Shepherds Producers Co-operative Limited v John Scott Lamont

[2009] NSWSC 294

CITATION:	Shepherds Producers Co-operative Limited v John Scott Lamont & Ors [2009] NSWSC 294
HEARING DATE(S):	8/04/09
JUDGMENT DATE :	22 April 2009
JURISDICTION:	Equity Division Commercial List
JUDGMENT OF:	Einstein J
DECISION:	Separate question for decision answered. Clause 5 of Settlement Agreement held to operate to release the first, second and third defendant's from the causes of action the subject of these proceedings
CATCHWORDS:	Construction of Settlement Agreement providing that "plaintiffs release defendants from all claims, actions, suits, demands arising from or in any way connected with the proceedings, the allegations contained in the statement of claim, and of the liquidation of the third plaintiff" - Consideration of meaning of particular phrases and words: "arising out of or in any way connected with" - the word "and" including whether or not it is appropriately read as conjunctive or disjunctive - the phrases "all" and "any"
LEGISLATION CITED:	Co-operatives Act 1992 (NSW) Corporations Act 2001 (Cth) Uniform Civil Procedure Rules (NSW)
CATEGORY:	Separate question
CASES CITED:	Adbooth Pty Limited v Ryde City Council [2006] NSWLEC 783 Amaca Pty Limited formerly known as James Hardie & Coy Pty Limited v CSR Limited [2001] NSWSC 324 Antaios Compania Naviera SA v Salen Rederierna AB [1985] AC 191 Ashington Piggeries Ltd v Christopher Hill Ltd [1972] AC 441 Ashville Investments Ltd v Elmer Contractors Ltd [1989] QB 488 Australian Broadcasting Commission v Australasian Performing Right Association Ltd (1973) 129 CLR 99 Australian Broadcasting Corporation v XIVth Commonwealth Games Ltd (1988) 18 NSWLR 540 Bank of Credit and Commerce International SA v Ali [2001] 1 All ER961 Brambles Holdings Ltd v Bathurst City Council (2001) 53 NSWLR 153 Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337 Collector of Customs v Pozzolanic Enterprises Pty Ltd (1993) 43 FCR 280 Commissioner for Superannuation v Miller [1985] FCA 445; (1985) 8 FCR 153 Daniel v Manly Municipal Council (1975) 34 LGRA 14 Dowell Australia Ltd v Triden Contractors Pty Ltd [1982] 1 NSWLR 508 Drayton v Martin (1996) 137 ALR 145) Elkateb v Lawindi (1997) 42 NSWLR 396 Fountain v Alexander (1982) 150 CLR 615 Gissing v Gissing [1971] AC 886 Grant v John Grant and Sons Pty Ltd (1954) 91 CLR 112 Green v Premier Glynrhonwy Slate Co Ltd [1928] 1 KB 561 Health Insurance Commission v Freeman (1998) 158 ALR 267 Hide and Skin Trading Pty Ltd v Oceanic Meat Traders Ltd (1990) 20 NSWLR 310 Home Building Society Ltd v Pourzand [2005] WASCA 242 IBM Australia Ltd v National Distribution Services Ltd (1991) 22 NSWLR 466 Investors Compensation Fund Ltd v West Bromwich Building Society [1998] 1 All ER 98 Iletrait Pty Limited v McInnes (New South Wales Court of Appeal, Priestley, Handley JJA and Grove AJA, 17 April 1997, unreported) International Fina Services AG v Katrina Shipping Ltd (“The Fina Samco”) [1995] 2 Lloyd’s Rep 344 Investors Compensation Scheme Ltd v West Bromwich Building Society [1998] 1 WLR 896 at 912; [1998] 1 All ER 98 Karam v ANZ Banking Group Limited & 1 Ors [2001] NSWSC 709 Licensing Ordinance, Re (1968) 13 FLR 143 L Schuler AG v Wickman Machine Tool Sales Ltd [1974] AC 235 Maggbury Pty Ltd v Hafele Australia Pty Ltd (2001) 210 CLR 181 Magill v National Australia Bank Ltd [2001] NSWCA 221 Masterton Homes Pty Ltd v Palm Assets & Ors [2008] NSWSC 274 Nanaimo Community Hotel Ltd v Board of Referees [1945] 3 DLR 225 O'Grady v Northern Queensland Co Ltd [1990] HCA 16; (1989) 169 CLR 356) Optus Vision Pty Ltd v Australian Rugby Football League Ltd [2004] NSWCA 61 Our Town FM Pty Ltd v Australian Broadcasting Tribunal [No 1] (1987) 16 FCR 465 Peat Resources of Australia Pty Ltd, Re; Ex parte Pollock (2004) 181 FLR 454 Peppers Hotel Management Pty Ltd v Hotel Capital Partners Ltd [2004] NSWCA 114 Perlman v Perlman [1984] HCA 4; (1984) 155 CLR 474 Prenn v Simmonds [1971] 1 WLR 1381 Reardon Smith Line Ltd v Hansen-Tangen [1976] 1 WLR 989 Royal Botanic Gardens and Domain Trust v South Sydney City Council (2002) 186 ALR 289 R v Ross-Jones; Ex parte Green [1984] HCA 82; (1984) 156 CLR 185 Ryledar Pty Ltd v Euphoric Pty Ltd (2007) Aust Contract R 90-254; [2007] NSWCA 65 Salkeld v Vernon (1758) 1 Eden 64, 28 ER 608 Sportsvision Australia Pty Ltd v Tallglen Pty Ltd (1998) 44 NSWLR 103 Taciak v Commission of Australian Federal Police (1995) 59 FCR 285 Toll (FGCT) Pty Limited v Alphapharm Pty Limited (2004) 219 CLR 165 Upper Hunter County District Council v Australian Chilling and Freezing Co Ltd (1968) 118 CLR 429 Victims Compensation Fund Corporation v Brown (2003) 77 ALJR 1797 Vodafone Pacific Ltd v Mobile Innovations Ltd [2004] NSWCA 15
TEXTS CITED:	Lord Steyn, writing extra-judicially on “The Intractable Problem of the Interpretation of Legal Texts” (2003) SLR 1
PARTIES:	Shepherds Producers Co-operative Limited (in Liquidation) (Plaintiff) John Scott Lamont (First Defendant) Anthony John Lehman (Second Defendant) John Thomson McCormack (Third Defendant) Scott Bradley (Fourth Defendant) Kerry Ann Hall (Fifth Defendant)
FILE NUMBER(S):	SC 50175/08
COUNSEL:	Mr DR Pritchard SC (Plaintiff) Mr CRC Newlinds SC, Mr DM Macfarlane (First, Second and Third Defendants)
SOLICITORS:	Piper Alderman (Plaintiff) Riley Gray-Spencer (First, Second and Third Defendants)

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
COMMERCIAL LIST

Einstein J

Wednesday 22 April 2009

50175/08 Shepherds Producers Co-operative Limited (In Liquidation) v John Scott Lamont & Ors

JUDGMENT

The proceedings

1 The question for determination in these proceedings has been split off from all other questions by order made pursuant to the Uniform Civil Procedure Rule Part 28 rule 2 on 11 March 2009.

