British National Trust Ltd(in liq) v Pither (1937) 57 CLR 89 at 102 – 103 where he said:
"As to equities which leave unchanged the character of the debt assigned, though affecting the relation between an assignor and an assignee of that debt, see In re Milan Tramways Co; Ex party Theys; Government of Newfoundland v Newfoundland Railway Co. In Halsbury's Laws of England, 2nd ed, vol 4, at p 459, the law is thus stated: 'Though the assignee takes subject to equities available against the assignor, he is only thereby made liable to equities against the original assignor, not to those available against an intermediate assignor, so that where a liability (such as a set-off) only attaches to the intermediate assignor the ultimate assignee can maintain his action freed from the equity.' I think that the rule (in its strict sense) that an assignee of a chose in action takes subject to equities refers only to equities affecting the debt, and not to equities affecting intermediate assignments of the debt, and therefore this rule does not apply in this case to prejudice the title, if any, of the debenture holders as assignees from the assignee (the company) of the original creditor-assignor (the plaintiff)." 38 In my opinion the result of the assignment by Springs Apartments to GFS Pty Ltd was simply to return the judgment debt that GFS Pty Ltd had earlier assigned to Springs Apartments back to GFS Pty Ltd with nothing more and nothing less. The judgment debt was returned by Springs Apartments to GFS Pty Ltd free of all set-offs and counterclaims that Rasile may have against Springs Apartments in relation to the Supreme Court action which Rasile has against Springs Apartments. 39 I now turn to consider the merits of Rasile's action in this Court against GFS Pty Ltd seeking orders inter alia that the agreement pursuant to which the consent judgment was filed be set aside and rescinded and that the consent judgment be set aside. It is necessary to consider whether the circumstances of this action are capable of constituting "special circumstances" for the purposes of O 47 r 13(1)(a). 40 Whether or not I should exercise my discretion to order a stay depends on whether or not Rasile has a reasonable prospect of success in the action seeking to set aside the consent judgment. The starting point with respect to any application for a stay is that a plaintiff who has
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obtained a money judgment is, on the face of it, entitled to proceed to execution without delay. See State Bank of Victoria Pty Ltd v Parry (supra) at 250 and 244 respectively. 41 It seems to me that the decision whether or not to stay the consent judgment involves questions of degree. Is the prospect of success by Rasile sufficiently strong so as to outweigh GFS Pty Ltd's entitlement to the fruits of the consent judgment entered in its favour? 42 The following information has been extracted from the various affidavits filed in relation to this stay application. In the negotiations which led to the consent judgment solicitors Cahill Billington acting on behalf of Rasile sent a letter by facsimile dated 6 February 2002 to solicitors Taylor Smart acting on behalf of GFS Pty Ltd. In such letter Cahill Billington set out Rasile's position as mentioned earlier, namely that all contractual relations were with him and not Gianfranco Constructions. The letter also set out a proposal by Rasile to settle the matter on terms and conditions including that the amount payable by Springs Apartments to GFS Pty Ltd pursuant to any agreement for settlement was to be deducted from the amount otherwise payable by Rasile to GFS Pty Ltd pursuant to the terms of settlement irrespective of whether or not Springs Apartments actually made any payment and similarly that any amount paid by Springs Apartments to GFS Pty Ltd pursuant to any judgment obtained against it was to be deducted from the amount otherwise payable by Rasile. 43 By letter dated 14 February 2002 from Taylor Smart to Cahill Billington, GFS Pty Ltd made a counter-proposal for settlement which expressly rejected the terms of the proposal made earlier by Rasile to which I have just referred and also advised that it was not prepared to advise Rasile of the terms of any settlement which may be reached between it and Springs Apartments. 44 In an affidavit sworn 11 September 2003 Mr Billington stated that in a telephone conversation he had with Philip John Patterson ("Mr Patterson") a director of GFS Pty Ltd and solicitor of Taylor Smart, Mr Patterson told him that GFS Pty Ltd would not agree to tell Rasile about any agreement that it had with Springs Apartments. Mr Billington also stated that Mr Patterson said to him that obviously GFS Pty Ltd would set-off against any sum due on the judgment any money that it received from Springs Apartments. Taylor Smart's letter dated 14 February 2002 was sent to Cahill Billington after this telephone conversation. Mr Patterson denies that he advised Mr Billington that the
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plaintiff would agree to any such set-off. Mr Billington stated in his affidavit that when he received the letter dated 14 February 2002 from Taylor Smart he noticed that it confirmed what he says Mr Patterson had told him about GFS Pty Ltd not telling Rasile about the terms of any settlement which may be reached with Springs Apartments but that it also indicated that GFS Pty Ltd would not agree to setting off against any sum due on the judgment any money that it received from Springs Apartments. Mr Billington faxed Taylor Smart's letter dated 14 February 2002 to Rasile. 45 Mr Billington also stated in his affidavit that on 19 February 2002 he had a telephone conversation with Rasile in which he advised Rasile that he did not understand why Taylor Smart had denied that entitlement in their letter and told him of the discussion he had with Mr Patterson on 14 February 2002 with respect to setting off the money. Mr Billington stated that Rasile then instructed him that he was prepared to agree to the terms of settlement as contained in the letter of Taylor Smart dated 14 February 2002. 46 Mr Billington has also stated in his affidavit that on 19 February 2002 he had a telephone conversation with Mr Patterson in which he told Mr Patterson that he had received verbal instructions from Rasile to settle on the terms proposed by Taylor Smart in its letter dated 14 February 2002. Mr Billington stated that during this telephone conversation he raised with Mr Patterson the situation of Springs Apartments and that Mr Patterson told him that GFS Pty Ltd were negotiating a settlement with Springs Apartments. 47 On 20 February 2002 Cahill Billington sent a letter by facsimile to Taylor Smart setting out the terms of the proposed settlement and sought to confirm the advice that Mr Billington alleges Mr Patterson gave him that any amount received from Springs Apartments would be set off in reduction of the amount otherwise payable by Gianfranco Constructions and Rasile to GFS Pty Ltd. This facsimile letter set out inter alia:
