Sportsbet Pty Ltd v Moraitis
[2010] NTSC 24
•20/05/2010
Sportsbet Pty Ltd v Moraitis [2010] NTSC 24
PARTIES: SPORTSBET PTY LTD (ACN 088 326 621) v MORAITIS, Stephen (By original proceedings) AND BETWEEN: MORAITIS, Stephen v SPORTSBET PTY LTD (ACN 088 326 621) and MATTHEW TERRENCE TRIPP (By counterclaim) TITLE OF COURT: SUPREME COURT OF THE
NORTHERN TERRITORYJURISDICTION: SUPREME COURT OF THE
NORTHERN TERRITORY
EXERCISING TERRITORY
JURISDICTIONFILE NO: 138 of 2007 (20733770) DELIVERED: 20 May 2010 JUDGMENT OF: SOUTHWOOD J CATCHWORDS: PRACTICE AND PROCEDURE – application for summary judgment – gambling debt – defence of settlement – was there an oral agreement to forgive the debt – defence of setoff – dux litis – costs
Agar v Hyde (2000) 201 CLR 552
Austotel Management Pty Limited v Jamieson (1995) 57 FCR 411
Australian Can Co Pty Ltd v Levin & Co Pty Ltd [1947] VLR 332
Cloverdell Lumber Co Pty Ltd v Abbott (1924) 34 CLR 122
Commonwealth Development Bank of Australia v Karastavrou (VSC,
Beach J, No 4558/1995, 12 November 1996, unreported)
Country Estates Pty Ltd v Leighton Contractors Pty Ltd (1975) 49 ALJR 173
El-Mir & 1 Or v Risk [2005] NSWCA 215
Evans v Bartlam [1937] AC 473
Fancourt v Mercantile Credits Ltd (1983) 154 CLR 87
Federal Commissioner of Taxation v Orica Ltd (1998) 194 CLR 500
Forsyth v Gibbs [2009] 1 Qd R 403
Geoffrey W Hill & Associates v King (1992) 27 NSWLR 228
Hausman v Abigroup Contractors Pty Ltd [2009] VSCA 288
Re LJ Young Manufacturing Co [1900] 2 Ch 753
Murphy v Zamonex (1993) 31 NSWLR 439
Needlework Warehouse Pty Limited v Chansonette Pty Limited (2005) 226
ALR 252
Osborn & Bernotti t/as G04 Productions v McDermott t/as RA McDermott &
Co & Karmine Pty Ltd [1998] 3 VR 1
Suburban Homes Pty Ltd v Ward [1928] VLR 267
Symon and Co v Palmer’s Stores 288 (1903) Ltd [1912] 1 KB 259
Taller man & Co Pty Limited v Nathan’s Merchandise (Victoria) Pty Limited
(1957) 98 CLR 93
Thompson v Australian Capital Television Pty Ltd and Other (1996) 186
CLR 574
Tomlin v Standard Telephones [1969] 1 WLR 1378REPRESENTATION:
Counsel:
Plaintiff: T North SC Defendant: P Brereton Solicitors:
Plaintiff: Minter Ellison Defendant: De Silva Hebron Judgment category classification: B
Judgment ID Number: Sou1004 Number of pages: 46 IN THE SUPREME COURT
OF THE NORTHERN TERRITORY
OF AUSTRALIA
AT DARWINSportsbet Pty Ltd v Moraitis [2010] NTSC 24
No 138 of 2007 (20733770)
BETWEEN:
SPORTSBET PTY LTD
(ACN 088 326 621)Plaintiff
AND:
MORAITIS, Stephen
Defendant
(by original proceedings)
AND BETWEEN:
MORAITIS, Stephen
Plaintiff
AND:
SPORTSBET PTY LTD
(ACN 088 326 621) and
MATTHEW TERRENCE TRIPPDefendants
(by counterclaim)
CORAM: SOUTHWOOD J REASONS FOR JUDGMENT
(Delivered 20 May 2010)
Introduction
The plaintiff has applied by summons for summary judgment under O 22 of the Supreme Court Rules. The plaintiff seeks the following orders:
1. Judgment for the plaintiff in the sum of $3,867,846.
2. Paragraphs 7, 12, 14, 15, 16, 17 and 18 of the further amended defence and counterclaim are struck out.
During the course of the hearing of the application, the plaintiff also argued that par 20 to par 37 inclusive and par 40 to par 56 inclusive of the further amended defence and counterclaim should be struck out and in the circumstances the claim against Mr Matthew Tripp was unsustainable.