2 In essence the court is called upon to construe the terms of a release documented in a Settlement Agreement entered into on 3 December 2007.

The agreed statement of facts

3 The parties have agreed upon an agreed statement of facts which is appropriate to be set out [excluding for present purposes the detail of the particular documents referred to in the agreed statement]:

i. The plaintiff company is registered under the Co-operatives Act 1992 (NSW).

ii. On 15 May 2003 the directors of the plaintiff appointed David Kerr and Peter Marsden as Voluntary Administrators of the plaintiff pursuant to s436A of the Corporations Act .

iii. At a meeting of creditors on 2 September 2003, it was resolved by a resolution of creditors pursuant to section 439C of the Act that the plaintiff be wound up and Mr Kerr and Mr Marsden (‘the Liquidators’) be appointed liquidators of the plaintiff.

iv. On 17 December 2003, the then solicitors for the Liquidators wrote to, inter alia, the first, second, third and fourth defendants to notify them of potential claims against them by the plaintiff and/or the Liquidators.

v. The plaintiff and the Liquidators commenced proceedings (‘the First Proceedings’) against the 9 directors of the plaintiff (which included the first, second and third defendants to these proceedings) alleging breach of s588G of the Corporations Act 2001 (Cth)

vi. The first, second and third defendants each filed defences in answer to the Statement of Claim.

vii. The parties agreed to attend mediation and entered into a mediation agreement

viii. The parties attended a mediation on 3 December 2007 with Michael McHugh QC as mediator. The parties settled the proceedings at that mediation on terms which were incorporated into a Settlement Agreement dated 3 December 2007

ix. The defendants paid the plaintiffs in the First Proceedings $3.45 million pursuant to that settlement agreement. The court made orders in accordance with those set out in the Settlement Agreement and the proceedings were dismissed with no order as to costs

x. The plaintiff commenced these proceedings by way of Summons dated 4 September 2008

xi. The solicitors for the defendants requested further and better particulars of the Summons by way of letter dated 19 November 2008

xii. The solicitors for the plaintiff provided a response to the request for particulars by way of letter dated 1 December 2008

xiii. The Court made orders on 11 March 2009 pursuant to Part 28 Rule 2 of the UCPR that the following question be decided separately and before the trial of the balance of these proceedings:
“Whether clause 5 of the Settlement Agreement operates to release the first, second and third defendants from the causes of action the subject of these proceedings.”

The terms of the Settlement Agreement

4 The Settlement Agreement was made on 3 December 2007 between the following persons/entities:

DAVID JOHN KERR; PETER MARSDEN; SHEPHERDS PRODUCERS COOPERATIVE LIMITED (In Liquidation); REL LLEWELLYN HECKENDORF; PETER RAMSEY GAIN; BARBARA ELIZABETH DOUGLAS; DOUGLAS GRAEME BELL; JOHN SINCLAIR BEGG; PAUL RUPERT BURKINSHAW; JOHN SCOTT LAMONT; ANTHONY JOHN LEHMAN; JOHN THOMSON McCORMACK

5 The Agreement provided as follows:

Recitals

A. The parties are the parties in the proceedings no. 3505 of 2006 in the Supreme Court of New South Wales (the Proceedings).

Agreement

1. The parties agree to settle the Proceedings by the payment to the plaintiffs by the defendants of $3,450,000.00 in full and final settlement of the Proceedings.

2. The sum of $3,450,000.00 referred to clause 1 above is to be paid by the defendants to the third plaintiff on or before 13 December 2007.

3. Upon receipt of the payment referred to in clause 2 above, the plaintiffs will approach the Court to have the orders made by consent as set out in annexure “A” to this agreement.

4. This Agreement remain confidential as between the parties and their advisers, except to the extent that disclosure is required by law or constitutes disclosure to the creditors and the Committee of Inspection of the third plaintiff.

5. The plaintiffs hereby release the defendants from all claims, actions, suits, demands arising from or in any way connected with the Proceedings, the allegations contained in the Statement of Claim and of the liquidation of the third plaintiff.

Characterising the statement of claim in the First Proceedings

6 As the defendants have pointed out, the Statement of Claim in the First Proceedings is a very detailed document. It makes many allegations relating to the period December 2002 to May 2003.

7 In effect, the progressive demise of the plaintiff is alleged. The liquidators and the plaintiff relied on that demise in support of the allegations of insolvent trading.

8 The Statement of Claim inter alia makes allegations as follows:

6.1 The knowledge of directors from December 2002 to May 2003 as to the trading activities and financial circumstances of the plaintiff;

6.2 The deterioration and causes of the deterioration in the financial position of the plaintiff from December 2002 to May 2003 which included reviews conducted by Kronos, KPMG and officers of the company as to activities of the plaintiff company;

6.3 Information which the directors either had or should have had at relevant times between December 2002 and May 2003;

6.4 Actions that the directors and officers took in response to the deterioration in the financial circumstances of the plaintiff;

6.5 Actions that the directors should have taken in answer to the deterioration in the financial circumstances of the plaintiff.

9 The Summons and Commercial List Statement which commenced the current proceedings, makes allegations against three defendants in relation to the conduct of the 2002/2003 wheat pool.

