Robinson v Langley - [2002] WADC 241

JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CHAMBERS

LOCATION: PERTH

CITATION: ROBINSON & ORS -v- LANGLEY [2002] WADC 241

CORAM: COMMISSIONER GILES

HEARD: 16 OCTOBER 2002

DELIVERED : 19 NOVEMBER 2002

FILE NO/S: CIV 3320 of 2000

BETWEEN: DAVID LESLIE ROBINSON
GENEVIEVE MARIANNE ROBINSON
NOEL DAVID ROBINSON
LESLEY FLORENCE ROBINSON
Appellant (Defendant)
AND
PAMELA ANNE LANGLEY
Respondent (Plaintiff)

Catchwords:

Leave to discontinue - Costs - Accord executory - Conditional discharge of cause of action

Legislation:

Rules of the Supreme Court O 23 r 2(3)

Result:

Appeal dismissed

Representation:

Counsel:

Appellant (Defendant) : Mr D S McManus
Respondent (Plaintiff) : Mr Jordan

Solicitors:

Appellant (Defendant) : Corsers
Respondent (Plaintiff) : Michael Whyte & Co

Case(s) referred to in judgment(s):

Garwolin Nominees Pty Ltd v Statewide Building Society [1984] VR 469
Nissho Iwai (Australia) Ltd v Shrian Oskar [1984] WAR 53
Scott v English [1947] VLR 445

Case(s) also cited:

Nil

COMMISSIONER GILES: This is an appeal from a decision of Deputy Registrar Hewitt made on 16 April 2002 granting the plaintiff leave to discontinue the action, and ordering that there be no order as to costs of the action, and of the application to discontinue.
The defendants (now the appellants) have appealed this decision of the Deputy Registrar, arguing that they should be entitled to the costs of the action.
The cause of action relates to recovery of money owed to the plaintiff, (now the respondent) by the defendants (now the appellants). The debt arose out of an agreement reached between the parties in 1998 that the appellants lease a property known as Mooloo Downs for an annual rental, and purchase livestock and machinery, from the respondent.
Arising from this agreement, the total sum owed by the appellants to the respondent was $189,600.
The parties executed a deed, undated but stamped on 19 May 2000.
As this matter turns largely on a construction of the deed itself, it is set out in full below:
"Recitals
A.The Lender and Borrower entered into an agreement on 1 November 1997 whereby the Borrower leased from the Lender Pastoral Lease 3114/511 described as Mooloo Downs for the amount of FIFTEEN THOUSAND DOLLARS ($15,000.00) rental per annum ('the First Agreement').
B.The Lender and Borrower entered into an agreement 1 November 1997 whereby the Lender purchased from the Borrower the livestock and machinery situated on Mooloo Downs ('the Second Agreement').
C.The Lender is indebted to the Borrower pursuant to the terms of the First and Second Agreement for the amount of ONE HUNDRED AND EIGHTY NINE THOUSAND SIX HUNDRED DOLLARS ($189,600.00) ('the Debt').
D.The Lender has agreed to accept the sum of ONE HUNDRED AND SIXTY FIVE THOUSAND DOLLARS ($165,000.00) ('the Settlement Sum') in full and final payment of the Debt upon the terms and conditions contained in this deed.
Operative part:
Payment of the Settlement Sum
1.(a) The Borrower covenants that it will pay to the Lender the Settlement Sum.
(b)The Settlement Sum will be paid by the Borrower to the Lender by the following instalments:
(i)on or before 31 October 2000 the sum of FIFTY FIVE THOUSAND DOLLARS ($55,000.00);
(ii)on or before 31 October 2001 the sum of FIFTY FIVE THOUSAND DOLLARS ($55,000.00);
(iii)on or before 31 October 2002 the sum of FIFTY FIVE THOUSAND DOLLARS ($55,000.00).
(c)The Lender covenants that upon payment of the whole of the Settlement Sum as described in clause 2, the Lender will release and discharge the Borrower from the Debt.
Manner Of Payment Of Instalments
2.Each of the instalments specified in clause 2 to be paid by the Borrower to the Lender:
(a)by way of cash or deposit of cleared funds into the Lender's nominated bank account or by bank cheque;
(b)in the event of payment by way of cash or bank cheque to an address nominated by the Lender; and
(c)the Lender will not issue receipts to the Borrower unless requested in writing.
3.(Deleted).
Variation
4.No modification, variation or amendment shall be of any force or effect unless it is in writing and signed by the parties hereto.
Entire Deed
5.This deed comprises the entire agreement between the parties relating to the subject matter hereof and succeeds all or any prior agreement and no additional representation, waiver or undertaking by any party prior to the date hereof shall be of any force and effect.
Assurance
6.The parties will do all things and acts and execute such documents as required to give effect to the operation of this deed.
Costs
7.The Lender will pay the costs of preparation of this deed and all stamp duty assessed thereon.
Jurisdiction
8.The deed shall be governed by the law for the time being of the State of Western Australia and the parties hereby submit to the non‑exclusive jurisdictions of the Courts of Western Australia."
Pursuant to clause 1(b(i) of the deed the first payment was due on 31 October 2000. Instead of making full payment of the amount on that date, the appellants paid two amounts before the due date, namely $9,194.29 on 27 September 2000 and $15,286.32 on 10 October 2000.
That left the balance of the first instalment of $30,519.39 owing.
Apparently an extension of time to pay the balance of the first payment was granted by the respondent until 30 November 2000 but payment was not received within this time.
On 7 December 2000 the respondent's solicitors advised the appellants by letter that the deed was "at an end" and demanded payment of the balance of the $165,000 to be paid within 21 days, failing which proceedings would be issued.
On 11 December 2000 (and well within the 21 days) the appellants paid the respondent $33,519.39 finally completing the first payment. This was, of course, 41 days late according to the deed.
On 14 December 2000 the respondent issued a writ in the District Court against the appellants seeking $134,600 being the original sum owed of $189,600 less the sums paid to date.
The proceedings slowly took shape in the court with both parties being late for the filing of various documents, and various regrettable incidents in which either counsel for respondent, or the appellants failed to appear at directions hearings.
On 30 October 2001 the appellants made a further payment of $55,000 by cheque, which was banked by the respondents. The letter accompanying the cheque explained it by reference to the deed, characterising it as a second payment due under the deed on 30 October 2001.
On 1 March 2002 the respondent sought leave to discontinue the action pursuant to O 23 r 2 of the Rules of the Supreme Court, and sought an order that the appellants pay its costs. There is nothing before me that would indicate what precisely led to the application by the respondent to discontinue, although competing theories about this were advanced by the parties to this appeal.