Finally, the plaintiff seeks costs of the cross-vesting application.
| [4] | a sports bookmaker, taking bets by telephone and via the internet on horse |
The plaintiff is a company carrying on business in the Northern Territory as plaintiff between September 2005 and July 2007 and, as a result of his losses during that period, he became indebted to the plaintiff.
In its Statement of Claim, the plaintiff claims that by an agreement made on or about 30 April 2004 the plaintiff and the defendant agreed the plaintiff would accept bets and wagers placed by the defendant[1]. In performance of the agreement, the plaintiff opened betting account No 1 in the name of the defendant and extended credit as requested by the defendant and, from time to time, the defendant placed bets and wagers with the plaintiff. The results of the betting were debited or credited to betting account No 1 as the case required. As at 4 July 2007, the balance of the debt owed by the defendant to the plaintiff under the 2004 agreement, after taking into account all commissions and conditional adjustments, was $2,242,144. The defendant’s debt of $2,242,144 is due and payable to the plaintiff.
The plaintiff further claims that by an agreement made on or about 14 July 2006 the plaintiff and the defendant agreed the plaintiff would accept bets and wagers placed by the defendant[2]. In performance of the agreement, the
plaintiff opened betting account No 2 in the name of the defendant and
extended credit as requested by the defendant and, from time to time, the
defendant placed bets and wagers with the plaintiff. The results of the
betting were debited or credited to betting account No 2 as the case
required. As at 17 June 2007, the balance of the debt owed by the defendant
to the plaintiff under the 2006 agreement, after taking into account all
commissions and conditional adjustments, was $1,625,702. The defendant’s
debt of $1, 625,702 is due and payable to the plaintiff.
On 4 July 2007, the plaintiff and the defendant agreed the balance of $2,242,144 outstanding in betting account No 1 would be transferred to betting account No 2 making the total sum owing of $3,867,846. In breach of the 2004 agreement and in breach of the 2006 agreement the defendant has wrongfully failed to pay the amount $3,867,846 to the plaintiff.
| [8] | confessed that as at 4 July 2007 he was indebted to the plaintiff in the sum |
In its further amended defence and counterclaim, the defendant has is barred from maintaining the proceeding against the defendant. Thirdly, in the alternative, the plaintiff claims a setoff or, in the alternative, relief under r 13.14 of the Supreme Court Rules. The setoff is based on pleadings in the counterclaim that the plaintiff engaged in unconscionable conduct and was negligent in its dealing with the defendant.
The plaintiff’s application for summary judgment proceeds upon the defendant’s admissions that as at 4 July 2007 he was indebted to the plaintiff in the sum of $3,867,846. The plaintiff says that the defences
relied on by the defendant fundamentally contradict each other and are so
weak as to constitute an abuse of process. Further, the plaintiff says the
defendant’s counterclaims do not amount to a setoff. Therefore, while the
defendant’s claims may be pursued in a counterclaim, the claims of
unconscionable conduct and negligence are not a defence. The plaintiff says
it should have judgment for its claim for $3,867,846; the defendant should
then be dux litis and his counterclaims alone should proceed to trial.The principles applicable to an application for summary judgment
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It is of course, well accepted that a Court whose jurisdiction is
regularly invoked … should not decide the issues raised in those
proceedings in the summary way except in the clearest of cases.
Ordinarily, a party is not to be denied the opportunity to place his or
her case before the Court in the ordinary way, and after taking
advantage of the usual interlocutory processes. The test to be
applied has been expressed in various ways, but all of the verbal
formulae which have been used are intended to describe a high
degree of certainty about the ultimate outcome of the proceeding if it
were allowed to go to trial in the ordinary way.
