Murray v Wylie
[2017] VCC 1520
•23 October 2017
| IN THE COUNTY COURT OF VICTORIA AT MELBOURNE COMMERCIAL DIVISION | Revised Not Restricted Suitable for Publication |
GENERAL LIST
Case No. CI-17-01671
| JONATHAN ST QUINTON MURRAY & ANOR | Plaintiffs |
| v | |
| JOHN WYLIE & ORS | Defendants |
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JUDGE: | HIS HONOUR JUDGE COSGRAVE | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 11 October 2017 | |
DATE OF RULING: | 23 October 2017 | |
CASE MAY BE CITED AS: | Murray & Anor v Wylie & Ors | |
MEDIUM NEUTRAL CITATION: | [2017] VCC 1520 | |
REASONS FOR RULING
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Legislation Cited: Civil Procedure Act 2010 (Vic), County Court Civil Procedure Rules 2008 (Vic)
Cases Cited:Gollin & Co Ltd v Karenlee Nominees Pty Ltd (1983) 153 CLR 455
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiffs | Mr H Forrester | Slater & Gordon Lawyers |
| For the Defendants | Mr A Rollnik | Minter Ellison |
HIS HONOUR:
Nature of Application
1 By summons filed 20 September 2017 the defendants seek orders that:
(a)Pursuant to section 63 of the Civil Procedure Act 2010 (Vic) that summary judgment be entered for the Defendants against the Plaintiffs, dismissing the Plaintiffs’ claim.
(b)Alternatively, pursuant to rule 23.02 of the County Court Civil Procedure Rules 2008 (Vic) that the Plaintiffs’ Statement of Claim dated 17 January 2017 be struck out.
2 Thus, the defendants seek summary judgment or, alternatively, to strike out the plaintiffs’ statement of claim. The basis of both applications appears to be that the statement of claim indorsed on the writ does not disclose a cause of action. The plaintiffs oppose the application and say that it is misconceived and must fail.
Background
3 The case concerns a claim by the plaintiffs against the defendants seeking damages for breach of contract. In the statement of claim indorsed on the writ, the plaintiffs allege that, on about 23 June 2016, the first plaintiff (“Murray”), Sherpa Systems Pty Ltd (“Sherpa”) and Olsen Capital Pty Ltd (“Olsen”) entered into a settlement and release deed (“the Deed”). They then plead various terms of the Deed which the defendants admit. The only parties to the Deed are Murray, Sherpa and Olsen. It appears from the Deed that Murray is to cease employment with Sherpa. Olsen holds shares in Sherpa and has agreed to assist with certain funding issues which Sherpa has, and amendments to both the Sherpa shareholders deed and the Sherpa constitution. Murray agrees to resign and forego all entitlements except those in clause 2.3 of the Deed, namely annual salary, statutory superannuation entitlements, accrued leave and other entitlements due under his employment contract, together with an ex gratia payment of $25,000 (less tax). Pursuant to clause 4 of the Deed, Sherpa had to make all payments under the Deed in Australian dollars to an account nominated by Murray without set-off, counterclaim, condition or (unless required by law) deduction or withholding. The Deed also provided for mutual releases.
4 The plaintiffs’ claim refers also to another agreement (“the Unico Agreement”) made on or about 11 July 2016 between Unico Computer Systems Pty Ltd (“Unico”), Sherpa, the first defendant (“Wylie”), the second defendant (“Namarong”), the third defendant (“Tamorer”), Murray, Ian Basser, Christine Christian and Olsen. The Unico Agreement is said to be partly written and partly implied. Insofar as the agreement was written, it was said to comprise the terms sheet signed by the parties. Insofar as it was implied, it was said to be implied from the necessity to give business efficacy to the agreement. The defendants admitted the terms of the agreement alleged in the defence and pleaded that: the Unico Agreement was wholly written; the written terms of the agreement were admitted; the defendants would rely at trial upon the full terms and effect of the agreement.
Summary judgment application
5 The defendants’ major complaints with the claim relate to the following paragraphs of the statement of claim:
10. There was an implied term of the Unico Terms Sheet Agreement, that all relevant parties would enter into all documents required to give effect to the Unico Terms Sheet Agreement by 12 August 2016, or within a reasonable time, that being not later than 12 September 2016.
