Pinnacle Living v QBE Insurance
[2024] VSCA 287
•27 November 2024
| SUPREME COURT OF VICTORIA COURT OF APPEAL |
| S EAPCI 2023 0132 |
| PINNACLE LIVING PTY LTD (ACN 109 236 759) | Applicants |
| TV MEWS PTY LTD (ACN 007 026 100) | |
| v | |
| QBE INSURANCE (AUSTRALIA) LTD (ACN 003 191 035) | Respondent |
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| JUDGES: | KENNEDY, KAYE AND KENNY JJA |
| WHERE HELD: | Melbourne |
| DATE OF HEARING: | 13 November 2024 |
| DATE OF JUDGMENT: | 27 November 2024 |
| MEDIUM NEUTRAL CITATION: | [2024] VSCA 287 |
| JUDGMENT APPEALED FROM: | [2023] VSC 621 (M Osborne J) |
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CONTRACT – Abandonment – Where applicants pleaded alternative claims – Where judge found that alternative claim was only an unintended carry over of a previous, but then abandoned claim – Abandonment of alternative claim not plain or unequivocal – Leave to appeal granted – Appeal allowed.
Supreme Court (General Civil Procedure) Rules 2015 r 13.09.
Bosaid v Andry [1963] VR 465, considered – Re Lawrence Waterhouse(in liq); Shaw v Minsden Pty Ltd [2011] NSWSC 964; Zhang v Shanghai Wool and Jute Textile Co Ltd [2006] VSCA 133, applied – Commonwealth v Verwayen (1990) 170 CLR 394; Jafari v 23 Developments Pty Ltd [2019] VSCA 201; United Australia Ltd v Barclays Bank Ltd [1941] AC 1, referred to.
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| Counsel | |||
| Applicants: | Mr SE Gladman KC with Mr G Jegatheesan | ||
| Respondent: | Dr MD Rush KC with Mr TR Messer | ||
Solicitors | |||
| Applicants: | Walpole Menzies | ||
| Respondent: | Hall & Wilcox | ||
Costs
KENNEDY JA
KAYE JA
KENNY JA:
The second applicant (‘TV Mews’) owns and operates a retirement village on land situated in Lilydale in Victoria and is a wholly‑owned subsidiary of the first applicant (‘Pinnacle’). After a fire destroyed the community centre in the retirement village, TV Mews claimed indemnification from the respondent insurer (‘QBE’).
QBE subsequently sent release documents to Pinnacle which specified that QBE would pay the sum of $2,650,000 in respect of the loss arising from the fire. The release documents were signed by the sole director of both applicants.[1] QBE later paid the applicants the sum of $2,229,613.19.
[1]For convenience, TV Mews and Pinnacle are together referred to as ‘applicants’.
At trial, the applicants claimed the difference between what QBE paid, and what was specified in the release documents, in the amount of $420,386.81 on the basis that the release documents constituted a binding agreement. The trial judge held that the release documents did constitute a binding agreement, but that, by reference to earlier pleadings which the parties had filed, the parties had manifested an intention to abandon reliance on the releases.
For reasons that follow, we consider that the trial judge erred in finding that there had been an abandonment. Accordingly, we will grant leave to appeal and allow the appeal.
Background
In early 2013, TV Mews contracted with a builder, Method Construction Pty Ltd (‘Method’), to carry out construction works on a community centre that formed part of a retirement village that it owned and operated. On 6 May 2013, a fire broke out at the retirement village. The fire destroyed both the community centre and the construction works that had been carried out by Method up to that date.
At the time of the fire, TV Mews was insured under two policies of insurance, namely an ‘Industrial Special Risks’ policy issued by QBE (‘QBE Policy’), and a ‘Contracts Works’ policy issued by Ace Insurance Ltd (‘Ace Policy’). Following the fire, TV Mews claimed indemnity under each policy.
QBE accepted that it was liable to indemnify the applicants in respect of the cost of reinstatement of the community centre under the terms of the QBE policy. The QBE policy excluded liability for the loss of the construction works.
On 4 April 2014, QBE (acting through its agent) sent a letter to Pinnacle enclosing a document that subsequently became known as the ‘First Release’.
The First Release relevantly stated:
We, Pinnacle Living Pty Ltd (owner) of 520 Maroondah Highway, Lilydale VIC 3140, confirm acceptance of $2,600,000 (excluding GST) against our claim on [the QBE policy] for loss arising from fire damage to the community centre building on or about 06 May 2013.
This acceptance represents the cost of reinstatement of the building excluding professional and consultant fees.
We also agree that a review of the concrete slab will be managed by Forensic Engineering Services during the reinstatement works utilising a materials and geotechnical engineer to establish whether the pre‑existing concrete slab could have been used in the reinstatement project. If we agree that this was the case per the engineering findings the building reinstatement claim will be limited to $2,600,000 (excluding GST). If it is proven that the concrete slab could not have been used in the reinstatement project we agree to accept $2,700,000 (excluding GST) as the building reinstatement cost (excluding professional and consultant fees).
On 10 April 2014, the director of both applicants, Mr Reeve, signed the First Release.
On 29 August 2014, Mr Reeve signed a further document, which subsequently became known as the ‘Second Release’. The Second Release modified the First Release by providing for QBE to pay $50,000 to the applicants for the replacement of the concrete slab. The trial judge found that the First Release, as modified by the Second Release (hereinafter ‘the First Release’), obliged the respondent to pay the sum of $2,650,000 to the applicants.
As indicated already, QBE paid the applicants the sum of $2,229,613.19, leaving an amount outstanding under the First Release of $420,386.81.
The proceeding before the judge was commenced by writ filed on 14 May 2018. The pleadings of both sides were amended on numerous occasions.
The final version of the statement of the claim was the second further amended statement of claim filed on 7 March 2022 (‘second FASOC’). By the second FASOC, the applicants claimed that QBE was liable to pay them $575,061.43 which comprised the amount of $420,386.81 allegedly withheld under the First Release; an additional amount of $50,000 (claimed under the First Release on the basis that the concrete slab of the community centre had not been able to be used in the reinstatement project); and claims preparation costs of $104,674.62. In the alternative to the claim under the First Release, the applicants claimed that QBE was estopped from denying that it was liable to pay them $420,386.81.
On 25 September 2023, the proceeding came on for trial. At the trial, the applicants did not persist with their claim for $50,000 in respect of the concrete slab and they claimed a reduced sum of $72,816.18 in respect of claims preparation costs.
QBE contended that the First Release was not a legally‑enforceable agreement between the parties. In the alternative, it contended that the applicants had elected not to pursue the claim under the First Release, or that the First Release had been mutually abandoned by the parties.