The construction of contracts

10 For present purposes it is sufficient to simply repeat the treatment of this subject to be found in Masterton Homes Pty Ltd v Palm Assets & Ors [2008] NSWSC 274 at 26 - 28:

Dealing firstly with conventional approaches to the construction of written documents the following propositions are well established:

i. where the language of an Agreement is ambiguous or susceptible of more than one meaning the factual matrix including the context and surrounding circumstances, its aim, object or commercial purpose may be taken into account in the construction of an agreement: Reardon Smith Line Ltd v Hansen-Tangen [1976] 1 WLR 989 at 997 cited in Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337 per Mason J at 350-352.

ii. Clearly primacy must be given to the actual words used in a written contract. McColl JA in Peppers Hotel Management Pty Ltd v Hotel Capital Partners Ltd [2004] NSWCA 114 at [69] enunciated the following principles:

“[69] If the words used [in a written contract] are unambiguous the court must give effect to them, notwithstanding that the result may appear capricious or unreasonable, and notwithstanding that it may be guessed or suspected that the parties intended something different. The court has no power to remake or amend a contract for the purpose of avoiding a result which is considered to be inconvenient or unjust. On the other hand, if the language is open to two constructions, that will be preferred which will avoid consequences which appear to be capricious, unreasonable, inconvenient or unjust, ‘even though the construction adopted is not the most obvious, or the most grammatically accurate’: A ustralian Broadcasting Commission v Australasian Performing Right Association Ltd (1973) 129 CLR 99 at 109–110 per Gibbs J (as he then was). However, in construing written contracts it should be presumed that the parties did not intend their terms to operate unreasonably. The more unreasonable the result a party’s construction would produce, the more unlikely it is that the parties would have intended it. If the parties did intend an unreasonable result, it is essential that that intention be made “abundantly clear”: L Schuler AG v Wickman Machine Tool Sales Ltd [1974] AC 235 at 251 per Lord Reid.
[70] Dealing with the circumstances where there are internal inconsistencies in a contract, Gibbs J said “it will be permissible to depart from the ordinary meaning of the words of one provision so far as is necessary to avoid an inconsistency between that provision and the rest of the instrument.”: Australian Broadcasting Commission v Australasian Performing Right Association Ltd (1973) 129 CLR 99 at 109.

[71] Gibbs J’s statement in Australian Broadcasting Commission v Australasian Performing Right Association Ltd (1973) 129 CLR 99 at 109 that “the court should construe commercial contracts "fairly and broadly, without being too astute or subtle in finding defects", finds reflection in the statement in International Fina Services AG v Katrina Shipping Ltd (“The Fina Samco”) [1995] 2 Lloyd’s Rep 344 at 350 per Neill LJ (with whom Roch and Auld LL.J agreed) that the primary focus is the agreement itself which “must speak for itself, but … must do so in situ and not be transported to a laboratory for microscopic analysis”.

[72] Consistently with this approach, it has been held that if detailed semantic and syntactical analysis of a written contract lead to a conclusion that flouts business commonsense the contract must be made to yield to business commonsense: Antaios Compania Naviera SA v Salen Rederierna AB [1985] AC 191 at 201 per Lord Diplock; applied by Gleeson CJ, Gummow and Hayne JJ in Maggbury Pty Ltd v Hafele Australia Pty Ltd , above, at 198 [43]. In Maggbury , after referring to Lord Diplock’s observations, Gleeson CJ, Gummow and Hayne JJ added: “what in respect of a particular contract comprises ‘business commonsense’, as an apparently objectively ascertained matter, may itself be a topic upon which minds may differ and in respect of which an imputed consensus is impossible”.”

iii. In Optus Vision Pty Ltd v Australian Rugby Football League Ltd [2004] NSWCA 61 Santow JA [with whom Meagher JA and Stein AJA agreed] at [22] referred with approval to what the trial judge had said concerning the observations of the High Court in Royal Botanic Gardens and Domain Trust v South Sydney City Council (2002) 186 ALR 289 at 292–3:

“In Codelfa [ Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337], Mason J (with whose judgment Stephen J and Wilson J agreed), had referred to authorities [[i]n particular, speeches of Lord Wilberforce in Prenn v Simmonds [1971] 1 WLR 1381 at 1383–1385 [1971] 3 All ER 237 at 239–241; LSchuler AG v Wickman Machine Tool Sales Ltd [1974] AC 235 at 261; and Reardon Smith Line Ltd v Yngvar Hansen-Tangen [1976] 1 WLR 989 at 995–997 [1976] 3 All ER 570 at 574–576] which indicated that, even in respect of agreements under seal, it is appropriate to have regard to more than internal linguistic considerations and to consider the circumstances with reference to which the words in question were used and, from those circumstances, to discern the objective which the parties had in view. In particular, an appreciation of the commercial purpose of a contract:

“presupposes knowledge of the genesis of the transaction, the background, the context, the market in which the parties are operating” [citing Reardon Smith Line Ltd v Yngvar Hansen-Tangen [1976] 1 WLR 989 at 995-996; [1976] 3 All ER 570 at 574].
[cf Toll (FGCT) Pty Limited v Alphapharm Pty Limited (2004) 219 CLR 165 at 179 [40]].

iv. Such statements exemplify the point made by Brennan J in his Judgment in Codelfa at 401:

“The meaning of a written contract may be illuminated by evidence of facts to which the writing refers, for the symbols of language convey meaning according to the circumstances in which they are used.”

v. Santow JA at [23] continued:
“To this I would add the observation of Lord Steyn, writing extra-judicially on “ The Intractable Problem of the Interpretation of Legal Texts ” (2003) SLR 1 at 7. After pointing to the shift from literal to purposive interpretation, he adds the caveat that it would be an oversimplification to say that there has been a homogenous shift towards a purposive interpretation of all legal texts. Nonetheless he says: “In a network of contracts governing a construction project, parties ought generally to be able to rely on the obvious meaning of the interlocking texts”.

vi. More recently these principles have been affirmed by the Court of Appeal in terms of the proposition that even if evidence of surrounding circumstances is admissible it cannot be used to construe a meaning to the document that is contrary to the express language : cf Ryledar Pty Ltd v Euphoric Pty Ltd (2007) Aust Contract R 90-254; [2007] NSWCA 65 where Tobias JA affirmed the approach of Palmer J at first instance, quoting his Honour as follows (at [108]-[109]):


“However, that does not mean that when the Court begins the task of construction it puts the words of the document aside and endeavours first to ascertain the commonly known factual context and purpose of the transaction, often only by resolving a strenuous contest between the parties. The Court does not, once it has found the commonly known factual context and purpose, then look at the words of the contract and, if they do not readily accommodate the context and purpose so found, force them to do so by a process of interpretation.

When the Court is construing a commercial contract, it begins with the words of the document: there it often finds expressed the factual context known to both parties and the common purpose and object of the transaction. But the court is alive to the possibility that what seems clear by reference only to the words on the printed page may not be so clear when one takes into account as well what was known to both parties but does not appear in the document. When that is taken into account, the words in the contract may legitimately have one or more of a number of possible meanings. It is then the Court's task to identify which of the possible meanings represents the parties' contractual intention.