The appellants' arguments

Mr McManus for the appellants argues that at the date of issue of the writ, there was no cause of action in existence. Hence he says the respondent should bear the costs of the action. He also says that as a matter of course where a plaintiff discontinues an action, the plaintiff should pay the defendant's costs of the action.
The appellant's counsel points to the lack of any provision in the deed for a default clause, and the lack of any provision in the deed for an "acceleration" of the payments owing. He maintains that as at the date of the issue of the writ, there was no money owing under the deed, because the full first instalment had by that time been paid, albeit late. At the time of the issue of the writ on 12 December 2000 no cause of action lay in favour of the respondent. He submits that if there had been no payment at all under the deed at that point, all the respondent would have been entitled to seek by way of damages would have been the payment of the first instalment of the deed. This is because this is all that would have been due and owing at that time.
Counsel for the appellants points to the decision of Supreme Court of Victoria in Garwolin Nominees Pty Ltd v Statewide Building Society [1984] VR 469. In this case Kaye J held that where a discontinuance is as a result of the plaintiff having obtained the relief it seeks prior to trial, costs of the action and of the application to discontinue, may be awarded in favour of the plaintiff (at 473).
Mr McManus relies on a remark by the Court (at 472), that if a plaintiff discontinues in circumstances where the plaintiff cannot possibly succeed, the defendant is entitled to its costs. He speculates that the reason for the respondent in this case discontinuing is due to her realisation of the hopelessness of her case. As already observed, there's nothing before me that would permit such a finding.