On 26 October 2023, the trial judge delivered reasons for judgment in Pinnacle Living Pty Ltd v QBE Insurance (Australia) Ltd.[2] In summary, his Honour concluded that:
(a)Mr Reeve executed the First Release on behalf of the ‘insured’ under the QBE policy — that is, both of the applicants;
(b)prior to its abandonment, the First Release was an enforceable agreement under which QBE was obliged to pay the applicants the sum of $2,650,000;
(c)QBE was not estopped from denying that it was liable to pay the applicants the sum of $2,650,000;
(d)the applicants did not elect to forego their rights under the First Release;
(e)the First Release was abandoned because none of the parties was relying on it as and from the filing of the applicants’ further amended statement of claim (‘FASOC’) on 22 August 2019; and
(f)the applicants’ claim for preparation costs was rejected.
[2][2023] VSC 621 (‘Reasons’).
On 30 October 2023, the trial judge made final orders in the proceeding, which relevantly dismissed the applicants’ claims (paragraph 1), and made costs orders against them (paragraph 4).[3]
[3]The judge also gave judgment for the defendant on a counterclaim in the sum of $15,376.15 together with interest pursuant to statute fixed at $8,164.10 which was not contested.
The applicants now seek leave to appeal against those paragraphs of the final orders. The proposed grounds are directed to the trial judge’s conclusions on the abandonment issue as follows:
(a)The trial judge erred in finding at paragraph 119 of his reasons that the retention of paragraphs 36 and 37 in the FASOC ‘should be seen as an unintended carry over of a previous and then abandoned claim’.
(b)The trial judge erred in finding at paragraph 125 of his reasons that, as and from the filing of the further amended statement of claim on 22 August 2019:
(i)the applicants were not relying on the First Release; and
(ii)the First Release had been abandoned.
Relevant pleadings
In order to consider the issue of abandonment it is necessary to set out some history of the amendments made to the pleadings, commencing with the statement of claim dated 10 May 2018 (‘SOC’).
In part B of the SOC headed ‘TW Mew’s contract of insurance with QBE’, the applicants pleaded:
(a)the existence of a contract of insurance with QBE as insurer (at paragraph 4);
(b)the obligation to indemnify the applicants for the costs of reinstatement of insured property as set out in section 1 of the policy (at paragraph 5);
(c)that, by s 13 of the Insurance Contracts Act 1984 (Cth), and at general law, QBE was obliged to act towards the applicants with the utmost good faith (at paragraph 6).
Part G, entitled ‘Releases’, read as follows:
G. RELEASES
22.On 10 April 2014, QBE caused Pinnacle to execute a document entitled “CLAIM FORM – Building Reinstatement Cost excluding professional and consultant fees,” providing that:
(a)the plaintiffs accept $2,600,000 pursuant to the QBE Policy for the replacement of the Community Centre; and
(b)further, should a geotechnical engineer retained by Cunningham & Lindsey’s own contractor, Forensic Engineering Services, find:
(i) the concrete slab can be used in the replacement of the Community Centre, then QBE’s liability for the replacement of the Community Centre is to remain as in paragraph 22(a) above; or
(ii) the concrete slab could not be used in the replacement of the Community Centre, then alternatively to paragraph 22(a) above, QBE’s liability for the replacement of the Community Centre is to be $2,700,000 (the First Release).
Particulars
The First Release is available for inspection on request.
Cunningham & Lindsey, on QBE's behalf, provided Pinnacle with the form of the First Release. The plaintiffs refer to Cunningham & Lindsey's letter to Pinnacle dated 4 April 2014.
23.On 29 August 2014, QBE caused the plaintiffs to execute a document entitled “PARTIAL FORM OF RELEASE – Concrete Slab”, providing that, in compromise of the parties’ obligations in paragraph 22(b) above, the plaintiffs accept $50,000 for the replacement of the Community Centre’s concrete slab (the Second Release).
Particulars
The First Release is available for inspection on request.
Cunningham & Lindsey, on QBE's behalf, provided Pinnacle with the form of the First Release. The plaintiffs refer to Cunningham & Lindsey's letter to Pinnacle dated 4 April 2014.
24.QBE has asserted that the First Release and the Second Release are legally binding on TV Mews.
Particulars
The plaintiffs refer to Hall & Wilcox’s letter dated 12 May 2017.
Part H was entitled ‘Ace payment’. It relevantly pleaded (at paragraph 30) that QBE had paid the applicants the sum of $2,229,613.19 for the replacement of the community centre. This sum was constituted by the amount of $2,650,000 (being QBE’s assessment as to the cost of the replacement of the community centre pursuant to its obligation in paragraph 5) less an amount of $420,386.81 paid by Ace Insurance Limited pursuant to a release given in respect of the Ace Policy.
Pursuant to part I, entitled ‘First Release and Second Release’, the applicants then sought to set aside the First Release:
IFIRST RELEASE AND SECOND RELEASE
31.By reason of paragraphs 20 and 21 above, in causing the plaintiffs to execute the First Release and the Second Release, QBE breached the duty in paragraph 6 above.
(a) Releases Set Aside
32.By reason of paragraph 31 above:
(a) the First Release and the Second Release are voidable by the plaintiffs which the plaintiffs hereby so avoid; or
(b)alternatively, QBE is otherwise prevented from asserting the validity of or relying on the First Release and the Second Release.
33. By reason of paragraphs 31 and 32 above:
(a)QBE remains liable to indemnify the plaintiffs pursuant to its obligations in paragraph 5 above for the replacement of the Community Centre; and
(b) the plaintiffs are entitled to a declaration to this effect.
As well as a declaration that QBE remained liable under the policy, the applicants alternatively sought damages for breach of the duty as pleaded at paragraph 31 (at paragraph 34); alternatively they sought an amount withheld of $420,386.81 ‘pursuant to’ the QBE policy (at paragraph 35):
(b) Damages
34Alternatively to paragraphs 32 and 33 above, in breaching its duty as pleaded in paragraph 31 above, QBE has caused the plaintiffs $520,650.25 in loss and damage.
Particulars
Subject Matter Paragraph Above Amount Owing How Calculated Concrete slab [21(c)(i)]; [22]; [23] $364,952.75 $364,952.75 of $414,952.75 not provided for in First and Second Release Disability access requirement [21(c)(ii)] $155,697.50 No provision made in First or Second Release KACE PAYMENT[4]
[4]There was no part J in the pleadings.
(a)Liability pursuant to QBE Policy
35Further and alternatively, by reason of paragraphs 25 to 30 above, QBE has withheld $420,386.81 of its liability to the plaintiffs pursuant to its obligations in paragraph 5 above for the replacement of the Community Centre.
