Powell v Comfrey Constructions Pty Ltd
[2006] QDC 73
•6 April 2006
DISTRICT COURT OF QUEENSLAND
CITATION:
Powell v Comfrey Constructions Pty Ltd & Anor [2006] QDC 073
PARTIES:
GRANT ALBERT POWELL
Plaintiff
v
COMFREY CONSTRUCTIONS PTY LTD
First Defendant
and
GOLD COAST CITY COUNCIL
Second Defendant
FILE NO/S:
D138/2002
DIVISION:
Civil
PROCEEDING:
Application pending proceedings
ORIGINATING COURT:
Southport
DELIVERED ON:
6 April 2006
DELIVERED AT:
Southport
HEARING DATE:
19 December 2005
JUDGE:
Rackemann DCJ
ORDER:
Each application is dismissed
CATCHWORDS:
JOINT TORTFEASORS - RELEASE - DOUBLE SATISFACTION - where plaintiff settled and signed a release with one defendant – where the release was generally worded and contained the phrase ‘paid in full and final settlement, satisfaction and discharge of all claims whatsoever’ – where the plaintiff intended to continue claim against other defendant – where the amount accepted in settlement was less than total amount claimed – whether the plaintiff had or should be regarded as having fully recovered the alleged loss
COUNSEL:
Mr Dewalt, of counsel, for the plaintiff
Mr Howe, of counsel, for the second defendant
SOLICITORS:
Hunter Solicitors for the plaintiff
O’Keefe Mahoney Bennett for the second defendant
The plaintiff commenced these proceedings on 19 February 2002, claiming damages for personal injuries resulting from an alleged trip and fall incident at a workplace on 9 September 2002. By his further amended statement of claim, it was alleged that the fall was caused by the negligence of the servants or agents of the first defendant, for whom both it and the second defendant were vicariously liable. Further or in the alternative, it was pleaded that the fall was caused by the direct negligence of the second defendant, its servants or agents[1].
[1]see para 5 of the further amended statement of claim
The action has subsequently been settled, as between the plaintiff and the first defendant on terms that the plaintiff be paid $90,000 plus standard costs. A form of “release discharge and indemnity” (“the release”) was executed. By its amended defence the second defendant now pleads that:
“[18] By Deed of Release dated 3 March 2005 and in consideration of the sum of $90,000 plus standard costs the plaintiff released and discharged the first defendant and its insurer, Zurich Australian Insurance Limited (“Zurich”) from all causes of action, claims, demands, suits or proceedings, being the proceedings described as Southport District Court proceedings number D138 of 2002.
[19] On a date presently unknown to the defendant, Zurich paid the agreed sum of $90,000 to the plaintiff.
[20] In further answer to the whole of the amended statement of claim the second defendant says the action on behalf of the plaintiff is brought in respect to the same damage as that sought and fully recovered against the second defendant.”
By an application filed on 29 September 2005 the second defendant seeks, inter alia, the following orders:
(1)A declaration that the first respondent/plaintiff is no longer able to proceed with Southport District Court claim D138 of 2002 against the applicant/second defendant, the Council of the City of Gold Coast and/or any defendant;
(2)A declaration that all proceedings in claim D138 of 2002 including all claims for contribution have been compromised and that no party can continue with any claims in relation to said proceedings;
(3)Claim D138 of 2002, including the contribution proceedings, be dismissed.
The plaintiff responded with an application that paragraph 20 of the amended defence be struck out.
On 22 February 2005 the first defendant made a formal offer to settle, pursuant to the Rules. The offer was to pay the plaintiff the sum of $90,000 plus professional costs and outlays on the District Court scale. By a facsimile letter dated 1 March 2005, the solicitors for the plaintiff responded in the following terms:
“Please note our client accepts your client’s offer to settle our client’s claim in the sum of $90,000 plus standard costs and outlays on the District Court scale.
Please forward a discharge to arrive by 3 March 2005.
Please note the offer is accepted on the clear understanding that we reserve our rights to continue against the Gold Coast City Council in these proceedings.”
On the following day the solicitors for the first defendant responded in the following terms:
“We refer to your facsimile dated 1 March 2005 and advise that our client agrees to settle this matter with your client on the terms set out in your correspondence.
Accordingly, enclosed is a release, discharge and indemnity for execution by your client.