The respondent's arguments

Mr Jordan for the respondent says that the deed recited an antecedent debt in the amount of $189,600 which debt was specifically acknowledged in the deed by the appellant. The deed did not create any independent prospective obligation in itself.
He further argues that the deed is not relied upon as constituting a separate cause of action by the respondent. Rather, the effect of the deed is that it constituted a conditional discharge of the antecedent debt, the condition being that the appellants complied with the terms of payment set out in the deed.
He further argues that the lack of provision of an acceleration of payments or a default clause is irrelevant. Once the appellants were in default, it was always open for the respondent either to sue for the full amount or to sue under the deed. She has done the latter. He cites the cases of Nissho Iwai (Australia) Ltd v Shrian Oskar [1984] WAR 53 and Scott v English [1947] VLR 445, in support of this proposition.
Mr Jordan also submits that the inference is open to the court that the payment of $55,000 by the appellants on 30 October 2001 is as a result of the institution of the proceedings. If an action is discontinued in these circumstances, the court has the power to order costs in the respondent's favour. While for commercial reasons the respondent did not now seek the appellants pay her costs, she may well have been entitled to them, and at the very least should not be burdened by an order to meet the appellants' costs.

The legal principles

Order 23 r 2(3) of the Rules of the Supreme Court provides relevantly as follows:
"Save as in this Rule otherwise provided it shall not be competent for the plaintiff to withdraw the record or discontinue the action without leave of the Court, but the Court may before, or at, or after the hearing or trial, upon such terms as to costs, and as to any other action, and otherwise, as may be just, order the action to be discontinued, or any part of the alleged cause of complaint to be struck out."
Unlike O23 r 2(1), there is no general rule that a defendant meet a plaintiff's costs a discontinued action. The principle of the rule is that once a proceeding has reached a certain stage, a plaintiff should not be permitted to abandon it in order to avoid a contest except upon the terms determined by the Court, (Rules of the Supreme Court par 23.0.1). The deciding factor in determining who should meet the costs of an action, discontinued pursuant to O23 r 2 is what in the opinion of the Court is just.
The discretion of the court is therefore at large.
O23 r 2 is in almost identical terms to the rule discussed in Garwolin Nominees (supra).
As is held by the Supreme Court of Victoria in Garwolin Nominees the merits of the initial action, the way in which it proceeds and the reason for the plaintiff discontinuing are significant in the exercise of that discretion. If a totally hopeless cause of action is pursued, thereby incurring costs on the part of the defendant, and the plaintiff discontinues in circumstances where it is clear that there is no chance of success, it would be an unusual case in which costs would not be awarded in favour of the defendant. Alternatively, if the plaintiff has achieved the remedy it has sought from the litigation prior to the trial, the plaintiff is likely to be entitled to its costs.
These are not the only considerations. There are also considerations relating to conduct of the parties during the proceedings, their compliance with the rules and any other relevant matters.