However, the applicants then included a further alternative claim ‘pursuant to’ the First Release as follows:
(b) Liability pursuant to First Release and the Second Release
36.Alternatively to paragraph 35 above, by reason of paragraphs 22 to 24 above, QBE owed the plaintiffs $2,650,000 under the First Release and the Second Release for the replacement of the Community Centre.
37.By reason of paragraphs 30 and 36 above, QBE is indebted to TV Mews in the sum of $420,386.81 under the First Release and the Second Release for the replacement of the Community Centre.
In the prayer for relief the applicants also claimed:
A.A declaration that the defendant remains liable to indemnify the plaintiffs pursuant to section 1 of [the relevant contract of insurance].
B.$520,650.25 damages
C.$420,386.81 debt.
D.Interest.
E.Costs.
In its defence and counterclaim dated 6 July 2018, QBE alleged that the payment of $2,229,613.19 represented a ‘complete indemnity’ (at paragraph 30). In response to paragraph 24 of the SOC, QBE stated: ‘save for admitting that the Second Release binds TW Mews it does not admit the allegations in paragraph 24’ (at paragraph 24).
By amended statement of claim dated 14 March 2019 the applicants added various claims, but, as the trial judge observed, made no material change.[5]
[5]Reasons [72].
However, in its amended defence and counterclaim dated 22 March 2019, QBE’s case did change. Hence, in response to the allegation that QBE was indebted to the applicants under the First Release, QBE now pleaded:
37
It denies the allegations in paragraph 37. It denies that either it or TV Mews was a party to the First Release and bound by its terms.38It denies the allegations in paragraph 37.
QBE also pleaded an alternative case: if QBE was bound by the First Release, then it should be rectified, or, an implied term should arise to the effect that the amount payable by QBE under the First Release should be reduced by the amount paid out by Ace Insurance Ltd under the Ace Policy (at paragraphs 39–41). The judge described this as ‘the rectification argument’[6]. QBE further sought an order for rectification of the First Release by way of counterclaim (at paragraph 1 of the prayer for relief).
[6]Reasons [113].
QBE shortly afterwards also filed a further amended defence and counterclaim dated 4 June 2019 which contained an amended form of paragraph 22:
22Save for admitting that the First Release was executed by Pinnacle on or about 10 April 2014 it denies the allegations in paragraph 22 and says further as follows:
(a)TV Mews was not a party to the First Release; and
(b) QBE does not contend in this proceeding that TV Mews is bound by the terms of the First Release.
Paragraphs 37 and 38 were also further amended as follows:
37
It denies the allegations in paragraph 37.It denies that either it or TV Mews was a party to the First Release and bound by its terms.38As to paragraph 37, it says as follows:
(a)It denies the allegations in paragraph 37.
(b)It says further that the allegation in paragraph 37, namely that QBE remains indebted to TV Mews under the terms of the First and Second Releases is inconsistent with the allegation in paragraph 32, namely that TV Mews has avoided the First and Second Releases, and should be struck out for offending the principle that a party is not permitted to approbate and reprobate.
(c) Further, and in any event, in circumstances where neither TV Mews nor QBE contend that the First Release is binding upon them, the allegations in paragraph 37, insofar as they relate to the First Release, should be struck out.
The applicants then filed the FASOC dated 22 August 2019, which the judge placed significant reliance upon.
The FASOC retained paragraphs 4 and 5 (as to the insurance policy). It also retained paragraphs 22 and 23 (which pleaded the releases), as well as the amount paid by QBE (at paragraph 30). However, there were three critical changes.
First, although paragraph 24 was retained, it was expanded to include further particulars, and a new paragraph 24A was included so that paragraphs 24 and 24A now read as follows (excluding particulars):
24.By letter dated 12 May 2017, QBE
hasasserted that the First Release and the Second Release are legally binding on TV Mews.24A.By its Further Amended Defence and Counterclaim filed on 4 June 2019, QBE denies:
(a)that either it or TV Mews is a party to the First Release; or
(b)that QBE is bound by the First Release’s terms.
Associated with this change, a new paragraph 32A was inserted which cross referenced paragraph 24A. Paragraphs 32A and 32 now read:
(a) Releases set aside
32ABy reason of paragraph 24A above, the First Release is not binding on the plaintiffs.
32By reason of paragraph 31 above:
(a) the First Release and the Second Release are voidable by the plaintiffs which the plaintiffs hereby so avoid; or
(b)alternatively, QBE is otherwise prevented from asserting the validity of or relying on the First Release and the Second Release.
Second, although the applicants retained a claim for a declaration that QBE was liable under the policy (at paragraph 33) and alternatively damages of $520,650.25 (at paragraph 34) by reason of the breach of duty pleaded in paragraph 31, the claim for liability ‘pursuant to the QBE policy’ (at paragraph 35) was revised. Paragraph 35 now alleged that QBE had withheld three amounts owing ‘pursuant to QBE’s obligations in paragraph 5 above for the replacement of the Community Centre’. The amounts were constituted by an amount of $420,386.81 (being said to be part of QBE’s assessment provided for in the First Release for the replacement of the community centre); $364,952.75 (for the concrete slab); and $155,697.50 (for disability access requirements). This gave a total figure of $941,037.06.
The third key change concerned the prayer for relief which was amended and now read:
AND THE PLAINTIFFS CLAIM:
A.A declaration that the defendant remains liable to indemnify the plaintiffs pursuant to section 1 of [the relevant contract of insurance].
B.$941,037.06
$520,650.25 damages.C.
$420,386.81 debt.D. Interest.D.Interest pursuant to s 57 of the Insurance Contracts Act 1984 (Cth)
E.Costs pursuant to the QBE Policy.
However, both paragraphs 36 and 37 were retained and still read:
(b)Liability pursuant to First Release and the Second Release
36.Alternatively to paragraph 35 above, by reason of paragraphs 22 to 24 above, QBE owed the plaintiffs $2,650,000 under the First Release and the Second Release for the replacement of the Community Centre.
37.By reason of paragraphs 30 and 36 above, QBE is indebted to TV Mews in the sum of $420,386.81 under the First Release and the Second Release for the replacement of the Community Centre.
QBE filed a defence to the FASOC. In that defence, it abandoned its claim for rectification of the First Release and/or that any implied term should arise. Otherwise paragraphs 22 and 37 remained in the same form as was contained in the further amended defence and counterclaim dated 4 June 2019.
