Hollyburton UK Ltd v Irani - [2006] VSC 403

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMERCIAL AND EQUITY DIVISION

No. 5407 of 2005

HOLLYBURTON UK LIMITED	Plaintiff
v
BOMAN IRANI	Defendant

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JUDGE:	WHELAN J
WHERE HELD:	Melbourne
DATE OF HEARING:	11, 13 October 2006
DATE OF JUDGMENT:	31 October 2006
CASE MAY BE CITED AS:	HOLLYBURTON UK LTD v IRANI
MEDIUM NEUTRAL CITATION:	[2006] VSC 403

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CONTRACT — Judgment for debt — agreement made by the parties in relation to the judgment debt — whether mere accord executory— whether rights under original judgment remain unaffected.

Osborn v McDermott [1998] 3 VR 1
Scott v English [1947] VLR 445
McDermott v Black (1940) 63 CLR 161
Bartlett v Mouncey [1988] FCA 418
National Australia Bank v Pollak (2001) 186 ALR 44
Pollak v National Australia Bank [2002] FCA 237

PRACTICE AND PROCEDURE - Whether any relevant controversy – whether declaratory relief should be granted.

Russian Commercial and Industrial Bank v British Bank for Foreign Trade Ltd [1921] AC 438
Forster v Jododex Australia Pty Ltd (1972) 127 CLR 421
Ruhani v Director of Public Prosecutions [2005] HCA 42
Laws v Australian Broadcasting Tribunal (1990) 170 CLR 70

COSTS – Whether successful party should be deprived of costs order in his favour – whether his conduct induced the plaintiff to institute the proceeding.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr M. R. Simon	Erica Strugnell & Co.
For the Defendant	Mr A. W. Sandbach	Comlaw

TABLE OF CONTENTS

Introduction........................................................................................................................................ 1

The arrangement in September/October 2003.............................................................................. 2

Contentions of the Parties................................................................................................................ 5

Characterisation of the Arrangement Made – Applicable Legal Principles........................... 6

Characterisation of the Arrangement Here................................................................................. 10

Declaration........................................................................................................................................ 13

Proof of Incorporation..................................................................................................................... 15

Costs.................................................................................................................................................... 16

Conclusion......................................................................................................................................... 18

HIS HONOUR:

Introduction

In March 2000 the plaintiff (“Hollyburton”) lent the defendant, Dr Irani, the sum of $416,000. Dr Irani did not repay that sum when it was due and on 12 June 2003 Hollyburton obtained judgment against him in this Court in proceeding number 6302 of 2000 for a total sum, inclusive of interest and costs, of $569,589.65.

In September and October 2003, an arrangement was made between the then solicitors for Hollyburton, Galilee and Associates, and the solicitors for Dr Irani, Comlaw, under which Dr Irani was to pay specified sums, including monthly instalments of $10,000 per month. Dr Irani made payments until 28 July 2004. The total amount he paid was $140,000. He has not paid anything since 28 July 2004.

Prior to an amendment made during the trial, Hollyburton’s only claim in this proceeding was to enforce what are alleged to be terms of an agreement reached in September/October 2003. During the trial, pursuant to leave I granted, Hollyburton added an alternative claim seeking a declaration as to the continuing enforceability of the judgment in proceeding 6302 of 2000 and as to the amount presently outstanding under that judgment. It took this course in response to the position taken by Dr Irani on the trial which was, in substance, that no binding contract…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2006] VSC 403
Decision Date: 31 October 2006

CaseChat Overview and Summary

Hollyburton UK Ltd brought an action against Irani to recover a judgment debt, originally awarded by the Federal Court of Australia. Irani argued that the debt was discharged by an agreement between the parties, and sought a declaration to that effect. The matter was heard in the Federal Court of Australia, where the court had to determine whether the agreement constituted an accord and satisfaction of the judgment debt, thereby discharging the obligation, or whether it merely postponed the payment. The court also had to decide whether declaratory relief was appropriate in the circumstances.

The court considered whether the agreement between the parties constituted an accord and satisfaction, or whether it was merely an executory agreement. The court examined the precedents set by cases such as Osborn v McDermott, Scott v English, McDermott v Black, Bartlett v Mouncey, National Australia Bank v Pollak, and Pollak v National Australia Bank. The court noted that an accord and satisfaction requires an agreement to discharge an existing obligation, while an executory agreement merely postpones payment. The court concluded that the agreement in question was executory, and did not discharge the judgment debt.

In determining whether declaratory relief was appropriate, the court considered cases such as Russian Commercial and Industrial Bank v British Bank for Foreign Trade Ltd, Forster v Jododex Australia Pty Ltd, Ruhani v Director of Public Prosecutions, and Laws v Australian Broadcasting Tribunal. The court held that declaratory relief should only be granted where there is a real controversy between the parties, and that the plaintiff must demonstrate a real and immediate need for the declaration. The court found that Irani had not demonstrated such a need, and therefore declaratory relief was not appropriate.

The court also considered whether Hollyburton UK Ltd should be deprived of its costs order in light of Irani's conduct in initiating the proceeding. The court found that Irani's conduct did not induce Hollyburton UK Ltd to institute the proceeding, and therefore the costs order in favour of Hollyburton UK Ltd should not be disturbed.

Orders