However, when a party to a contract argues that the known context and common purpose of the transaction gives the words of the contract a meaning which, by no stretch of language or syntax they will bear then, in truth, one has a rectification suit, not a construction suit.
That is the case here ...

[109] In my opinion his Honour's approach articulated in the foregoing paragraphs of his judgment is unexceptionable.”
vii. Hence I take it as axiomatic that:

· the Court endeavours to give primacy to unambiguous words used in a written contract, this matter generally being approached in the manner outlined by McColl JA in Peppers Hotel Management, supra;

· the proper approach seeks “the ascertainment of the meaning which the document would convey to a reasonable person having all the background knowledge which would reasonably been available to the parties in the situation in which they were at the time of the contract” (Maggbury Pty Ltd v Hafele Australia Pty Ltd (2001) 210 CLR 181 at 188 citing Lord Hoffmann; Investors Compensation Scheme Ltd v West Bromwich Building Society [1998] 1 WLR 896 at 912; [1998] 1 All ER 98 at 114; Peppers Hotel Management Pty Ltd, supra at [66] et seq;

· commercial contracts should be construed so as to be given a sensible commercial operation: Upper Hunter County District Council v Australian Chilling and Freezing Co Ltd (1968) 118 CLR 429 at 437; Australian Broadcasting Commission v Australasian Performing Right Association Ltd (1973) 129 CLR 99 at 109; Hide and Skin Trading Pty Ltd v Oceanic Meat Traders Ltd (1990) 20 NSWLR 310 at 313-4; Vodafone Pacific Ltd v Mobile Innovations Ltd [2004] NSWCA 15 per Giles JA at [64].

The parole evidence rule

In the circumstance that the words of a contract are clear and unambiguous such that the language has a plain meaning, the parol evidence rule operates to exclude from the construction of the Agreement:

a) Evidence of the parties’ subjective intentions. In Brambles Holdings Ltd v Bathurst City Council (2001) 53 NSWLR 153, Heydon JA stated (at 164):

“…the construction of a contract is an objective question for the court, and subjective beliefs of the parties are generally irrelevant in the absence of any argument that a decree of rectification should be ordered...”.
b) In Brambles Heydon JA stated (at 163):

“…pre-contractual conduct is only admissible on questions of construction if the contract is ambiguous and if the pre-contractual conduct casts light on the genesis of the contract, its objective aim, or the meaning of any descriptive term: Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337 at 347-352.”
c) In Brambles Heydon JA stated (at 164):

“Post-contractual conduct is not admissible on the question of what a contract means as distinct from the question of whether it was formed”.
[See also Sportsvision Australia Pty Ltd v Tallglen Pty Ltd (1998) 44 NSWLR 103 per Bryson J at 115-116; affirmed Magill v National Australia Bank Ltd [2001] NSWCA 221 at [51]]


The general test of objectivity and the agreed rulings to objections

Nothing in the above authorities suggest anything otherwise than that in dealing with the instant construction issue, the general test of objectivity remains pervasive: cf Australian Broadcasting Corporation v XIVth Commonwealth Games Ltd (1988) 18 NSWLR 540 at 549 per Gleeson CJ, citing Lord Diplock in Gissing v Gissing [1971] AC 886 and in Ashington Piggeries Ltd v Christopher Hill Ltd [1972] AC 441 at 502.

The construction of releases

11 In Karam v ANZ Banking Group Limited & 1 Ors [2001] NSWSC 709 [at 406] Santow J sought to distil the principles applicable to construing releases or purported releases by reference to the following a series of propositions:

(1) In construing a release… the Court should ascribe to the release the meaning that the release would convey to a reasonable person having all the background knowledge which would reasonably have been available to the parties at the time that they signed the document containing the release: ICS v West Bromwich BS [1998] 1 All ER 98 per Lord Hoffman at 114.

(2) In order for the Court to give effect to what in an objective sense the contracting parties intended, it is clear that a party may agree to release claims or rights of which it is unaware and of which it could not be aware, provided clear language is used to make plain that that is its intention: see Salkeld v Vernon (1758) 1 Eden 64, 28 ER 608 per Lord Keeper Henley.


(3) Consistent with this emphasis on intention, general words in a release are limited to what was specifically in the contemplation of the parties at the time when the release was given: Grant v John Grant and SonsPty Ltd (1954) 91 CLR 112 per Dixon CJ, Fullagar, Kitto and Taylor JJ; Iletrait Pty Limited v McInnes (NSWCA, 17 April 1997, unreported) per Priestley JA with whom Grove AJA and Handley JA agreed).

(4) Although there are no special rules of construction, such as a contra proferentem requirement, in the absence of clear language courts have been slow to infer that a party intended to surrender rights and claims of which it was unaware and could not have been aware: BCCL v Ali [2001] 1 All ER961 at 966 per Lord Bingham, (contrast Lord Nicholls in BCCL v Ali (supra) at 971-72 who was of the view that for the purposes of construction a general release is simply a term in the contract).

(5) Although each release should be considered against its own matrix of facts, an example of this line of "cautionary principle" (Lord Bingham’s phrase) is the frequently cited judgment of the High Court of Australia in Grant v John Grant & Sons Pty Limited (supra), where Dixon CJ, Fullagar, Kitto and Taylor JJ (at 125) referred with approval to the proposition put by Sir Frederick Pollock in his “Principles of Contract” (Stevens: London, 1950) 13th ed at 412, that "in equity a release shall not be construed as applying to something of which the party executing it was ignorant."

(6) Despite the fact that, strictly speaking, releases are subject to no special rules of construction, a transaction in which one party agrees in general terms to release another from any claims upon it does have special features: BCCL v Ali at 984 per Lord Hoffman.

(7) In such circumstances it may well be appropriate to imply an obligation upon the beneficiary of such a release to disclose the existence of claims of which it actually knows and which it also realises might not be known to the other party: BCCL v Ali at 984 per Lord Hoffman, for such an obligation is consistent with a concern to protect parties from sharp practice, by preventing advantage being taken of the known ignorance of the conceding party; BCCL v Ali per Lord Nicholls at 973. (The Bank made no such disclosure here.)

(8) Most recently in this Court in Amaca Pty Limited formerly known as James Hardie & Coy Pty Limited v CSR Limited [2001] NSWSC 324, Bergin J adopted the principles of construction broadly as outlined above, including the "cautionary principle" and taking into account the purpose of the contract and the circumstances in which made.