Particulars
The term was implied as necessarily required to give business efficacy to the Unico Terms Sheet Agreement, and from the written terms of the Unico Terms Sheet Agreement that:
(a)“completion date” means 12 August 2016, or such other date as agreed by the Parties in writing (Completion Date) (Clause 1); and
(b)On or before the Completion Date the Parties will enter into all documentation necessary to effect the terms of the Agreement (Clause 6(c)).
11. By reason of the terms of the Unico Terms Sheet Agreement (as referred to in paragraphs 9 and 10 herein), the defendants and Sherpa were jointly obligated to have paid the amounts due to the plaintiffs by 12 September 2016.
…
13.On or around 21 July 2016, Wylie, Namarong and Tamorer communicated their intention to breach the terms of the Unico Terms Sheet Agreement.
Particulars
The communication was in writing and is contained in an email from Hive Legal to Arnold Bloch Leibler dated 21 July 2016. A copy of the email is in the possession of the plaintiffs’ solicitors and may be inspected by prior appointment.
14.In breach of the Unico Terms Sheet Agreement, Wylie, Namarong and Tamorer and each of them have:
(a)persistently refused or neglected to perform their obligations under the Unico Terms Sheet Agreement in that they have not complied with the terms referred to in paragraphs 9 and 10 herein; and
(b)breached the terms of the Unico Terms Sheet Agreement by:
(A) failing to enter into the Second Settlement Deed to give effect to the agreement within the Unico Terms Sheet Agreement, and pay $450,000 to Murray;
(B) failing to pay or take steps to effect the payment of $50,000 to Olsen for its Shares in Sherpa and failing to take steps to effect the transfer of said Shares; and
(C) failing to pay or take steps to effect the payment of all cash entitlements owed to Murray under the Settlement and Release Deed as referred to in paragraph 9 herein.
6 As put in the defendants’ submissions, the nub of the plaintiffs’ claim as set out in paragraphs 14 and 15 of the statement of claim, is that the defendants breached the Unico Agreement because:
(a) they did not enter into the second settlement deed and did not pay Murray $450,000;
(b) they did not pay Olsen $50,000 for its shares in Sherpa;
(c) they did not effect the payment of all cash entitlements ($105,725.54) to Murray under the Deed.
7 The defendants contended that the Unico Agreement did not oblige the defendants or any of them to:
(a) enter into the second settlement deed and pay Murray $450,000;
(b) pay Olsen $50,000 for its shares in Sherpa;
(c) pay any entitlements allegedly owed to Murray under the Deed.
8 The plaintiffs attached considerable significance to clause 3(e) of the Unico Agreement which provides as follows:
Olsen and Murray: the following is to apply in relation to Olsen [second plaintiff] and Murray [first plaintiff]: [emphasis in original]
(i) Murray [first plaintiff] and Olsen Capital [second plaintiff] will enter into a settlement deed on or before 22 July 2016, or as soon as practical after signing this agreement (Second Settlement Deed), which will record in writing the following three terms (and only such others as are necessary to give effect to them or to this Agreement):
a.The payment of $450,000 as contemplated in subclause (iii) below;
b.Subject to payment, the waiver by Murray of his rights to additional Shares in Sherpa under the Settlement Deed;
c.Subject to payment, the release by all Parties of all Claims they have, or may have against each other, other than for breach of the Second Settlement Deed.
(ii) On or before 22 July 2016 … Olsen Capital will sell all its shares in Sherpa for the sum of $50,000 to such transferee(s) as advised …
(iii) The sum of $450,000 will be paid to Murray as soon as possible after entering into the Second Settlement Deed…
(iv) Murray will be removed from the Sherpa board …
(v) On or before 22 July 2016, all cash entitlements owed to Murray under the Settlement Deed … are to be paid to Murray.
9 The defendants argued that the obligations asserted by the plaintiffs in the Unico Agreement are obligations binding Murray and Olsen but not any of the defendants. The defendants contended that the claim as pleaded does not disclose a cause of action because the contract relied upon, the Unico Agreement, does not on a plain reading, oblige the defendants to pay the money or do those things which the plaintiffs allege it required them to do.
