Re Cluness, Daphne Louise v Commonwealth Bank of Australia

[1996] FCA 1186

IN THE FEDERAL COURT OF AUSTRALIA )
  )
NEW SOUTH WALES DISTRICT REGISTRY )    No. NN 1914 of 1995
  )
BANKRUPTCY DIVISION              )

RE:DAPHNE LOUISE CLUNESS

Applicant

AND:COMMONWEALTH BANK OF AUSTRALIA

Respondent

CORAM:    FOSTER J

DATE:     7 MAY 1996

PLACE:    SYDNEY

MINUTE OF ORDERS

THE COURT ORDERS THAT:

1.The bankruptcy notice dated 18 October 1995, insofar as it relates to the applicant, be set aside.

2.The respondent pay the applicant's costs.

Note:  Settlement and entry of orders is dealt with in Rule 124 of the Bankruptcy Rules.

IN THE FEDERAL COURT OF AUSTRALIA )
  )
NEW SOUTH WALES DISTRICT REGISTRY )    No. NN 1914 of 1995
  )
BANKRUPTCY DIVISION              )

RE:DAPHNE LOUISE CLUNESS

Applicant

AND:COMMONWEALTH BANK OF AUSTRALIA

Respondent

CORAM:    FOSTER J

DATE:     7 MAY 1996

PLACE:    SYDNEY

REASONS FOR JUDGMENT
  (Extempore)

HIS HONOUR:    I have before me an application on behalf of Daphne Louise Cluness to set aside, insofar as it relates to her, a bankruptcy notice dated 18 October 1995, issued at the request of the respondent, the Commonwealth Bank of Australia ("the Bank").  The bankruptcy notice by its terms relates to a judgment in the Supreme Court of New South Wales obtained against her and her husband by the Bank in the amount of $469,112.24 made up, apparently, of a series of amounts owing by way of instalment.

After the judgment was obtained in November 1989, various events occurred by way of negotiation between the Bank and Mr and Mrs Cluness.  Those matters are set out in the affidavit of John Glen Tylington filed in these proceedings in opposition to this application. 

The affidavit sets out correspondence which passed between the parties, the last letter being Exhibit H to that affidavit.  That letter indicates that the Bank was prepared to release Mrs Cluness from her liability provided that outstanding payments for the period January 1991 to 19 June 1991 were made up and that further payments as agreed were to continue to be made on an ongoing basis.

The amount of such payments is referred to in the correspondence and it is not difficult to arrive at the conclusion that, so far as the Bank was concerned, Mrs Cluness was to be released from her obligation in relation to the judgment debt, provided that stipulated payments continued to be made by her husband.  Equally, it is not difficult to see from the correspondence that that offer was understood and accepted by both Mr and Mrs Cluness.  However, subsequent to that time, as indicated in Mr Tylington's affidavit, a deed was entered into between the Bank and Mr and Mrs Cluness on 13 February 1992.

That deed was annexed to the affidavit of the applicant, Mrs Cluness and it is the terms of the deed to
which I must have regard.  Mr Aldridge mentioned in argument some reliance upon the principles set out in the well known case of Masters v Cameron (1954) 91 CLR 353 but that argument has not, as I apprehended, been persisted in in light of the fact that, whatever might have been the result of the exchange of correspondence, clearly the parties entered into an agreement thereafter in writing, that not being merely a written agreement but an agreement having the form of a deed. Recital D to that deed might be said to encapsulate the material that I have already referred to, namely, what appeared to be the agreement reached as the result of correspondence. That recital reads as follows:

"The bank has now agreed to release Daphne Louise Cluness from her liability to the bank under the judgment, provided that payments of $416.56 per month to the bank in reduction of the judgment debt are maintained by Scott Cluness."

The operative part of the deed however, reads as follows:

1. Mr and Mrs Cluness had paid to the bank the sum of $5003 since September 1990. 

2That Scott Cluness agrees to continue to make monthly payments to the bank of $416.66 in repayment of a sum due from time to time under the judgment."

I pause for a moment to emphasise that the recital D and the two operative clauses that I have just referred to appear to follow completely the agreement that could readily be spelled out of the correspondence annexed to the affidavit of Mr Tylington.  The problem arises and the question for consideration also arises in terms of paragraph 3 which I now set out.  It reads:

"... in consideration of the matters set out in Clauses 1 and 2, the Bank will forthwith discontinue and forever abandon and forgo all of its rights in respect of the judgment against Daphne Louise Cluness and her servants, agents and employees which it now has, or at any time hereafter may have or but for the execution of these presents might have had in any way arising out of the judgment."

It is the submission of the applicant, through her counsel, that the effect of this paragraph is that from the time of the execution of this deed on 13 February 1992 she was effectively and conclusively released from any liability under the judgment by the Bank, this being so whatever may have been the intention of the parties prior to execution of the deed or as evidenced by the correspondence to which I have made reference.  It has not been suggested that I can call in aid that correspondence as a matter of interpretation of this document and I am of the view that I cannot do so.

I must regard it as a final document in the form of a deed, with all its binding characteristics, entered into by the parties.  I should also add that in the course of argument there was some discussion as to matters of rectification and other matters that might arise in equity.  I have not been asked to take those matters into consideration in relation to what I regard as the operative effect of the deed on the basis of its construction, nor indeed, I should add, in the absence of any precise application for rectification in circumstances where that could be litigated could I, in my view, possibly take those matters into account. 

I have come to the conclusion, with some reluctance, that the effect of clause 3 is to release Mrs Cluness from the time of execution of the deed.

The reason for that is that the consideration referred to in that clause is the agreement of Scott Cluness to make the monthly payments referred to in clause 2, not the actual making of those payments.  In those circumstances, I am not able as a matter of construction to hold that this deed makes the release of Daphne Louise Cluness conditional upon the actual continuance of those payments, apart from the mere agreement to continue. 

In those circumstances I must hold that the debt referred to in the bankruptcy notice is one from which she was released by this deed on the date of the deed.

In those circumstances I consider that I must make the order sought in the application, namely that the bankruptcy notice in so far as it relates to her, be set aside.

The applicant makes an application for costs on the basis that they should follow the event.  The application is resisted and is resisted solely on the basis that there had been, as well as the application upon which the applicant has succeeded, an accompanying application based upon a miscalculation of interest in the bankruptcy notice.  That application was abandoned today in circumstances where the court has been informed that some work had been done in relation to it on behalf of the respondent. 

However, no application is made by the respondent for the recovery of those costs.  That matter is simply put before the court as an argument for the dismissal of the applicant's application for costs and the substitution, therefore, of an order that each party should pay its own.  In light of what led up to the execution of a deed upon which the applicant has succeeded, I have some reluctance in relation to the granting of costs of the application.  I do not feel however, that I can give effect to that reluctance despite the width of the discretion that I hold. 

In all the circumstances I think costs should follow the event and I simply order that the respondent pay the applicant's costs in this application.

I certify that this and the preceding five (5) pages are a true copy of the reasons for judgment herein of the Honourable Justice M. L. Foster.

Associate:

Date:   7 MAY 1996

A P P E A R A N C E S

COUNSEL FOR THE APPLICANT:   B. SKINNER

INSTRUCTED BY:              BROWN & PARTNERS

COUNSEL FOR THE RESPONDENT:  M.R. ALDRIDGE

INSTRUCTED BY:              L.E. TAYLOR

DATE OF HEARING:            7 MAY 1996

DATE OF JUDGMENT:           7 MAY 1996