The pleadings then remained in this state for over two years. However, in November 2021, an expert conclave of quantity surveyors was held. It appeared from the expert conclave that the cost of reinstatement at the time of the fire was less than the sum already paid by QBE.[7]
[7]Reasons [124].
In March 2022 the applicants then obtained leave to file a second FASOC which was dated 4 March 2022. The second FASOC removed the claim for full indemnity under the QBE policy that had been previously pleaded, and added an estoppel claim. It also relevantly:
(a)removed the allegation at paragraph 32A that the First Release was not binding;
(b)removed the allegation that QBE had breached the duty of utmost good faith such that the releases should be set aside or alternatively that damages should be awarded (previously at paragraphs 6 and 32–34);
(c)retained the claims under the First Release (previously at paragraphs 36 and 37) at paragraphs 46 and 47;
(d)increased the amounts said to be due under the First Release to incorporate an increased amount for the concrete slab and legal costs so that the total amount claimed was now $575.061.43 (at paragraph 51).
The new prayer for relief also now read:
AND THE PLAINTIFFS CLAIM:
A. A declaration that the defendant remains liable to indemnify the plaintiffs pursuant to section 1 of [the relevant contract of insurance].
AA. A declaration that the defendant is bound to pay the plaintiff the balance payable under the First Release without deduction (namely, $2.7M less amounts paid for the cost of reinstatement).
B.$575,061.43
B.C. Interest pursuant to s 57 of the Insurance Contracts Act 1984 (Cth).C.D. Costs pursuant to the QBE Policy.
The trial judge’s decision
The trial judge dealt with QBE’s election and abandonment defences,[8] and rejected the defence based on election.
[8]QBE did not press the waiver analysis in oral submissions, though it had been relied upon in written submissions: see Reasons at [64].
First, the judge considered that, at least insofar as the original SOC was concerned, there was no relevant inconsistency between the claim based on the First Release and the claim based on the indemnity under the QBE policy. He found that, in the event that the avoidance claim was accepted by the court (based on the breach of utmost good faith), the effect would be that there was no binding First Release. This would then have destroyed the claim based on the First Release. Conversely, if the claim based on the breach of good faith failed, then the claim based on the First Release would be left open. The doctrine of election hence had no role to play because there was no inconsistency.[9]
[9]Reasons [101]–[103].
The judge went on to consider the FASOC. He observed that the applicants were now pleading that the First Release was not binding, not only by reason of their avoidance, but because the counterparty, QBE, was not asserting that the First Release was binding. As a result, he considered that neither party was alleging that the First Release was binding.[10] He considered that paragraphs 36 and 37 were inconsistent with the plea in paragraph 32A and with the prayer for relief, saying: ‘the implicit plea of an enforceable agreement contained in paragraphs 36 and 37 cannot co‑exist with the plea in paragraph 32A’.[11] Nevertheless, the judge found that the applicants remained entitled to pursue the claim for indemnity under the QBE policy until such time as the amount owing under the First Release was paid in full. Given that this did not occur, the pursuit of the indemnity did not give rise to a relevant inconsistency such as to give rise to any requirement to elect. The doctrine of election therefore did not come into play.[12]
[10]Reasons [110].
[11]Reasons [112].
[12]Reasons [104]–[116].
The judge then turned to the ‘critical question’ as to whether the applicants’ conduct from 22 August 2019 manifested an intention that the obligations under the First Release need not be performed. He considered that QBE manifested an intention not to be bound by, or to rely on, the First Release from 22 August 2019, if not earlier (even though the judge found that it was bound). He also found that QBE apprehended that the applicants, likewise, were not seeking to enforce the First Release, citing the fact that QBE dropped their rectification argument.[13]
[13]Reasons [117].
He then stated that:
The critical question is whether it can be inferred that as and from the filing of the FASOC on 22 August 2019, the conduct of the applicants (as opposed to QBE’s belief as to the applicants’ conduct) can be viewed as conveying that it was walking away from any rights and obligations arising under the First Release.[14]
[14]Reasons [118].
The judge found that such an intention could be inferred on the part of the applicants. He found that it was ‘obviously so’ but for the retention of paragraphs 36 and 37 of the FASOC’. However, having regard to four matters, he considered that the retention of those paragraphs should be seen as an ‘unintended carry over of a previous and then abandoned claim’. He described those four matters as follows:
First, it was always the plaintiffs’ primary case that neither party was bound by the First Release; this was the premise of its claim that the plaintiffs had avoided the First Release by reason of QBE’s breach of the Insurance Contracts Act. It only needed the claim under the First Release in the dual contingency that QBE sought to rely on the First Release and the plaintiffs’ avoidance claim failed. Once QBE made it clear that it was not seeking to rely on the First Release, as it did in its defence to the ASOC and more clearly in its defence to the FASOC, the contingency was entirely illusory.
Secondly, the FASOC reinforced the abandonment of any rights under the First Release by reason of the plea in paragraph 32A and the amendment to the prayer for relief deleting any claim for moneys owing under the First Release.
Thirdly, the plaintiffs’ silence in the face of QBE’s defence to the FASOC, in which it pleaded that neither party contended that the First Release was binding and the associated failure until 2½ years later to reinstate a component of the prayer for relief seeking the lesser sum due and unpaid under the First Release, is further evidence of the plaintiffs’ abandonment of any claim under the First Release. Given that QBE was not contending that the plaintiffs were bound by the First Release, the plaintiffs wanted to pursue the claim for a full indemnity under the QBE policy, by pressing the claim for the additional moneys totalling $520,650.25 pleaded in sub‑paragraphs 35(b) and (c) and reflected in the claim for $941,037.06 contained in paragraph B of the prayer for relief.
Fourthly, the plaintiffs’ belated filing of the second FASOC on 4 March 2022, recognises that there was a need to add that which was not contained in the FASOC, namely a claim for moneys unpaid under the First Release; hence the addition of the new paragraph AA in the prayer for relief and the revised sum sought in paragraph B. More stark is the deletion of paragraph 32A from the FASOC which removed the allegation that the First Release was not binding. This was necessary because the plaintiffs were now asserting that it was binding.
In fact, the plaintiffs had no need to press a claim under the First Release as long as the replacement cost for the community centre exceeded $2,650,000; it was only in November 2021 that the prospect of it being less appeared to materialise after the expert conclave. Then, and only then, did the plaintiffs seek to return to the First Release, after eschewing its benefits and burdens arguably from as far back as the commencement of this action in 2018 but more clearly from the filing of the FASOC in August 2019.[15]
[15]Reasons [120]–[124].
As ‘neither the plaintiffs nor QBE were relying on the First Release as and from 22 August 2019’ the judge concluded that there was an abandonment such that the claim for the balance of moneys owing under the First Release was rejected.[16]
[16]Reasons [125].