10 To the extent that the plaintiffs argued that the claim was clear and that its resolution depended upon the proper construction of the Deed and the Unico Agreement, the defendants argued that the court could not have regard to the circumstances surrounding the agreements, because the words in the documents did not, and could not, bear the meaning which the plaintiffs sought to ascribe to them. This inability was said to prevent the court from going beyond the terms of the written documents in interpreting them. It seemed to be agreed between the parties that, in the absence of ambiguity, the court could not have regard to extraneous material.
11 While the defendants are correct to say that the Unico Agreement does not explicitly oblige them to do the things alleged in paragraph 7 of the Statement of Claim, that is not necessarily determinative of the application. The defendants’ position is consistent with the plaintiffs’ contention that the obligations imposed upon the defendants are to be found in construing the Unico Agreement in its context. Although the defendants submit that the writ contains no cause of action against them, and they do not understand the case which they have to meet, my assessment of their submissions was that they do appreciate the allegations made but consider them to be nonsense. I note in passing that not all the legal issues raised in the defendants’ submissions before me are found in their existing defence and, to that extent, the defendants might wish to reconsider their own pleading.
12 The defendants argue in their written submissions that the obligations relied upon by the plaintiffs in the Unico Agreement are obligations which fall upon those plaintiffs and not any of the defendants. This view of the matter appears to me unlikely, especially insofar as it might require Murray and Olsen to pay $50,000 for Olsen’s shares and $450,000 to Murray.
Ambiguity
13 The defendants contend that regard cannot be had to the surrounding circumstances of the agreement because there is no ambiguity in clause 3(e) of the Terms Sheet.
14 The plaintiffs, however, contend that, since the Unico Agreement does not specify which party is obliged to give effect to the terms of clause 3(e), it could be said to be ambiguous, and as such, regard may be had to the surrounding circumstances of the agreement.
15 In my opinion, there is some merit to the plaintiffs’ argument for the following reasons.
16 First, clause 3(e) commences, ‘the following is to apply in relation to Olsen Capital and Murray’ (emphasis added). The expression ‘in relation to’ is one of potentially broad meaning. It may mean, as the defendants contend, that the clause in question concerns Olsen and Murray exclusively. Alternatively, as the plaintiffs contend, the clause might relate to Olsen and Murray in the context of an agreement that binds the defendants to a number of different parties.
17 I am satisfied that this point[1] is at least arguable, and as such, is not fanciful or without any real prospect of success. I consider that the plaintiffs should have the opportunity to argue this point in a full hearing. If accepted, the point has the potential to enliven the court’s power to take account of the circumstances surrounding the agreement.
[1]See paragraph 19 of the plaintiffs’ submissions.
18 Secondly, various parts of the clause employ the passive voice in such expressions as ‘will be paid to Murray’, ‘to be paid to Murray’ and ‘owed to Murray’. This grammatical structure omits the identity of the subject of each phrase – in this case, it is unclear who specifically is required to pay Murray $450,000 plus cash entitlements. The defendants contend, on the basis of their construction of clause 3(e) discussed above, that Olsen is the party obliged to pay Murray. The plaintiffs contend, however, that the failure of clause 3(e) to specify the party obliged to pay Murray the amounts due renders the clause ambiguous, and therefore, regard must be had to the context of the agreement.
19 Again, I am satisfied that plaintiffs’ position on the question of ambiguity is at least arguable, and as such does not render its case fanciful or with no real prospect of success.
20 As previously noted, the defendants contend that the obligations in clause 3(e) of the Terms Sheet fall solely upon Olsen and Murray, and not any of the defendants.
21 Murray is an outgoing employee and director of Sherpa. I would regard it as unusual to oblige Olsen, a shareholder of Sherpa that is itself selling all its shares for $50,000,[2] to pay Murray his severance pay and entitlements. As the High Court said in Gollin & Co Ltd v Karenlee Nominees Pty Ltd,[3] generally courts should not adopt a construction of a clause which makes no commercial sense. However, if the ambiguity asserted by the plaintiffs above were to be accepted by the court, such an interpretation might be avoided. By way of alternative, the court might reach an interpretation whereby Sherpa or another party would be obliged to pay Murray $450,000 plus his various entitlements.