…”
On the same day the solicitor for the plaintiff wrote to the solicitor for the second defendant in the following terms:
“Please note our client has settled his action against Comfrey Constructions Pty Ltd. Our client will now proceed against your client to trial.
We now enclose a request for trial date which we request you sign and return in the next 14 days.”
Disclosure, as between the plaintiff and second defendant was progressed over the next five months[2]. The second defendant’s amended defence, raising the issue, was filed on 17 August 2005.
[2]paras 8-13 of the affidavit of Hunter
The release executed by the plaintiff was, in part, in the following terms:
“In consideration of the person described in the first schedule (hereinafter called the ‘insurer’) as insurer for the person described in the second schedule (hereinafter called the ‘insured’) paying to the person described in the third schedule (hereinafter called the ‘releasor’) the sum of money referred to in the fourth schedule (hereinafter called the ‘settlement money’) paid in full and final settlement, satisfaction and discharge of all claims whatsoever which the releasor, or any person on behalf of the releasor, may have arising as a result of or in any way connected with the matter (as defined in the seventh schedule, the releasor hereby:
1. Releases, discharges and forever holds harmless the insurer and the insured and each of them (hereinafter jointly and each of them severally called the ‘persons discharged’) with respect to (and agrees to indemnify and keep indemnified) the persons discharged in respect of any and all loss arising as a result of any and all causes of action, claims (including but without limiting the generality of the foregoing claims for legal costs and consequential loss of profit), demands, actions, suits or proceedings (including but without limiting the generality of the foregoing the proceedings described in the fifth schedule (hereinafter called the ‘present proceedings’)) of whatsoever nature, which the releasor, or any person on behalf of the releasor, may or now have or at any time heretofore had or at any time hereafter may have or but for the execution of this discharge, release and indemnity, could have against the persons discharged (and each of them) with respect to or in any way connected with the matter.
2. Agrees that this release discharge and indemnity may be pleaded as a bar to any action, suite or proceeding (including the present proceedings) commenced now or taken at any time by the releasor against the persons discharged (and each of them with respect to or in any way connected with the matter.
3. Agrees to file a notice of discontinuance in relation to the present proceedings, (if any).
4. Acknowledges and agrees that the payment of the settlement money is made without any admission of liability on the part of the persons discharged (or any of them).
5. Directs that the settlement money be paid to the solicitors for the releasor whose name and address is set out in the sixth schedule whose receipt for payment of the settlement money shall constitute a valid discharge.
6. Acknowledges that money may be payable to the Health Insurance Commission out of the settlement money.
7. Acknowledges that payment of the settlement money be deferred until a charge has been issued by the Health Insurance Commission and any applicable refund has been paid.”
…
“The First Schedule
The insurer: Zurich Australian Insurance Limited The Second Schedule
The insured: [Where the insured is more than one person this release discharge and indemnity shall be in favour of two or greater number of them jointly and each of them severally]
COMFREY CONSTRUCTIONS PTY LTD
The Third Schedule
The releasor: [Where the releasor is more than one person the covenants on the part of the releasor shall bind any two or greater number of them jointly and each of them severally]
GRANT ALBERT POWELL
The Fourth Schedule
The settlement money: $90,000 plus standard costs and outlays on the District Court scale The Fifth Schedule
The present proceedings: Southport District Court proceedings number D138 of 2002 The Sixth Schedule
Solicitors for the releasor (name and address): Hunter Solicitors
1st Floor, 113 Scarborough Street
Southport Qld 4215The Seventh Schedule
The matter: On 9 September 2000, the claimant allegedly sustained personal injury to his right shoulder when he tripped and fell on plywood sheeting along a section of the Gold Coast Highway at Surfers Paradise, Queensland.”
The release made no mention of the second defendant.
The second defendant was not a party to the settlement agreement. There was no suggestion that s 55 of the Property Law Act applied or that there was any other basis for relaxation of the rules respecting contractual privity or for regarding the release as enuring for the benefit of the second defendant.
The release of one tortfeasor does not operate to release others, whether they are joint or several tortfeasors[3]. No defence of accord and satisfaction is available to the second defendant. The matters pleaded in paragraph 18 of the amended defence do not afford a defence. The real issue is whether, in the course of settling the matter with the first defendant, the plaintiff has, or should be regarded as having, fully recovered his loss, so as to preclude his right to pursue the second defendant on the basis of the principle or rule respecting “double satisfaction” of claims upon co-ordinate liabilities. That is the issue raised in paragraph 20 of the amended defence.