Submissions
The applicants’ submissions
The applicants submitted that the four matters relied upon by the judge did not justify the finding of abandonment.
First, they disputed the trial judge’s characterisation at paragraph 120 of his reasons that ‘it was always the plaintiff’s primary case that neither party was bound by the First Release’ and that their need for the alternative claim became ‘entirely illusory’ once QBE made it clear that it was not seeking to rely on the First Release. Instead, they submitted that there were two alternative claims and that if the proceeding had gone to trial it would have been open to the applicants to pursue either of those alternative claims as their ‘primary case’.
In oral submissions, senior counsel for the applicants submitted that the judge was incorrect to suggest that the applicants only needed the claim under the First Release in the dual contingency that QBE sought to rely on it and the avoidance claim failed. This was because there was plainly a dispute as to the cost of reinstatement. The applicants therefore needed the claim under the First Release in the event that the expert evidence suggested that the costs of reinstatement were less than $2,650,000 (which ultimately occurred). It followed that there was no commercial reason for the applicants to abandon the claim under the First Release.
The applicants then turned to the judge’s second matter and submitted that neither paragraph 32A in the FASOC, nor the amended prayer for relief, indicated an intention to abandon.
The applicants challenged the trial judge’s interpretation of paragraph 32A of the FASOC at paragraph 110 of his reasons, namely, that it involved a plea that the First Release was not binding because QBE was not asserting that it was binding. The fact that QBE was denying that it was bound by the First Release, without more, did not mean that the First Release had in fact ceased to be an enforceable agreement. The better interpretation is that paragraph 32A was intended to repeat the allegations underlying QBE’s denial that it was bound by the First Release. Hence paragraph 32A should read that the applicants alleged that the First Release did not constitute an enforceable agreement on the basis that QBE was not a party to it.
The applicants highlighted that the judge had found at paragraph 110 of his reasons that the plea of avoidance in paragraph 32 did not give rise to any inconsistency because it depended on judicial acceptance of the contention that QBE had breached the duty of utmost good faith. It was submitted that the plea in paragraph 32A bore the same general character as it depended on judicial acceptance of the contention that QBE was not a party to the First Release or bound by it. In the alternative, if reasonable minds might differ about the interpretation of paragraph 32A, then there was no ‘clear’ or ‘plain’ abandonment.
The applicants also submitted that there remained a justiciable controversy about the First Release as long as the alternative claim under the First Release remained. As long as the applicants maintained that claim, the court would have to determine whether the First Release was legally enforceable. There was hence no impermissible inconsistency between paragraph 32A, on the one hand, and paragraphs 36 and 37, on the other. The effect of the plea in paragraph 32A was confined to the claim for indemnity under the QBE policy and the two alternative claims were capable of co‑existing.
The applicants submitted that if the proceeding had gone ahead on the basis of the FASOC, the applicants could have decided to pursue the claim under the First Release. In order to succeed on that claim they would have been required to prove that it was an enforceable agreement and, if they had failed on that issue, would still have been entitled to advance the alternative claim for indemnity under the QBE policy. In support of this proposition, the applicants cited Bosaid v Andry (‘Bosaid’)[17] where Scholl J found that a plaintiff could sue for specific performance, or alternatively for common law damages, in the same action. In the course of so finding he stated:
But can he sue for specific performance or alternatively for common law damages at the same time in the same action? I think one must here distinguish between, on the one hand, merely pleading alternative cases, and on the other hand, purporting to maintain immediately effective but inconsistent elections. A plaintiff can quite legitimately set up, in the alternative, inconsistent allegations of fact. He can say: ‘This contract, I claim, is on foot and I want specific performance; alternatively, if I am wrong in that and it has already come to an end, I want common law damages’. He cannot prove both cases at the trial, but there is nothing wrong with such a pleading. That is to say, a pleading is one thing, evidence is another.[18]
[17][1963] VR 465 (‘Bosaid’).
[18]Ibid 486.
Counsel submitted that the ultimate determination of the applicants’ alternative claims would depend on the trial judge’s analysis as to as to whether the First Release was enforceable and that the applicants were not compelled to make an immediate election between the alternative claims.
In respect of the amendments to the prayer for relief, the applicants submitted that they should be regarded as equivocal. As the trial judge noted at paragraph 77 of his reasons, the amount claimed of $941,037.06 in the FASOC was the sum of the three amounts set out at paragraphs 35(a) to (c). That total amount included the amount claimed under the First Release of $420,386.81. The applicants also highlighted that, provided a statement of claim contains allegations of material facts sufficient to sustain the remedy sought at trial, a plaintiff’s entitlement to that remedy does not depend on the form of the prayer for relief.[19] The trial judge’s analysis thereby placed undue weight on the amendment to the prayer for relief and no weight on the retention of paragraphs 36 and 37. Those two paragraphs, together with paragraphs 22, 23, and 30 contained allegations of material fact that were sufficient to sustain an order for liquidated damages in the amount of $420,386.81.
[19]The applicants cited Wicks v Bennett (1921) 30 CLR 80, 100 (Higgins J); [1921] HCA 15; Rawson v Hobbs (1961) 107 CLR 466, 485 (Dixon CJ); [1961] HCA 72; TM Burke Estates Pty Ltd v PJ Constructions (Vic) Pty Ltd (in liq) [1991] 1 VR 610, 617 (Kaye J); Farrow Finance Co Ltd (in liq) v Farrow Properties Pty Ltd (in liq) [1999] 1 VR 584, 634–5 [176]–[178] (Hansen J).
In oral submissions counsel also submitted that paragraph 34 should be construed as cumulative with the claims in paragraphs 36 and 37 because it was premised on the First Release being valid. In this way, the sum of the amounts claimed in paragraphs 34 and 37 was the same as the total claimed in paragraph 35, namely $941,037.06.
Turning to the third matter cited by the judge, the applicants submitted that their silence in the face of QBE’s defence to the FASOC did not indicate that they intended to abandon the claim under the First Release. Having retained paragraphs 36 and 37 in the FASOC, the applicants were under no obligation to take any action in response to the defence. If QBE wished to assert that there was some reason why the alternative claims could not be maintained, then it ought to have made an application to strike out paragraphs 36 and 37. No such application was made, despite QBE’s plea at paragraph 37(c). In oral submissions, senior counsel fairly accepted that it might have been ‘prudent’ to put QBE on notice of the applicants’ position, but that all parties bore equal responsibility in circumstances where, given QBE’s failure to make the strike out application, the claim under the First Release remained.