Merits of the cause of action

I do not think I am required to make a judgment about the likely outcome had this matter proceeded to trial. Even in a matter such as this, which would have ultimately depended on the construction of the deed, the pleadings are unable to be assessed without regard to the evidence and arguments at trial, which now will never see the light of day. Rather, the Court is obliged to consider whether the respondent had at least an arguable case. In my view she did.
There is no doubt that the deed could have been better drafted. This argument as to costs and indeed the entire action may have been unnecessary, had the deed expressly provided for the parties' rights in event of a default. It would also have been preferable to have the acknowledgement of the debt included in the operative parts of the clause as well as in the recitals, allowing expressly for the debt to be enforced in the event of a breach. It appears that in aiming for simplicity, the drafters and/or their respective clients have not turned their minds sufficiently to the possibility of a breach.
However, reading the deed as a whole, a reasonable observer would conclude that the parties were agreeing that the debt of $189,600 was to be compromised by a payment of $165,000, provided that that amount was received in the manner set out in the deed. This construction is drawn both from recital D and clause 1(c) which provides that "upon payment of the whole of the settlement sum, … the Lender will release and discharge the Borrower from the Debt."
The clear implication of that is if payment of the debt is not made pursuant to the deed, that the lender (the respondent to this appeal) reserves her rights to recover that debt.
This does not represent an importation of a clause into the contract, as is suggested by counsel for the appellants. Rather, it relies on a construction of the legal meaning and effect of the deed considered as a whole.
In Scott v English (supra) Fullagar J said (at 453) that it is necessary:
"… to construe the contract to see whether its effect is to discharge the original cause of action absolutely, so that the plaintiff can never thereafter sue on it but can only sue on the new contract, or whether it effects only a conditional discharge, merely suspending the original cause of action, so that, if it is not performed by the defendant according to its tenor, the plaintiff may still maintain that original cause of action."
In that case the settlement reached between counsel compromising the original cause of action allowed for the payment of a sum of money. The settlement contained no mechanism for enforcement in the event of a breach of the settlement arrangement. However, it did provide for the trial of the initial cause of action to be adjourned. The defendant made a late payment, which the plaintiff refused to accept. The defendant then proceeded on the initial cause of action.
The court held that the plaintiff was entitled to proceed on the initial cause of action. Fullagar J was particularly influenced in so finding, by the settlement agreement having provided for an adjournment of the trial of the initial cause of action, which in his opinion was "conclusive" (at 454). He went on to observe that this factor might not be decisive in every case.
I understand the court to be saying that one must construe the contract with a view to determining whether it provides for an absolute, or a conditional discharge of the cause of action. A feature such as an adjournment of a trial may assist in reacting a conclusion, but each contract must be considered individually.
In Nissho Iwai (Australia) Ltd v Shrian Oskar (supra), Brinsden J considered a settlement that had been reached between parties in which one party sued the other on a guarantee, to recover a sum of money. The terms agreed to in the settlement of the action required the debtor to pay in instalments. The settlement agreement expressly provided that in the event that an instalment was not met, the entire sum became immediately payable.
However, the plaintiff took the course of suing on the new contract. His Honour was of the view (at 58) that the settlement agreement was not a "mere accord executory" but a contract intended to create new antecedent obligations, effecting no absolute discharge of the cause of action, only if the defendant performed his promise. The defendant failed to perform his promise and so that left the plaintiff in the position that it could sue on the new contract or rescind the new contract and proceed on the original cause of action.
Mr McManus for the appellants seeks to distinguish Nissho Iwai (Australia) Ltd v Shrian Oskar on the basis that the parties in that case expressly provided for a mechanism for enforcement in the event of breach. However, this is not the crucial point. The crucial point is that when one construes the deed as a whole, and notwithstanding its deficiencies, it is clear that the parties intended that the original cause of action would continue to exist until there had been strict compliance with cl 1 of the deed. There had not been at the time the writ was issued, because the first payment was late.
I therefore have no difficulty in finding that the plaintiff's cause of action was at least arguable and may well have had considerable merit.
The inference most readily able to be drawn from the discontinuance by the plaintiff was indeed that she had largely received the remedy she sought. Furthermore, as Mr Jordan submitted, in the event that the final payment was not received, summary judgment for the final payment could be sought without the need for an expensive trial.
All of this could lead to a determination that it was indeed the respondent who is entitled to her costs. This has not been sought by the respondent in this appeal who, with commendable wisdom, simply wants an end to the litigation. Furthermore, in light of the conduct of the proceedings (as to which, see below), I do not think this would be a just disposition of the matter.
Turning to other matters, there is conduct on both sides which can be criticised. The respondent was late in filing her statement of claim, and the appellants were late in filing their defences. There was delay in provision of discovery. There were court appearances at which one or other of the parties' legal representative did not attend.
The milestones for the filing of documents have not been complied with.
It goes without saying that the parties' solicitors must attend at court. The court notes with concern that at the hearing before Deputy Registrar Hewitt at which the order was made from which the appellants now appeal, Mr McManus for the appellants failed to appear. He explained to the court during the appeal proceedings that this was due to an oversight. This failure takes on larger significance than the failure of the respondent's solicitors to attend at least one court date (even though this is not to be condoned) because Mr McManus failed to appear before the Registrar, and has then appealed against his decision.
Considering the conduct of both sides of this dispute and my views mentioned above concerning the merit of the cause of action itself, I am of the view that the order of Deputy Registrar Hewitt that there be no order as to the costs of the action and of the application, was entirely correct.
I dismiss the appeal and will hear counsel as to costs.