[3]See Law Reform Act 1995 (Qld) s 6(a) and Thompson v Australian Capital Television Pty Ltd (1996) 186 CLR 574.
Counsel for the second plaintiff placed particular reliance on Jameson v Central Electricity Generating Board [2000] 1 AC 455. In that case a plaintiff had, a few days before his death, agreed to accept an amount of money from his former employer in “full and final settlement and satisfaction of all causes of action in respect of which the plaintiff claimed in the statement of claim”, although the amount accepted was significantly less than the full liability value of his claim. Following the plaintiff’s death, his executors issued proceedings against another. The House of Lords concluded, by majority, that the subsequent proceedings could not be maintained.
The critical issue in Jameson was whether “satisfaction”, for the purposes of the rule, is achieved where the plaintiff agrees to accept a sum from one tortfeasor, which is expressed to be in full and final settlement of the claim against that tortfeasor, if the sum is less than the amount which a Judge would have assessed, had the matter gone to trial and the defendant found to be liable. Hope LJ, who wrote the leading judgment, said, at page 473:
“The critical question … is whether the claim has in fact been satisfied. I think that the answer to it will be found by examining the terms of the agreement and comparing it with what has been claimed. The significance of the agreement is to be found in the effect which the parties intended to give to it. The fact that it has been entered into by way of a compromise in order to conclude a settlement forms part of the background. But the extent of the element of compromise will vary from case to case … The essential point is that the meaning which is to be given to the agreement will determine its effect.”
And at 476:
“The question therefore is … not whether the plaintiff has received the full value of his claim, but whether the sum which he has received in settlement of it was intended to be in full satisfaction of the tort. In this case the words used cannot be construed as meaning that the sum which the deceased agreed to accept was in partial satisfaction only of his claim of damages. It was expressly accepted in full and final settlement and satisfaction of all his causes of action in the statement of claim. I would hold that the terms of his settlement with Babcock extinguished his claim of damages against the other tortfeasors.”
It was contended, for the second defendant, that the subject release was not ambiguous and the court should focus upon its terms and, in particular, the part which records that the moneys were “paid in full and final settlement, satisfaction and discharge of all claims whatsoever which the releasor, or any person on behalf of the releasor, may have arising as a result of or any way connected with the matter”. The conclusion, it was submitted, is the same as in Jameson, namely that the sum received in settlement was intended to be in full satisfaction of the tort and that, as a consequence, the plaintiff cannot continue his proceedings as against the second defendant.
Jameson’s case was considered by the High Court in Baxter v Obacelo Pty Ltd (2001) 205 CLR 635. In that case, unlike the present, the intention to continue proceedings against the other tortfeasor was evident on the face of the release, as well as the terms of settlement. After discussing Jameson’s case, Gleeson CJ and Callinan J said, at 656-657:
“…If it would be unconscientious of the plaintiff to pursue a claim against another tortfeasor, or if the amount received pursuant to the settlement is, or ought to be regarded as, recoupment of the whole of the plaintiff’s loss or damage, then action against another tortfeasor, whether in separate proceedings, or, whether the other tortfeasor was a party to the original proceedings, by way of continuation of those proceedings, must fail. If, either expressly or by implication, a settlement agreement manifested a common intention of the parties to the agreement that the settlement sum was to be paid and received in full satisfaction of the rights of the plaintiff, against the defendant or anyone else, in relation to the loss or damage incurred, then, for both of those reasons, a further claim would fail. The most obvious way to negative such an intention would be by an express reservation of rights. While the effect of the settlement agreement, in the ordinary case, will be the most significant factor bearing upon either or both of the two possible grounds mentioned, it is not possible to eliminate any other circumstances which, in a given case, could indicate unconscientiousness, or loss of the subject matter of a claim. Bearing in mind the obligation to give credit for the amount already recovered, a defendant who could show that the actual loss or damage incurred by the plaintiff did not exceed the amount already recovered would succeed in any event. Leaving aside questions of onus of proof, to say that there is no such excess is simply to say the loss has been fully recouped.