12 With respect that analysis is adopted for present purposes. Naturally however the particular circumstances which arise whenever it becomes necessary to construe a release become of the utmost significance.

"Arising out of or in any way connected with"

13 In IBM Australia Ltd v National Distribution Services Ltd (1991) 22 NSWLR 466, the Court of Appeal considered a clause which provided "[a]ny controversy or claim arising out of or related to [the relevant] Agreement or the breach thereof will be settled by arbitration."

14 Kirby P regarded the words "or related to" as extending the meaning of "arising out of" (at 477).

15 Clarke JA (at 483), with whom Handley JA agreed generally, put the matter as follows:

"The phrases "in relation to" or "related to" are of the widest import and should not, in the absence of compelling reasons to the contrary, be read down: Fountain v Alexander (1982) 150 CLR 615 at 629; Dowell Australia Ltd v Triden Contractors Pty Ltd [1982] 1 NSWLR 508 at 511 and Ashville Investments Ltd v Elmer Contractors Ltd [1989] QB 488.

16 Handley JA (at 487) observed that part of the submission which contained an agreement to refer controversies or claims "arising out of the Agreement or the breach thereof" appeared to cover every conceivable claim which either party might have against the other in contract, but observed also that the clause in addition, contained an agreement to refer controversies and claims "related to this Agreement or the breach thereof" being extremely wide words which should not be read down in the absence of some compelling reason for doing so.

17 Other authorities treating with the expression “arising out of or in any way connected with” which also make clear that the expression is of wide import may be found.

18 In relation to the narrower phrase “in connection with”, in Elkateb v Lawindi (1997) 42 NSWLR 396 at 402 Giles CJ Comm D held:

“The phrase “in connection with” has on many occasions been said to be of considerable width, satisfied by a link or an association ( Commissioner for Superannuation v Miller [1985] FCA 445; (1985) 8 FCR 153) or a relationship ( Our Town FM Pty Ltd v Australian Broadcasting Tribunal [No 1] (1987) 16 FCR 465; Drayton v Martin (1996) 137 ALR 145) and summed-up in the phrase “having to do with”: see the same cases and Nanaimo Community Hotel Ltd v Board of Referees [1945] 3 DLR 225. As with the phrase “in relation to”, no doubt the context or the purpose may require that the link, association or relationship be of a particular kind, sometimes described as an appropriate or relevant relationship ( Perlman v Perlman [1984] HCA 4; (1984) 155 CLR 474; R v Ross-Jones; Ex parte Green [1984] HCA 82; (1984) 156 CLR 185 and O'Grady v Northern Queensland Co Ltd [1990] HCA 16; (1989) 169 CLR 356), but it should not be read down unless there be compelling reason to do so ( Fountain v Alexander [1982] HCA 16; (1982) 150 CLR 615).”

19 Also in relation to the expression “in connection with” in Health Insurance Commission v Freeman (1998) 158 ALR 267 the Full Federal Court held at 273:

The words 'in connection with' have been accepted as capable of describing a spectrum of relationships between things, one of which is bound up with or involved in another: see Collector of Customs v Pozzolanic Enterprises Pty Ltd (1993) 43 FCR 280 at 288. However, as was pointed out by Sackville J in Taciak v Commission of Australian Federal Police (1995) 59 FCR 285 at 295, the question that remains in a particular case is what kind of relationship will suffice to establish the connection contemplated by the statute. That requires a 'value judgment about the range of the statute': see Pozzolanic (at 289)."

Is the word "And" to be regarded as having been used in a conjunctive or disjunctive sense?

20 Somewhat curiously Mr Prichard SC [having in his written overview submissions clearly conceded that the matters set out in clause 5 were to be read disjunctively], sought to reserve his position.

21 Some useful guidance may be gleaned from the following authorities cited by the defendants:

The ordinary meaning of the word “and” is conjunctive ( Victims Compensation Fund Corporation v Brown (2003) 77 ALJR 1797 at 1799).

However as was held in Home Building Society Ltd v Pourzand [2005] WASCA 242:
“[I]n appropriate circumstances, it can be construed as having a dispersive or disjunctive meaning. This can occur when the context so requires ( Re Peat Resources of Australia Pty Ltd; Ex parte Pollock (2004) 181 FLR 454 at 475 per Steytler J) or where the word is used as a link in a list of items or is necessary to avoid an absurd result ( Re The Licensing Ordinance (1968) 13 FLR 143 at 146–7 per Blackburn J).”

Similarly, in Adbooth Pty Limited v Ryde City Council [2006] NSWLEC 783, Preston CJ held at [18] – [20]:

“[T]he requirement that the principal purpose of the structure be “to provide improved safety, amenity and convenience for pedestrians” is conjunctive and not disjunctive. The word “and” generally does not mean “or”: Green v Premier Glynrhonwy Slate Co Ltd [1928] 1 KB 561 at 568; Victims Compensation Fund Corporation v Brown (2003) 201 ALR 260 at 263 [13] and Daniel v Manly Municipal Council (1975) 34 LGRA 14 at 18–19.
There are two exceptions to this general rule. First, if “and” was given its natural meaning, the result would be so extraordinary that in order to make sense of the provision the Court would be obliged to read the word “and” as if it had been “or”: See Re The Licensing Ordinance (1968) 13 FLR 143 at 146–147. This exception does not apply in this case. No absurdity results by affording the word “and” in the phrase as having its natural meaning.
The second exception is where there is a list of items and the items are joined by “and” and the list is governed or affected by words which showed that the list was a list of alternatives. In such a case, the word “and” which is used to join the items in the list is truly cumulative. It links the members of a class and its function is to indicate that the whole class is to be considered together. Governing the words which enumerate the members of the class are other words which categorise the class, as a whole, as a class of alternatives: see Re The Licensing Ordinance (1968) 13 FLR 143 at 147.”

The Henry Davis York letter of 17 December 2003

22 By letter dated 17 December 2003 the solicitors for the liquidators notified each of the first second and third defendants to the present proceedings of claims which the liquidators claimed to do have against those persons arising out of their conduct in the capacity of directors of SPC.

23 The letter was in the following terms:

We are instructed to notify you of claims which the liquidators have against you arising out of your conduct as a director of SPC.