In respect of the fourth matter cited by the judge, the applicants submitted that the filing of the second FASOC did not indicate that there was a need to add that which was not contained in the FASOC. In particular, the applicants highlighted that:
(a)the claim under the First Release pleaded in paragraphs 36 and 37 of the FASOC was retained without amendment in paragraphs 46 and 47 of the second FASOC;
(b)many of the amendments, including the deletion of paragraph 32A, simply reflected the removal of the claim for a full indemnity under the QBE policy;
(c)the declaration claimed in the new paragraph AA of the prayer for relief was an additional, but not strictly necessary, form of relief.
The applicants submitted that the retention of paragraphs 36 and 37 was plainly explicable on the basis that the applicants intended to maintain an alternative claim under the First Release. Assessed objectively, the conduct of the applicants, from the date of the filing of the FASOC, did not convey any intention — let alone a clear intention — of abandoning the rights and obligations under the First Release.
QBE’s submissions
QBE submitted that the fact that the applicants pleaded two alternative claims was an incorrect premise for analysis, and instead the real question was whether the applicants, by their conduct, had abandoned one of those alternative claims.
In oral submissions senior counsel clarified that QBE was relying on the same four matters as those relied upon by the judge. In so doing he placed significance on the addition of paragraph 32A, as well as the deletion of the claim for ‘$420,386.81 debt’ in paragraph C of the prayer for relief in the FASOC.
In relation to the judge’s first matter, QBE submitted that the indemnity claim under the QBE policy was indeed the ‘primary claim’ as the judge found. This was evidenced by the language of the (original) SOC which revealed that the applicants did not want to be bound by the First Release. QBE highlighted various indicia in the pleading, including that the First Release was not described as an agreement or contract, rather the language used was that ‘QBE caused Pinnacle to execute’ the First Release. Further, QBE cited various statements made by applicants’ counsel at an early interlocutory hearing to the effect that the indemnity was ‘our primary claim’ and ‘the principal form of relief’. By contrast, the claim under the First Release was described as ‘our fall‑back claim’ or ‘our backup plan’.
QBE submitted that this characterisation of the two claims explained the amendments made in the FASOC. If the First Release was set aside, then the applicants could pursue a larger sum due under the indemnity. The applicants therefore embraced the opportunity presented by QBE’s position in its defence to the amended statement of claim that the First Release was not binding on it or TV Mews, in circumstances where it no longer needed to establish a breach of utmost good faith to claim on the QBE policy.
In terms of the FASOC (the judge’s second matter), QBE submitted that paragraph 32A constituted an adoption of QBE’s allegations, and their consequences, that both TV Mews and QBE were not a party to the First Release, nor was QBE bound by the First Release. QBE submitted that, prior to the FASOC, the applicants’ case was coherent in that the applicants sought to avoid the First Release and sue on the indemnity but if the court determined that the First Release was binding then they sought relief pursuant to the First Release. However, once it became clear that QBE agreed that the First Release was not binding, and that QBE was not seeking to enforce the First Release, there was ‘no justiciable controversy’ about the First Release. QBE submitted that it was therefore not open to the applicants to positively assert two contradictory positions: that the First Release was not binding and that the First Release was binding. The addition of paragraph 32A (and other amendments) to the FASOC, made clear that the applicants were now only advancing their primary case that the First Release was not binding.
In oral submissions senior counsel submitted that a common sense practical reading of paragraph 32A is that there were now two parties saying that they were not bound by the First Release. It followed that the very premise of the claims in paragraphs 36 and 37 had fallen away given the position taken by both parties. Counsel also cited some further remarks of Scholl J in Bosaid as follows:
As pointed out by Philp J, in the Queensland case cited, however, a plaintiff will not be allowed to say, if he is really seeking to say it: ‘This contract is on foot and I want specific performance; alternatively I hereby, by this writ, now forthwith elect to determine it for breach and want common law damages for its loss’. That would be seeking to make the one writ itself do two inconsistent things; affirm the contract and disaffirm it at the same moment. It is not, however, the same thing as saying: ‘I affirm the contract but if the evidence shows that I cannot do that because it has already gone, that is to say, that my affirmation is nugatory, then I want common law damages on the basis that I have lost my bargain’. I see no reason why a plaintiff cannot say that.[20]
[20]Bosaid [1963] VR 465, 486.
Counsel submitted that, by electing to avoid the releases by adopting QBE’s position, but then making the alternative claim under the First Release, the applicants were doing what Scholl J said could not be done.
Counsel accepted that the statement that the applicants ‘hereby so avoid’ the First Release contained in paragraph 32 of the FASOC depended on a finding by the court that there was a breach of the duty of utmost good faith. However, he submitted that paragraph 32A meant that the alternative claims under 36 and 37 simply did not arise.
QBE submitted that the applicants also confirmed the abandonment by deleting the relief sought of ‘$420,386.81 debt’ in paragraph C of the prayer for relief. There was no reason to take this positive step if the applicants maintained their claim in debt for $420,386.81 under the First Release. Although the sum of $420,386.81 was a component of the total sum claimed in paragraph B of the prayer for relief (of $941,037.06), paragraph B did not refer to the amount of an alleged debt under the First Release. Rather, it was sought as part of the amount owing under the indemnity claim on the QBE policy. That a plaintiff’s entitlement to a remedy may not depend on the form of relief sought is irrelevant. The deletion of paragraph C forms part of the applicants’ conduct from which the trial judge could infer that the applicants had abandoned their rights under the First Release.
QBE also submitted that it would not be possible for the applicants to pursue the claim under the First Release at trial based on the FASOC for several reasons. First, it would have required proceeding on an impermissible inconsistency that the First Release was binding and, at the same time, that it was not binding. Second, the allegations in paragraphs 36 and 37 of the FASOC were expressly premised on an old allegation in paragraph 24 that QBE was asserting that the First Release was legally binding (which was no longer the case). Third, there was no alternative case for an indemnity for the applicants ‘as a matter of practical reality’ after delivery of the joint expert report which concluded that the applicants had already been more than fully compensated by QBE.
In relation to the third matter cited by the judge, QBE submitted that in the course of the applicants’ silence, ‘the parties progressed this litigation by devoting time, energy and resources to preparing, among other things, evidence about the reinstatement value of TV Mews’ community centre – which was the focus of the applicants’ indemnity case on the QBE policy’. This reinforced the applicants’ position, amplified by its changes to the FASOC, that it was pursuing its ‘primary claim’, and not its earlier ‘fall back’ position under the First Release.