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$115,000.00, which sum is inclusive of interest, costs and disbursements; 3. Your firm is to hold the consent judgment in escrow until the earlier of: 4. The sum of $115,000.00 will bear interest at the rate of 6% per annum from the date of agreement, irrespective of when the consent judgment is lodged. 5. The settlement as outlined above is to be in full and final satisfaction of all claims which your client has or claims to have against Mr Rasile and GC in respect of the matters the subject of the proceedings, including with respect to the issue of the positioning of the piles. We confirm your advice that any amount which your client receives from Springs Apartments will be set off in reduction of the amount otherwise payable by our client to your client pursuant to these terms." 48 On 21 February 2002 Taylor Smart wrote to Cahill Billington in the following terms: "We refer to your facsimile of 20th February 2002 and advise that our client agrees with the terms set out in paragraphs numbered 1 to 5. We did not advise you that any amounts which our client receives from Springs Apartments will be set off in reduction of the amount otherwise payable by your client to the Plaintiff pursuant to those terms. We advised as follows: That the Plaintiff would not be entitled to receive more than $115,000 from both parties, which in any event is a rule in Kendall v Hamilton. Our client does not agree that any amounts we receive from Springs Apartments will be set off in reduction of the amount otherwise payable by your client."
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49 Mr Patterson stated in his affidavit sworn 12 September 2003 that in every conversation he had with Mr Billington he advised him that GFS Pty Ltd would not be entitled to receive a total of more than $115,000 by way of payments made to it specifically in satisfaction of the debt owed to GFS Pty Ltd for the works it had performed, and also that GFS Pty Ltd would not agree that any amounts paid or payable by Springs Apartments to GFS Pty Ltd would amount to a set-off against the amount otherwise payable by Gianfranco Constructions or Rasile.
50 Mr Patterson also stated in his affidavit that he was extremely careful about this point as he was having negotiations with the solicitors for Springs Apartments at the time. Springs Apartments was to purchase the consent judgment against Gianfranco Constructions and Rasile and pay the plaintiff the sum of $115,000 in consideration of the consent judgment being assigned to it. Mr Patterson further stated that if GFS Pty Ltd agreed to any monies that were received from Springs Apartments amounting to a set-off then the solicitors for Springs Apartments were concerned that Gianfranco Constructions and Rasile may argue that the money received from Springs Apartments for the assignment should be set off against the money Gianfranco Constructions and Rasile had to pay on the judgment debt. The net effect of that could be that Gianfranco Constructions and Rasile might be able to argue that they did not have to pay any of the debt for the works and that Springs Apartments could not claim back from Gianfranco Constructions or Rasile any portion of the money that Springs Apartments had paid. 51 Whatever if anything was said by and between Mr Patterson and Mr Billington on 14 February 2003 the letters sent from Taylor Smart to Cahill Billington subsequent to any such discussion and dated 14 February 2001 and 21 February 2003 make it clear that GFS Pty Ltd was not prepared to agree that any monies payable or paid by Springs Apartments would be set off against any monies payable by Gianfranco Constructions or Rasile. 52 Even on Mr Billington's version of events, when he spoke with Rasile on 19 February 2002 he was unsure of the meaning of the combination of the telephone conversation he says he had with Mr Patterson on 14 February 2002 and contents of the Taylor Smart letter dated 14 February 2002. The letter of Taylor Smart dated 14 February 2002 clearly rejected any understanding or misunderstanding that Mr Billington may have had at that point in time. Rasile could not have been in any better position than Mr Billington. Rasile's further offer to settle was made after Taylor Smart's letter dated 14 February 2002.
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53 In my view the letter from Taylor Smart to Cahill Billington dated 21 February 2003 is also crucial. It completes the settlement agreement between GFS Pty Ltd and Rasile and again makes it clear that GFS Pty Ltd did not agree that any amounts received from Springs Apartments would be set off in reduction of the amount otherwise payable by Rasile. It was subsequent to this letter of acceptance and the letter dated 14 February 2002 and when the contents of both letters were known by all concerned that the parties including Mr Billington on behalf of Rasile executed the consent judgment.
54 In my view Rasile's action to set aside the consent judgment has little, if any, prospects of success and such prospects fall well short of being sufficiently strong enough to outweigh GFS Pty Ltd's entitlement to immediately execute on the consent judgment. 55 Further to all of this I note that Rasile takes no issue with the statement of Mr Patterson set out in his affidavit sworn 4 September 2003 that no money whatsoever has been paid to GFS Pty Ltd by Springs Apartments, Gianfranco Constructions or Rasile in relation to the work performed by GFS Pty Ltd. There is also no suggestion on the evidence presented that if the consent judgment is satisfied by reason of execution or Rasile making payment then GFS Pty Ltd would be unable later to satisfy any judgment entered against it in Rasile's action to set aside the consent judgment. 56 For all these reasons I am of the opinion that this application to stay should be dismissed.
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