1. FACTS

The liquidators allege that during the period to 14 May 2003, whilst you were a director and board member of SPC, SPC’s directors, officers and/or board:

1.1 Risk Management


1.1.1 failed to properly implement SPC’s Risk Management Policy and Procedures;

1.1.2 failed to monitor and measure compliance with SPC’s Risk Management Policy and Procedures;

1.1.3 failed to ensure that SPC’s officers did not engage in careless, reckless or potentially careless or reckless trading activity;

1.1.4 committed SPC to uncommercial trading terms which excessively favoured growers;

1.1.5 adopted and implemented inappropriate hedging tools and strategies;

1.1.6 failed to diligently supervise with proper care and skill the implementation of those tools and strategies;

1.1.7 failed to set and remain within position limits;

1.1.8 failed to ensure that, consistent with the Risk Management Policy, the maximum amount of SPC’s capital at risk at any particular time did not exceed $600,000;

1.1.9 failed to ensure that, consistent with the Risk Management Policy, the board was provided, at each board meeting, with details of SPC’s net open position by commodity and, through a mark to market report, the unrealised profit or loss by commodity category;

1.1.10 failed to ensure that, consistent with the Risk Management Policy, the board was provided, each quarter, with updated information detailing credit limits available to customers, names of approved counterparties and volumes of trade by customer for the previous quarter;

1.1.11 failed to ensure that, consistent with the Risk Management Policy, the Executive Risk Management Committee met weekly to review the position report and a mark to market report;

1.1.12 failed to ensure that the proper management of the risk associated with certain transactions was not delegated, outsourced or divested without proper authority to Netco;

1.1.13 failed to ensure that SPC’s cash-flow was at all times sufficient to meet its business needs and contractual obligation;

1.2 Financial management

1.2.1 failed to properly analyse and consider form time to time SPC’s financial position, particularly relating to:

(a) inventory level;

(b) commodity positions;

(c) mark to market performance;

(d) expected forward margins; and

(e) pool profitability;


1.2.2 failed to ensure that physical inventory stocks were reconciled against reported levels;

1.2.3 failed to ensure basic reconciliations of inventory, freight and other accruals were carried out in conjunction with the preparation, and prior to the presentation to directors, of monthly financial statements;

1.2.4 failed to implement systems to produce meaningful and timely financial information critical to the decision making processes of SPC’s directors, officers and board;

1.2.5 failed to prevent SPC from maintaining extremely poor administrative practices;

1.2.6 adopted inappropriate accounting policies;

1.2.7 failed to implement adequate checks and balances on data input;

1.2.8 failed to properly follow-up contracts, debtors and deliveries and to ensure that SPC’s contracts were legally enforceable;

1.2.9 failed to ensure that the true extent of SPC’s losses was accurately stated in the monthly financial management reports issued to SPC’s board.

1.3 Pools


1.3.1 failed to properly implement systems to produce meaningful and timely financial information about the value of SPC’s pools and in particular to ensure that their value was not overstated in the monthly financial management reports, financial statements and accounts of SPC;

1.3.2 failed to ensure that physical inventory stocks in SPC’s pools were reconciled against forward commitments;

1.3.3 failed to ensure that physical inventory stocks in SPC’s pools were reconciled prior to making distributions to pool contributors;

1.3.4 failed to ensure that the maximum first advance for the 2002/2003 pools did not exceed 80% of pool equity;

1.3.5 failed to ensure that the legal, financial and operational risk of SPC’s pools remained with the members of SPC contributing to the pools;

1.3.6 failed to establish and implement a clear policy on the allocation of sales between:


(a) on the one hand, pools; and

(b) on the other, trades conducted by SPC on its own account; and

1.4 Insolvent trading

1.4.1 failed to prevent SPC from trading whilst insolvent.

2. CLAIM


As a consequence of the circumstances particularised above, the liquidators of SPC claim against you the loss and damage which SPC has suffered on any or all of the following grounds:

2.1 breach of your duty under section 588G(1) of the Corporations Act 2001 to prevent SPC from trading whilst insolvent;

2.2 breach of your duty under section 222 of the Co-operatives Act 1992 to discharge your duties with the degree of care and diligence that a reasonable person in a like position in a co-operative would exercise in the co-operative’s circumstances;

2.3 breach of your duty under section 180(1) of the Corporations Act to exercise your powers and discharge your duties with the degree of care and diligence that a reasonable person would exercise if they were a director of SPC in SPC’s circumstances and occupied the office held by, and had the same responsibilities within SPC, as you.

3. DAMAGES

As a consequence of the breaches particularised in part 2 above, SPC’s liquidators are entitled to recover from you:

3.1 compensation as a debt due to SPC in an amount equal to the amount of the loss or damage suffered as a consequence of your breach of section 588G(1) of the Corporations Act : section 588M of the Corporations Act;

3.2 compensation as a debt due to SPC in an amount equal to the amount of the loss or damage suffered as a consequence of your breach of section 222 of the Co-operatives Act: section 224 of the Co-operatives Act;

3.3 damages for the loss suffered as a result of the breaches particularised in paragraphs 2.3 and 2.4 above.

The quantum of the loss and damages suffered by SPC as a consequence of the breaches of duty identified above is yet to be determined. The best current estimate is that the total loss suffered by SPC is in the vicinity of $11 million.

4. NOTIFICATION OF INSURER

We will be notifying the insurer of SPC’s directors, Zurich Australian Insurance Limited, or the claims particularised in this letter.

You should seek your own advice in relation to the matters set in this letter. We recommend, however, that you also notify Zurich of this claim by providing a copy of this letter before 31 December 2003 to the following:

BY FAX NO 6921 4363
AON Risk Services Australia Limited
PO Box 454
WAGGA WAGGA NSW 2650
Attention: Claims Manager

BY FAX NO [phone]
Zurich Australian Insurance Limited
GPO Box 232E
MELBOURNE VIC 3001
Attention: Specialties, Claims Manager

24 The letter is clearly admissible for the purpose of identifying the commonly known factual context which serves as a backdrop to the events which require to be dealt with on the present separate question. Paragraphs 1.18, 1.2, 1.3, 1.4, and the claims made in paragraphs 2 and 3 are all germane to be understood for present purposes.

25 Particular attention should be given to the reach of the claims made in paragraph 2 read together with the damages claims made in paragraph 3.

Dealing with the proper construction of the Settlement Agreement

26 It is appropriate to break down clause 5 of the Release into a table in order to point up the necessary analysis.

All claims, actions, suits, demands…	Arising from:	In any way connected to:
The (First) Proceedings	Released	Released
The allegations contained in the Statement of Claim	Released	Released
The Liquidation of the third plaintiff	Released	Released

Width of release

27 The inclusion of the phrases “all” and “any”, support the proposition that the parties intended the Release to have the widest effect possible so long as the relevant connection is made out.