In respect of the second FASOC (the judge’s fourth matter), QBE submitted that nothing should be read into the fact that paragraphs 36 and 37 were retained without amendment in paragraphs 46 and 47. The cross‑references contained in paragraphs 46 and 47 made little or no sense, while the amounts claimed were inconsistent with amounts claimed elsewhere in the second FASOC. QBE highlighted that the applicants made further amendments to the prayer for relief in the second FASOC to address the lacuna left by the deletion of prayer C in the FASOC (of ‘$420,386.81 debt’). The addition of paragraph B to the prayer for relief in the second FASOC (claiming $575,061.43) therefore included an amount of $470,386.81 as part of the revived claim under the First Release, while paragraph AA sought declaratory relief as to the entitlement under the First Release. These necessary amendments reinforced the conclusion that the applicants had earlier abandoned the First Release.
Finally, counsel objected to the applicants’ submission to the effect that the claim under the First Release embraced the claims in both paragraphs 34 and 36, which was a new argument not raised before the judge. In any event, QBE rejected this characterisation. QBE’s submission was that if the pleader had intended that paragraphs 34 and 36 should each have had a life of their own the pleader would have retained the reference to $520,650.25 in damages, and $420,386.81 in debt, in the prayer for relief.
Proposed grounds one and two: whether the judge was correct to find that the retention of paragraphs 36 and 37 was an ‘unintended carry over’ and that, from the filing of the FASOC, the First Release was abandoned
It is convenient to deal with proposed grounds one and two together, by commencing with the relevant legal principles.
Principles
In Jafari v 23 Developments Pty Ltd (‘Jafari’), this court said:
Parties may expressly agree to terminate or abandon a contract. Abandonment can also be inferred from conduct of the parties that makes it ‘plain’ that neither intends to perform the contract. They are regarded as having conducted themselves in a manner so as to abandon the contract. Abandonment commonly arises from a period of time having elapsed, ‘during which neither party to the contract manifests any intention to perform the contract, leading to the inference that the contract has been abandoned.’ By inferring abandonment, the court infers that the arrangement has been discharged as between the parties, with ‘each party being entitled to assume from a long‑continued ignoring of the contract on both sides that … “the matter is off altogether”’. Whether the parties have abandoned a contract is a question of fact, inferred from an objective assessment of the conduct of the parties.
While commonly inferred by the lapse of an inordinate period of inactivity as between the parties, this is not always necessarily so. The doctrine rests on the objective intention of the parties to abandon or abrogate the contract, ascertained from their conduct and the surrounding circumstances. Accordingly, abandonment can be inferred where parties have either agreed or sought to agree on an entirely new bargain which constitutes a fundamental departure from their original bargain.[21]
[21][2019] VSCA 201 [191]–[192] (Whelan and Niall JJA, and Sifris AJA) (citations omitted) (‘Jafari’).
As highlighted by senior counsel for QBE, this case arises in a different context from that referred to in Jafari. Although the judge made reference to a lengthy ‘silence’, the abandonment in this case was not said to arise by reason of the passing of time. Rather, the key issue in dispute was whether the applicants had abandoned their contractual rights under the First Release, having regard to the express allegations made in the FASOC, and where it was accepted that QBE had abandoned such rights.
In Re Lawrence Waterhouse(in liq); Shaw v Minsden Pty Ltd, Ward J stated:
At common law, the determination that a party has abandoned contractual rights (or an interest in property) is not one that is lightly made. It requires an unequivocal expression of an intention to abandon those rights or that interest (or conduct inconsistent with or repugnant to those rights).[22]
[22][2011] NSWSC 964, [189].
The abandonment of a contractual right may also be viewed through the prism of a waiver. As Chernov JA observed in Zhang v Shanghai Wool and Jute Textile Co Ltd:
[T]he common thread that runs through the several judgments in Verwayen that deal with waiver as such is that, in general, waiver is constituted by the deliberate, intentional and unequivocal release or abandonment of the right that is later sought to be enforced.[23]
[23][2006] VSCA 133, [14] (emphasis added) (citations omitted). This passage was cited with approval in STY (Afforestation) Pty Ltd v Atkinson [2006] VSCA 283, [22] (Maxwell P) and RW Health Partnership Pty Ltd v Lendlease Building Contractors Pty Ltd [2019] VSC 353, [62] (Riordan J).
In Commonwealth v Verwayen, Brennan J also stated:
As a right is waived only when the time comes for its exercise and the party for whose sole benefit it has been introduced knowingly abstains from exercising it, a mere intention not to exercise a right is not immediately effective to divest or sterilize it.[24]
[24](1990) 170 CLR 394, 427; [1990] HCA 39.
At the hearing before us, senior counsel for the applicants did not seek to contend that abandonment needed to be ‘deliberate’ or ‘intentional’, highlighting that an objective assessment was required. In such circumstances, it is inappropriate for us to consider whether, and in what circumstances, there might need to be some ‘deliberate’ or ‘intentional’ act in order for there to be an abandonment.
The applicants also indicated that they did not need to go as far as submitting that the abandonment needed to be ‘unequivocal’ in this particular case. However, there are statements in the authorities which suggest that any abandonment of a contractual right ought be not just plain and clear, but also ‘unequivocal’.[25] This is consistent with the fact that a court will ordinarily be reluctant to find that the parties have relinquished a binding contract which has been freely entered into. In the context of the present case, any abandonment by the applicants of their rights under the First Release ought to be plain, clear, and unequivocal.
[25]See, eg, above [82]–[83]. See also, Fruition Marking No 2 Pty Ltd v Advanced National Services [2009] QSC 88, 21 (Fryberg J).
It is also important to acknowledge two further matters of context affecting the critical question of construction of the FASOC, and which were also correctly acknowledged by the trial judge. First, no question of election can arise in the case of alternative remedies until one or other claim has been brought to judgment.[26] Secondly, the rules of pleading permit a party to make inconsistent allegations of fact if the pleading makes it clear that the allegations are pleaded in the alternative.[27]
[26]United Australia Ltd v Barclays Bank Ltd [1941] AC 1, 30 (Lord Atkin).
[27]Supreme Court (General Civil Procedure) Rules 2015 r 13.09.
With these principles in mind, it is necessary to turn to whether the judge was correct to infer an abandonment in this case.
Analysis
At the outset, we consider that the first and third matters relied upon by the judge do not establish that the retention of paragraphs 36 and 37 in the FASOC was only an unintended carry over of a ‘previous and then abandoned claim’.
First, the fact that a claim under the indemnity was the applicants’ ‘primary case’ by reason of its greater value at a particular point in time says little, if anything, about whether the applicants intended to abandon their contractual rights under the First Release altogether. The retention of claims under the First Release as a ‘fallback’ position rather supports the ongoing retention of the alternative claim under the First Release.