In the present case, the Deed of Release, terms of settlement, and the conduct of the parties to the settlement, clearly showed that it was contemplated that the respondents would pursue their claim against the appellant, and that they were not accepting the sum of $250,000 in full satisfaction of the loss or damage they said they incurred. There is no reason why they should be prevented from continuing with their claim against the appellant.”
It may be noted that their Honours referred to the effect of the settlement agreement not as the only factor, but as the “most significant factor” in “the ordinary case”. Further, in reaching a finding as to whether the moneys were received in full satisfaction of the loss or damage claimed, their Honours had regard not just to the deed of release, but also the terms of settlement and the conduct of the parties.
Gummow and Hayne JJ endorsed the statement of the test, by Auld LJ at the Court of Appeal level in Jameson, that:
“First, it must be full satisfaction and, second, it must be given, executed.”
and the following passage of the dissenting opinion of Lord Lloyd of Berwick that:
“On the face of it, it would seem strange and unjust that a plaintiff who settles a claim against A in respect of one cause of action should be unable to pursue a claim in respect of a separate cause of action against B. Of course if the plaintiff recovers the whole of his loss from A, then he will have nothing left to recover against B. The payment received from A will have ‘satisfied’ his loss, though I would for my part prefer not to use a term ‘satisfy’ in this context, in order to avoid confusion with the quite different concept of accord and satisfaction.”
Their Honours noted that, as a result of the decision in Thompson, those observations were applicable, in Australia, to joint torts. Their Honours went on, at page 661 to say:
“In their reasons for judgment in the present appeal, the Chief Justice and Callinan J referred to the somewhat limited factual material upon which the dispute has been conducted. This may give incomplete means for a determination as to where the balance of equities lie. However, what is apparent is that the respondents accept that in any recovery against the appellant they must do equity by allowing for the receipt pursuant to the settlement with Mr Whitehead.
Where it is accepted that the recovery under a settlement of the first action is of a sum less than that otherwise recoverable by judgment of the second action, it is not apparent that a question of ‘double satisfaction’ arises. There will be no breach of the universal rule that the plaintiff cannot recover more than he or she has lost if the judgment in the second action gives credit for the recovery upon settlement of the first. The source of the equity described by Viscount Simon LC in United Australia will not be present.”
In relation to what was said in Jameson regarding the effect of a compromise in fixing the amount of the claim in the same way as if the matter had gone to trial and the plaintiff obtained judgment, their Honours said, at page 662:
“It is, with respect, not immediately apparent that this conclusion follows.”
Their Honours observed that difficult questions may arise where, as here, words such as “in full and final satisfaction” are used in a negotiated settlement. In that regard, their Honours referred to questions of construction which could arise as to whether, as between the parties to that settlement, the plaintiff covenanted not to seek recovery of any further sum against any tortfeasor. A further question is then whether, in any event, the circumstance that the pursuit of the second action is in breach of an undertaking to the first tortfeasor renders unconscientious any recovery on the second claim. Their Honours did not regard the reasoning in Jameson as foreclosing debate on such questions. Their Honours went on however, to say, at page 663:
“These questions do not arise for decision in this appeal. That is because the text of the Deed of Release, taken with the terms of settlement and the conduct of the parties in relation thereto, plainly indicate that the respondents and Mr Whitehead contemplated that the respondents would pursue their claims against the appellant. There was no acceptance of the sum paid under that settlement as full satisfaction of the loss or damage the respondents claimed they had suffered. That being so, no basis has been shown to render it unconscientious for the respondents to continue the pursuit of their claim against the appellant.”
It may be noted that their Honours considered the text of the Deed of Release “taken with the terms of settlement and the conduct of the parties in relation thereto”.
Having observed that it was unnecessary to identify the precise legal source of the rule against double satisfaction, Kirby J concluded that the argument in Baxter failed at the threshold on the facts. He said at 669-670 that:
“Those facts appear relevantly in the circumstances of the settlement as between the respondents and Mr Whitehead. Having regard to the terms of that settlement, expressed in the Deed of Release between those parties, with appropriate additional reference to the amended statement of claim filed prior to the settlement and the judgment entered, it cannot seriously be disputed that the parties to the settlement were on notice that the respondents were keeping open the possibility of pursuing separately, and later, their action against Mr Baxter. No other interpretation is compatible with the record.