28 There is an obvious overlap between some of the above components. This tends to suggest an intention of the parties that the Release be given a wide meaning.

“And” to be read disjunctively

29 Upon its proper construction the word “and” in the Release is not be read conjunctively because if a claim is in any way connected to the statement of claim, it:

· Must be connected to the First Proceedings and

· Must be connected to the liquidation (this is because Clause 5 releases the defendants from claims which were an asset of the plaintiff company for the purposes of its winding up).

30 At one point during the hearing the following exchange took place:

HIS HONOUR: Would it have been different if they had said the plaintiffs hereby release the defendants from all claims, actions, suits and demands arising from the proceedings, the allegations contained in the statement of claim and of the liquidation, would that have been a different position or the same?

PRITCHARD: Well your Honour I cannot put to your Honour that the words in any way connected do not increase the - those words or in any way connected would increase the width of the release, so they have to be given some meaning.

HIS HONOUR: And what meaning can I give them?

PRITCHARD: Well your Honour a natural and reasonable meaning obviously, which is that there has to be some proper connection with the claim being subsequently made, that’s the claim, action, suit or demand being ultimately made, being in any way connected with the proceedings

31 Standing back from the issue it becomes apparent that to read to the word "and" conjunctively would result in the following seemingly absurd outcome, again assisted by a table:

All claims, actions, suits, demands…	Arising from:	In any way connected to:
The (First) Proceedings	Released (phrase otiose)	Released (phrase otiose)
The Statement of Claim	Released	Released
The Liquidation of the third plaintiff	Released (phrase otiose)	Released (phrase otiose)

32 Both the exceptions to the ordinary construction of the word “and” (made plain by Preston CJ in Adbooth supra] apply in this case:

i. The first exception applies because the ordinary construction would render 2/3 of the substance of the clause otiose.

ii. The second exception applies because First Proceedings, Statement of Claim, and Liquidation of the third plaintiff are alternatives: A party needs only to satisfy one of the three for the Release to operate.

Connection between Statement of Claim and the claims in the current proceedings Commercial List Statement

33 The defendants have demonstrated that material reasons behind the poor financial performance and position of SPC – that contextualise the insolvent trading claim in the First Proceedings – were:

i. Alleged overpayments made by the Plaintiff of amounts to members of the 2002/2003 wheat pool resulting in the Plaintiffs incurring losses. This is referred to as the Overpayment Claim in the current Commercial List Statement.

ii. Alleged unauthorised open market purchases of wheat by the Defendant directors resulting in the Plaintiffs incurring trading losses. This is referred to as “the Speculative Plan Claim” in the current Commercial List Statement.

34 Hence one can clearly be see that there is a connection between the insolvent trading claim in the First Proceedings and the Overpayment and Speculative Plan Claims in the current proceedings.

The Kronos Report

35 A key element of the case is the Kronos report of significance because of grave concerns about the financial situation of SPC in 2003.

36 Paragraph 53 of the Statement of Claim pleads that at a meeting of the Finance & Audit Committee of the directors of SPC on 20 March 2003, it was revealed that:

i. SPC was suffering cashflow problems (53.1);

ii. SPC was in breach of financing covenants with Westpac;

iii. There was a significant reduction in the amount of unrealised gains represented – such amount would never be realised and should never have been recognised as unrealised gains in SPC’s monthly financial statements.

37 As a result, Kronos was apparently appointed to advise the plaintiff on various topics. Paragraphs 71 to 82 of the Statement of Claim allege the circumstances surrounding Kronos’ appointment: an oral report delivered by Mr Winney on 13 April 2003 and a written report (the Krono Report) on 16 April 2003 were the fruits of the retainer.

38 The crux of Kronos’ findings was Mr Winney’s opinion that SPC was solvent (SoC paragraph 83.3).

39 The plaintiffs, in their Statement of Claim, have attempted to attack the credibility of the Kronos Report in its finding that SPC was solvent.

40 What is of interest is that certain criticisms of the Kronos Report allude to:

i. Overpayments to members of the 2002/2003 wheat pool and

ii. SPC’s exposure to the market price of wheat in the same period.

41 These criticisms are outlined in the table below:

Overpayment Claim	Speculative Plan Claim
SoC 83.4: There was an outstanding issue with $1 million in the pools that had not been reconciled.”	SoC 65: Alleges the monthly trading results of December 2002 and January, February, March and April of 2003. These are the very months in which the trades said to constitute the Speculative Plan were made.
SoC 89.1: The Kronos Report assumed no exposure for SPC in respect of the pools. Kronos became aware on 10 April 2003 that this assumption may be incorrect because there were discrepancies in the pools that needed to be resolved which Kronos had not had time to investigate. Kronos report, page 6: “A discrepancy currently exists in the pool accounts that needs to be resolved. It appears that estimated pool returns are currently overstated and will need to be dramatically reduced. It is also possible that some clawback of pool payments will be necessary… At this time we cannot give a definitive answer on this issue…”	SoC 88.4: There had been some “extremely poor administrative practices and some careless trading activity”.
SoC 89.2: The Kronos Report failed to recognise that SPC was required to meet any losses in the pools with only an entitlement to recover such losses, if possible, from overpaid grower members.	SoC 89.8: The Kronos Report contained no sensitivity analysis in respect to changes to the market of grains and the effect on the forecast profits in the mark to market analysis and failed to acknowledge, consider, or analyse that SPC’s financial position could deteriorate if market prices moved adversely to SPC’s open contracts positions.
SoC 89.9: The Kronos Report by virtue of not making a provision against the capitalised value of $1.435 million of pool losses on the balance sheet, implicitly assumed that SPC would be able to recover, at no cost and in a short period of time, the amount of overpayments made in respect of the pools from every grower member than had been overpaid.

The KPMG involvement

42 Paragraphs 95 to 99 of the Statement of Claim allege the circumstances surrounding the engagement by Westpac of KPMG – which published its own report regarding SPC’s financial situation – concluding that SPC remained insolvent at 31 March 2003 (paragraph 100.3 of the Statement of Claim).

43 The plaintiffs in the First Proceedings purported to rely on the KPMG report and the conclusions contained therein, to justify the appointment of the receiver and manager to the plaintiff and to justify the allegation of insolvent trading against the defendants.