A burden is cast on the defendant of satisfying the Court that there ought to be a trial and, if not, judgment. The provisions of O 22 of the Supreme Court Rules apply to cases where there can be no reasonable doubt that a plaintiff is entitled to judgment.
The following principles[6] are also of relevance to this particular application:
(1) Unless the plaintiff makes a proper affidavit the defendant is not
required to answer the application for judgment[7].(2) The court will give the plaintiff judgment unless the defendant
shows cause against the application to the satisfaction of the
Court[8]. Cause may be shown by affidavit or otherwise.(3) The Court will normally require an affidavit by or on behalf of a
defendant before a defendant will be granted leave to defend.
The defendant is required to use such diligence as is reasonable
in the circumstances to put before the Court in a summary form
all of the evidence relied on by the defendant in defence of the
plaintiff’s claim[9].(4) The affidavit material relied upon by a defendant may contain
statements of fact based on information and belief provided the
source of the evidence is identified and the grounds of belief are
set out[10]. A defendant may also obtain leave to defend if the
defendant tenders evidence which, though not evidence of the
facts, shows such evidence exists and will be available at the
trial[11].(5)
A defendant should condescend into particulars[12]. The evidence of the defendant must deal specifically with the facts relied upon by the plaintiff in support of its application. The affidavit of the defendant should state clearly and concisely what facts are
relied on as supporting the defence[13]. (6) The defendant must point to some material, legal or factual, that
provides an arguable response to the claim and not leave it to
the judicial officer hearing the application to trawl through the
material to find an answer to the plaintiff’s claim[14].(7) The evidence of the defendant should show that there is a real
case to be investigated either on the facts or in law.(8) A defendant will be granted leave to defend if there are facts
which, if true, would constitute a defence to the plaintiff’s
claim. The Court is reluctant to try a case on affidavit where
there are facts in dispute[15].(9) An important issue is whether the defendant’s account of the
facts has sufficient prima facie plausibility to merit further
investigation[16].
The pleading of the defence of forgiveness and release on 3 August 2007
In par 15 of the further amended defence and counterclaim, the defendant pleads:
Further, or in the alternative, and in answer to the whole of the
statement of claim, the defendant says that on or about 3 August
2007, the plaintiff forgave the defendant the debt alleged to be owing
as pleaded in paragraph 14 of the statement of claim and the allegeddebt was accordingly discharged or released.
Particulars
(ii) An offer to forgive the alleged debt was made orally during the course of a telephone conversation between Matthew Tripp (on behalf of the plaintiff) and the defendant on or about 3 August 2007.
(iii) The defendant accepted the plaintiff’s offer orally during the course of the same telephone conversation.
(iv) The valuable consideration moving from the defendant was an assurance that if the defendant resumed betting he would bet exclusively with the plaintiff.
In par 18 of the further amended defence and counterclaim, the defendant pleads that by reason of the matters pleaded in par 15 of the further amended defence and counterclaim the plaintiff cannot bring or prosecute the proceeding which is the subject of the statement of claim.
In par 15 of its reply to the further amended defence and counterclaim, the plaintiff pleads:
As to paragraph 15 of the defence, without prejudice to the matters pleaded in [sub-paragraph 3 below] the plaintiff denies each allegation in paragraph 15 of the defence as if it had been set out seriatim and denied, and says:
1. There is no allegation of any agreement between the plaintiff and the defendant in paragraph 15 and the plea is contradicted and unsupported by the particulars subjoined thereto.
2. Further, the consideration alleged to have been given by the defendant is illusory.
3. In any event paragraph 15 of the defence should be struck out as embarrassing, as: there is insufficient particularity of the matters alleged; and, the plea is in such conflict with paragraph 16 of the defence that it cannot be pleaded in the alternative thereto.