The Overarching Purpose
[2]See clause 3(e)(ii) of the Unico Agreement.
[3](1983) 153 CLR 455 at 464.
22 The Civil Procedure Act introduced or codified the concept of the overarching purpose, namely, to facilitate the just, efficient, timely and cost-effective resolution of the real issues in dispute. The court is to give effect to the overarching purpose in the exercise and interpretation of its powers. Section 9 of the Civil Procedure Act sets out the objects to which the court may have regard in seeking to further the overarching purpose.
23 While I consider it appropriate that the defendants’ summary judgment application fail and the plaintiffs have a full hearing, consistent with the requirements of the Civil Procedure Act, the defendants are entitled to a clear appreciation of the case they have to meet. Where the plaintiffs provide this, it is likely to assist the just, efficient, timely and cost-effective resolution of the issues between the parties. Accordingly, pursuant to Part 4.2 of the Civil Procedure Act, I direct that, within 21 days, the plaintiffs file and serve upon the defendants a written statement setting out:
(a) the documents which it is alleged in paragraph 10 of the Statement of Claim the defendants were required to enter into;
(b) the basis for the allegation in paragraph 11 of the Statement of Claim that the defendants were jointly obliged with Sherpa to pay certain amounts to the plaintiffs;
(c) the basis for the allegation in paragraph 13 of the Statement of Claim that the email from Hive Legal to Arnold Bloch Leibler dated 21 July 2016 was sent on behalf of the defendants;
(d) the basis for the allegation in paragraph 14 of the Statement of Claim that the defendants were obliged to:
(i) enter into the Second Settlement Deed;
(ii) pay $450,000 to Murray;
(iii) take steps to effect payment of $50,000 to Olsen for its shares in Sherpa;
(iv) take steps to effect the transfer of the shares in Sherpa;
(v) pay or take steps to effect the payment of cash entitlements owed to Murray under the First Settlement Deed.
24 Lest there be any doubt or confusion about the plaintiffs’ case, in reliance on the same part of the Civil Procedure Act, I further direct that, within 21 days, the plaintiffs file and serve upon the defendants a document setting out the substance of the interpretation or construction argument which the plaintiffs advance against the defendants. This document should assist both the defendants and the court in understanding the plaintiffs’ case.
25 Then, within 21 days of receipt of the plaintiffs’ document, the defendants are to file and serve a responsive document setting out the substance of the interpretation or construction argument which they seek to advance. In this way, the scope for surprise at trial and requests for time or even adjournments will be greatly reduced.
26 I indicated during the hearing of the application that I would not grant summary judgment in favour of the defendants. I was not satisfied that the claim had no real prospect of success. Viewed from one perspective, the Unico Agreement was incomplete or capable of more than one meaning. Even if I were satisfied that the claim had no real prospect of success, I consider that the proceeding should not be disposed of summarily because it is not in the interests of justice to do so and the dispute is of a kind such that a full hearing on the merits is appropriate. In short, I am satisfied that the plaintiffs have a bona fide grievance which they seek to pursue, and the nature of their claim is one in which the material facts to be pleaded are limited and reasonably clear, but the construction or interpretation argument is more complex. The situation is one in which, under section 64 of the Civil Procedure Act, I consider it just in all the circumstances that the plaintiffs have the chance to prove their claim at a full hearing.
Conclusion
27 Subject to hearing from the parties, I propose to order that:
(a) within 21 days, the plaintiffs file and serve upon the defendants a written statement addressing the points set out at paragraph 23;
(b) within 21 days, the plaintiffs file and serve upon the defendants a document setting out the substance of the interpretation or construction argument which the plaintiffs advance against the defendants;
(c) within 21 days of receipt of the plaintiffs’ document, the defendants file and serve a responsive document setting out the substance of the interpretation or construction argument which they seek to advance;
(d) the defendants’ summons is otherwise dismissed;
(e) the plaintiffs pay 50 per cent of the defendants’ costs of and incidental to this application.
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