44 KPMG’s report, which the plaintiffs relied upon in its Statement of Claim for the First Proceedings further reinforces the connection between the allegations in the Statement of Claim and the Overpayment Claim and the Speculative Plan Claim.

45 The relevant parts of the Statement of Claim referring to the KPMG report and the KPMG report itself that have been relied upon have been extracted below:

Overpayment Claim	Speculative Plan Claim
SoC 109.2: SPC’s monthly financial statement for March and April 2003 included as a capitalised item on the balance sheet an amount of $1.435 million in respect of pools losses. Recoverability of this amount was at least doubtful at 31 March 2003 and all times thereafter as SPC needed to recover the amount, which represented an overpayment, from a large number of grower members and SPC had not taken any steps to seek to make such recovery.	SoC 100.3: After considering SPC’s mark to market analysis of its open contracts for the sale and purchase of grains, SPC remained insolvent at 31 March 2003.
KPMG report, page 27: We do not agree that any further payment should be made to pool participants based on the current position. Given our understanding of pool trading, growers should not receive any further distribution as the pools are already in deficiency (that is, they have been overpaid upon receipt of the interim payment of 70%).	SoC 100.4: SPC’s cashflow forecast (being the 22 April Cashflow Forecast) was integrated to SPC’s balance sheet at 31 March 2003 and assumed no changes in market prices of grains in which SPC dealt during the projection period.
SoC 101: Each of KPMG’s conclusions was correct and accurate.
KPMG report, page 5: “SPC’s 2002/2003 pools include a capitalised loss of $1.4m as a result of member grower deliveries being substantially below expectations and forward sales required SPC to purchase the additional tonnage on a cash basis at the high prices prevailing at harvest. In the absence of any other satisfactory explanation, this amount should be written off.

Trading losses from February to May 2003

46 There are further references in the Statement of Claim that relate to the allegations in the Speculative Plan Claim namely:

· Paragraph 118.4 alleges “SPC did not have any unrealised profits on open grain trading contracts that it could realise in the short term to generate case”.

· Paragraph 119 alleges “In the months of February and April 2003 and the period from 1 May to 15 May 2003, SPC incurred losses from its trading operations and did not generate any positive cash flow from trading”.

· Paragraph 120 alleges “in the period from 20 February 2003 to 15 May 2003, SPC did not generate sufficient funds from its trading operations to enable it to pay its debts when they were due for payment”.

· Paragraph 122 alleges “At all times from 20 February 2003 to 15 May 2003, the aggregate amount of SPC’s sources of cash was insufficient to enable SPC to meet all of its debts when those debts were due and payable.” This allegation is clearly connected to the allegations in the Speculative Plan Claim.

Claim for compound interest

47 In addition, paragraphs 53 to 55 of the Summons plead that “SPC borrowed the amount of the Initial Payment from its banker, Westpac Banking Corporation.” Paragraph 16 of the plaintiff’s response to the defendants request for particulars dated 1 December 2008 confirmed that the plaintiff relies on the Facility Agreement dated 16 November 2001, as varied by the letter of variation dated 25 November 2002.

48 Paragraphs 15 to 19 of the Statement of Claim plead those exact documents and indebtedness of the plaintiff as at 28 February 2003. Clearly the Overpayment Claim is appropriately characterised as “arise[s] out of or [is] in any way connected with” the allegations in paragraphs 15 to 19 of the Statement of Claim.

The plaintiff's reliance upon the terms of the Mediation Agreement

49 The plaintiff made the point that the recitals to the mediation agreement stated inter alia as follows:

Disputes between the Parties have arisen concerning the following matters ("the Disputes") :

1a claim alleging insolvent trading by the directors of Shepherds Producers Cooperative Ltd (In Liquidation), the subject of Proceedings number 3505 of 2006, issued in the Supreme Court of New South Wales on 1 August 2006

50 Clause 1 of the Mediation Agreement provided that the parties appointed to the mediator to mediate the Disputes in accordance with the terms of the agreement.

51 The plaintiff's proposition put during the hearing of the separate question was that the mediation agreement was clearly only involved in the attempt to settle the first set of proceedings namely the insolvent trading proceedings. From that context the plaintiff contended that the court could now be satisfied of the limited reach of the releases.

52 I reject that approach. Ultimately all of the facts and circumstances presently before the Court require to be taken into account, the mediation agreement being only one of the background facts and circumstances. The decision on the separate question has been reached for reasons already set out.

53 Nor do I accept the central tenet put forward by the plaintiff generally in the following terms:

It is clear that clause 5 is not a complete release from any claims howsoever arising.

The First Proceedings (the subject of the Settlement Agreement) concerned a statutory claim, which only arises upon the commencement of a winding up, that the directors permitted the plaintiff to incur debts when they knew or ought reasonably have known that the plaintiff was insolvent.

The winding up of the plaintiff commenced on 2 September 2003.

The current proceedings plead causes of action, which arose on or about December 2002, relating to allegations of overpayment in relation to the 2002/2003 wheat pools, and causes of action relating to allegations relating to the speculative plan. Contrary to the defendants’ submissions, the claims are distinct and not inextricably connected.

The plaintiff could succeed at trial in respect of one of the claims and fail with the other.

The 2 claims need to be separately considered: neither is released by clause 5.

54 It is critical to the analysis that one take into account the express language used by the parties: cf the affirmation of the principles earlier set out in:

i. the extract from Optus Vision Pty Ltd v Australian Rugby Football League Ltd [2004] NSWCA 61 per Santow JA [with whom Meagher JA and Stein AJA agreed] as well as in

ii. the extract from Ryledar Pty Ltd v Euphoric Pty Ltd (2007) Aust Contract R 90-254; [2007] NSWCA 65; per Tobias JA affirming the approach of Palmer J at first instance.

Decision

55 The reasons above demonstrates the clear connection between the causes of action the subject of the Commercial List Statement, the First Proceedings, the allegations in the Statement of Claim and the liquidation of the third plaintiff.

56 The finding is that clause 5 of the Settlement Agreement operates to release the first, second and third defendants from the causes of action the subject of these proceedings.

Reserved rulings on evidence

57 The Court rejects the affidavit of Mr Billings sworn on 25 February 2009.

58 As the transcript records the parties reached an accommodation in relation to the initial objections taken by the plaintiff to the affidavits referred to in the transcript at 5.20.

59 The parties are directed to bring in short minutes of order on which occasion costs may be argued.

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