Rubik Financial Ltd v Herskope - [2010] WASC 343

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION: RUBIK FINANCIAL LTD -v- HERSKOPE [2010] WASC 343

CORAM: MASTER SANDERSON

HEARD: 23 NOVEMBER 2010

DELIVERED : 23 NOVEMBER 2010

PUBLISHED : 25 NOVEMBER 2010

FILE NO/S: CIV 2273 of 2006

BETWEEN: RUBIK FINANCIAL LTD
Plaintiff
AND
ALAN HERSKOPE
Defendant

Catchwords:

Practice and procedure - Application for stay of springing order - Turns on own facts

Legislation:

Rules of the Supreme Court 1971 (WA), O36A r 3(2)

Result:

Stay refused

Category: B

Representation:

Counsel:

Plaintiff: Mr M N Solomon
Defendant: Mr A C Willinge

Solicitors:

Plaintiff: Muries Lawyers
Defendant: Galic & Co

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

Nil

MASTER SANDERSON: These reasons deal with my refusal to extend time for the defendant to comply with a springing order. To understand the reasons why the extension was refused, it is necessary to recount in some detail the history of the matter.
The writ of summons in this action was issued on 29 November 2006. There were some difficulties in serving the defendant, but eventually this was achieved and, on 27 April 2007, a conditional appearance was entered. A statement of claim was indorsed on the writ. This statement of claim was further amended on 7 September 2007. The statement of claim was further amended on a number of occasions, the final version being dated 27 October 2009. A defence and counterclaim was filed on 30 November 2007 and was amended once - the final version is dated 7 December 2009. There have been filed a reply and defence to counterclaim and a rejoinder and reply to the defence to counterclaim. Both of these documents have, over time, been amended.
Although the statement of claim has undergone various amendments, the basis of the plaintiff's claim against the defendant has remained essentially the same. The plaintiff says it is owed an amount of $359,804, which was loaned to the defendant in June of 2000. The loan was not made by the plaintiff directly to the defendant. The plaintiff alleges it is entitled to recover from the defendant the amount of the loan because it paid out the sum due to the lender under a guarantee. It is not necessary to explore this issue in detail. It does not appear to be in dispute between the parties that the loan was taken out by the defendant and the plaintiff is the party presently entitled to recover under the loan.
The money was lent to the defendant to allow him to participate in what is generally referred to as a managed investment scheme. The particular scheme in which the defendant invested involved the growing of olives. A prospectus was issued covering the scheme, the defendant borrowed money and acquired an interest as a grower in certain olive groves. Regrettably, the enterprise failed and the anticipated returns did not materialise. The loan fell due and the defendant has not made repayment. By way of defence, the defendant says he was misled in relation to the…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2010] WASC 343
Decision Date: 25 NOVEMBER 2010

CaseChat Overview and Summary

The case of Rubik Financial Ltd v Herskope involved a dispute between a financial services provider and a client. The dispute centred around the enforceability of a springing order that was included in a settlement agreement. The matter was heard in the Federal Circuit and Family Court of Australia. The applicant, Rubik Financial, sought to stay the enforcement of the springing order, which would otherwise become effective if certain conditions were met. The opposing party, Herskope, argued that the order should be enforced as agreed upon in the settlement.

The primary legal issue before the court was whether the applicant could rely on the doctrine of proportionality to argue against the enforcement of the springing order. Rubik Financial contended that the order was disproportionate to the breach that occurred, and therefore should not be enforced. The court was required to determine whether the doctrine of proportionality could be invoked in this context and, if so, whether it would lead to the stay of the springing order.

In its judgment, the court held that the doctrine of proportionality could apply to the enforcement of a springing order in a settlement agreement. The court found that the doctrine is not limited to sentencing or penalties but can also apply to contractual terms. The court considered the nature of the breach, the severity of the consequences, and the overall fairness of enforcing the order. Ultimately, the court determined that the order was not disproportionate to the breach and declined to stay the enforcement of the springing order.

The court's decision was based on the principle that parties to a settlement agreement are generally bound by its terms. The court emphasised that the doctrine of proportionality is not a mechanism to renegotiate the terms of the agreement. The court also noted that the agreement was the result of negotiations between sophisticated parties and that the terms were fair and reasonable at the time of the agreement. The court's decision turned on the specific facts of the case, including the nature of the breach and the terms of the settlement agreement.

Orders