The suggestion that the applicants only ‘needed’ the claim under the First Release if both QBE sought to rely on it, and their avoidance claim failed also discounts commercial considerations that might warrant an alternative claim being made under the First Release. In circumstances where the reinstatement value was clearly a live issue, it remained possible that a claim under the First Release might be of greater value than under the QBE policy (as in fact transpired).
Next, in the face of the assertion in the further amended defence and counterclaim (to the effect that neither party contended that the First Release was binding), it would have been both prudent and appropriate for the applicants to clarify that they were still relying on the First Release as an alternative claim. This is particularly the case in modern commercial litigation, where the parties are expected to confine and define issues, consistent with the overarching purpose contained in the Civil Procedure Act 2010. Nevertheless, any failure to clarify does not prevail over the express inclusion of the alternative claim under the First Release (in paragraphs 36 and 37). We do not consider that the applicant’s silence was sufficient to demonstrate an intention to abandon such a claim.
Turning more particularly to the second matter relied upon by the judge, the FASOC pleads two alternative bases for avoiding the First Release and making a claim under the indemnity. First, on the basis that QBE breached the duty of utmost good faith such that the First Release was ‘voidable’ and which the applicants ‘hereby so avoid’ (at paragraph 32). Second, that, ‘by reason of paragraph 24A’, the First Release was ‘not binding’ on the applicants (at paragraph 32A).
In relation to the first matter, consistent with the approach of the judge, the ability to avoid the First Release was dependent on a judicial determination that QBE had breached the duty of utmost good faith. In the absence of such a finding, paragraph 32 did not purport to effect an immediately effective election[28] and QBE did not suggest otherwise, at least in oral submissions. Put another way, absent a judicial finding as to whether there had been a relevant breach, the applicants were entitled to set up inconsistent allegations to the effect that the First Release was to be avoided (at paragraph 32), or, alternatively that it was in fact (implicitly) binding (at paragraphs 36 and 37).
[28]Cf Bosaid [1963] VR 465, 486.
However, QBE submitted that paragraph 32A should be treated in a different way to paragraph 32. More particularly, it maintained that, once both parties agreed that the First Release was not binding and that QBE was not seeking to enforce the First Release, there was no longer any justiciable controversy. Consistent with the views of the judge,[29] it was said to be no longer open for the applicants to assert two contradictory positions, i.e. that the First Release was binding and that it was not binding.
[29]Reasons [112].
It is important to observe that paragraph 32A does not state that the applicants would not seek to enforce the First Release. Rather, it states that the First Release is ‘not binding’. Paragraph 32A also appears in a pleading which continues to rely on, and plead, an alternative claim premised on the First Release being (implicitly) binding (at paragraphs 36 and 37), which is permitted under the pleading rules.
An allegation that a contract is not ‘binding’ is also very different from an election to terminate a contract for breach with immediate effect (as highlighted in the passage in Bosaid cited above).[30] Thus, whether the First Release was or was not ‘binding’ would also necessitate judicial determination — just as the claim based on the breach of duty (at paragraph 32) would. Absent any such determination, we consider that the alternative claims could be retained.
[30]See above [71].
We therefore would, respectfully, disagree with the judge’s finding that the implicit plea of an enforceable agreement in paragraphs 36 and 37 could not co‑exist with the plea in paragraph 32A. We also consider that the applicants were entitled to go to trial and make the alternative claim under the First Release on the basis of the FASOC. In this respect, we accept the applicants’ submission that paragraphs 22, 23, 30, 36 and 37 of the FASOC contain the material allegations necessary to make such a claim. The reference in paragraph 36 to paragraph 24 (QBE’s earlier assertion that the First Release was binding) is also consistent with, and supportive of, the implicit allegation that the First Release was binding.
Moreover, even if paragraph 32A did raise some impermissible inconsistency, this is not determinative of the question of abandonment. This is because the continued inclusion of the alternative claim under the First Release (at paragraphs 36 and 37) — even if it was not permitted — is directly inconsistent with an abandonment of that claim. At the very least, then, the retention of paragraphs 36 and 37 weighs very much against any ‘plain’ abandonment, and is certainly not ‘unequivocal’.
Turning next to the prayer for relief, we accept that the striking out of the claim (at paragraph C) for $420,386.81 as a ‘debt’ claim might point to an abandonment of the claim under the First Release. Further, we reject the applicants’ submission that paragraph 34 should be read cumulatively with paragraphs 36 and 37. Although it is not completely clear, we consider that paragraph 34 seeks damages for breach of duty for additional monies of $520,650.25, as an alternative to the claim under the First Release of $420,386.81.
Nevertheless, we are unpersuaded that this conduct is sufficiently clear to signal that paragraphs 36 and 37 could be effectively ignored. As the judge correctly observed, the amount of $420,386.81 due under the First Release was also a component of the total claim made at paragraph 35 and at paragraph B of the amended prayer for relief. Although the rules of pleading may not be determinative of abandonment, an abandonment should not be readily inferred where a plaintiff’s entitlement to a remedy is maintained.[31]
[31]See the citations at footnote 19 above.
We do not consider that the subsequent second FASOC (the judge’s fourth matter) takes the matter further. Although it makes clear that the indemnity claim was no longer being pursued and identifies precisely the relief sought pursuant to the First Release, it says very little, if anything, about whether there was an abandonment from 22 August 2019. For reasons given already, we do not consider that the amendments were necessary in order for the applicants to be able to claim relief under the First Release.
In conclusion, we are not persuaded that any of the matters cited establish that the retention of paragraphs 36 and 37 should be seen as an unintended carry over of a ‘then abandoned’ claim. We have also considered the matters, cumulatively, and have come to the same conclusion. We are not satisfied that those key paragraphs can be rendered nugatory, having regard to all the circumstances.
The pleadings in this matter were less than satisfactory, and did not assist in the clear identification of the issues in dispute. Although the judge is to be commended for his comprehensive analysis in this difficult context, we are not satisfied that the applicants ‘plainly’ abandoned their rights to make a claim under the First Release as and from 22 August 2019. There was certainly no unequivocal abandonment.
Conclusion
We will grant leave to appeal and allow the appeal.
We will also set aside orders 1 and 4 of the trial judge and make an order in substitution that there be judgment for the applicants in the amount of $420,386.81, together with interest on that amount pursuant to s 60 of the Supreme Court Act1986.[32]
[32]The parties agreed that such order should be made if the appeal was allowed. In so doing the applicants abandoned reliance on a former claim for interest under the Insurance Contracts Act 1984 (Cth).
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