It is unnecessary to resolve the question of whether the intention of the parties to the settlement is to be derived subjectively – from what they expected and meant in their own words – or (as I would prefer) objectively from the effect of what they did – from what a reasonable observer (represented ultimately by the court) would impute to the parties. In either event, the only interpretation of the conduct of the respondents and of Mr Whitehead was that the respondents were reserving their right to proceed against Mr Baxter in respect of the residue of their damage which they continued to assert.”
After observing that the amount paid in settlement was considerably less than the damages claimed and the concession that there was evidence which, if accepted, would entitle recovery of an amount in excess of the settlement, his Honour concluded that:
“In these circumstances, it is impossible to conclude, without more facts, that a recovery now from Mr Baxter would amount to a form of double satisfaction.”
The amount paid by the first defendant to settle the subject action represented a very substantial discount to the plaintiff’s claim, as particularised in the further amended statement of claim. I have not, and have not been invited to, attempt any assessment of the plaintiff’s damages at this stage, but it has certainly not been established, at this point, that the moneys received from the first defendant matched or exceeded the amount for which judgment would have been (or will be) given upon any success by the plaintiff at trial. That is, the evidence does not permit a conclusion, at this stage, that the plaintiff has indeed recouped the whole of his loss or damage. Further, the plaintiff acknowledges that, in the proceedings as against the second defendant, credit will have to be given in respect of the amount received from the settlement with the first defendant. Those matters alone may be sufficient to justify a conclusion that no question of “double satisfaction” yet arises, at least on the approach of which appears to be favoured by Gummow and Hayne JJ[4].
[4]At page 661
The submission for the defendant was, in effect, that the plaintiff should be regarded as having received full satisfaction by reason of the terms of the release. Counsel called in aid the Parol Evidence Rule to submit that the court should not go beyond the words in that document. It should be noted however, that “the meaning of terms in a contractual document is to be determined by what a reasonable person would have understood them to mean. That, normally, requires consideration not only of the text, but also of the surrounding circumstances known to the parties, and the purpose and object of the transaction”[5]. (There has also been a long established rule that the general words of a release are limited to that thing or those things which were especially in the contemplation of the parties at the time the release was given[6], although that “special rule” may no longer be necessary[7]).
[5]Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165 at [40]
[6]Grant v John Grant and Sons Pty Ltd (1954) 91 CLR 121
[7]See Bank of Credit and Commerce International SA v Ali [2002] 1 AC 251
Consideration of the surrounding circumstances known to the parties and the purpose and object of the transaction would lead in this instance to the conclusion, as a matter of construction, that the plaintiff was not covenanting not to seek recovery of any further sum from any other tortfeasor liable for the same loss[8].
[8]In the circumstances paragraph 3 of the release (which was not the subject of argument) should be interpreted as requiring discontinuance pursuant to R 304(4) against the first defendant only
Further, what presently concerns the court is not a proceeding on the release. Rather, the court is concerned with an inquiry as to whether the plaintiff has received, or should be taken to have received, “full satisfaction”. The text of the release is not the only matter which bears upon the issue. I do not consider that the court is necessarily precluded from considering matters beyond the text of the release itself in order to make a finding as to whether there has been, or whether there should be taken to have been, full satisfaction. It has already been noted that the judgments in Baxter considered matters beyond the text of the Deed of Release.
In this case, not only were the settlement moneys a fraction of the amount claimed, but the terms of the compromise, as evidenced in the correspondence passing between the solicitors for the parties to the settlement, made it sufficiently clear that the parties did not intend the moneys to be received in full satisfaction of the rights of the plaintiff with respect to the tort and did not intend the release to have the effect of extinguishing the plaintiff’s right to pursue the second defendant for the balance of the amount claimed.
In the circumstances, the material does not lead to the conclusion that the plaintiff received, or should be taken to have received, full satisfaction or that it would be unconscientious for the plaintiff to continue to pursue his claim against the second defendant. The second defendant’s application will be dismissed.
That the terms of the release do not, in the circumstances, warrant a conclusion, at this stage, that the plaintiff has received full satisfaction, does not justify striking out paragraph 20 of the amended defence of the second defendant. It might be that, at trial, the second defendant can establish that the plaintiff received full satisfaction. Accordingly the plaintiff’s application will also be dismissed.
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