The evidence about the defence of forgiveness of the debt of $3,867,847
In support of the defence of forgiveness, the defendant relies on three affidavits of Jane Margaret Francis Owen sworn respectively on 29 May 2008, 23 June 2008 and 19 March 2009. The defendant did not make an affidavit about his discussions with Mr Tripp on 3 August 2007 or at all.
| [17] |
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Defendant: Matt can we do a deal where I pay some funds into
Sportsbet’s account today or tomorrow to pay off some of my debt, you hold some of the debt over into a number 2 account and wipe part of the debt?
Mr Tripp: Okay, but only on the basis that you promise you will
not bet anywhere else.Defendant: Okay!
After this conversation, some of the defendant’s then current debt was
written off by the plaintiff. This pattern of the plaintiff writing off parts of
the debts incurred by the defendant and the defendant being permitted to
continue betting lasted throughout the period between 1 October 2005 and
July 2007. In the course of discussions between the defendant and Mr Tripp
about such matters, Mr Tripp stated on a number of occasions that a debt
was forgiven only on the basis that the defendant kept betting with the
plaintiff.
The amount of the defendant’s debt written off by the plaintiff on 1 December 2006 was in excess of $1 million.
In par 11 of her affidavit sworn on 23 June 2008, Ms Owen states she is informed by the defendant and she believes that: between July 2007 and 3 August 2007 the defendant had four or five telephone conversations with
telephone discussions, the defendant requested the plaintiff to release him
from any indebtedness because he had no money to pay his debts; on
3 August 2007, the defendant received a message on his mobile telephone to
call Mr Tripp senior; after receiving the message, the defendant telephonedMr Tripp about his outstanding debt to Sportsbet; during some of these received was from Mr Tripp’s father who wanted the defendant to explain his financial circumstances to him personally.
In par 12 of her affidavit sworn on 23 June 2008, Ms Owen states she is informed by the defendant and she believes that on 3 August 2007 he telephoned Mr Matthew Tripp’s father and they had the following conversation:
Defendant: This is Stephen Moraitis returning your call.
Tripp Snr: Can you explain why you want Sportsbet to write off
your debt?Defendant: I have no money. I have an overdraft of about two and
half million. I am not sleeping at night and I have rashes
on my chest. If my wife finds out I could end up
divorced. I ask you that you leave me be as you havehad enough out of me.
Tripp Snr: It is hard because we have accountants and solicitors
who are shareholders and they don’t understand wiping a
debt like this.Defendant: I have always paid my debt to you before. I have lost all
my money to you.
Tripp Snr: We have bigger punters than you. Defendant: I don’t want to be your biggest punter. It is no good
trying to promise you payment as I have nothing. It is no good keeping on pushing me into a corner as it will do you no good.
Tripp Snr: No one threatens me. Defendant: I am not threatening you. I am just saying you have taken everything from me and I have nothing left. I could understand you chasing me if I had won money
from you but I have lost all my money to you.
Tripp Snr: All right leave it with me.
| [21] | informed by the defendant and she believes that shortly after the telephone |
In par 13 of her affidavit sworn on 23 June 2008, Ms Owen states she is Mr Matthew Tripp and they had a discussion to the following effect:
| [22] | on 23 June 2008. She is informed by the defendant and she believes, a | Ms Owen then states the following in par 14 to par 17 of her affidavit sworn telephone and they made arrangements to meet at the Qantas Club at Sydney airport. In October 2007, Mr Tripp and the defendant met at the Qantas Club. At the meeting Mr Tripp gave the defendant a copy of his betting records and a draft deed of settlement and release. Mr Tripp told the defendant the settlement deed was to cover both of them because the plaintiff’s business was in the process of being sold. Mr Tripp said he did not want the release of the debt to come back and “bite the defendant in the bum” if the business was sold. The defendant told Mr Tripp he would show the settlement deed to his lawyer and come back to him. |
| [23] | The draft deed of settlement and release was dated 15 October 2007. The operative part of the document stated: |
Tripp: Thanks for speaking to my father. Now the pressure is
off me to fight for this and I can now agree to wipe your
debt.Defendant: I would like closure, like a letter or something, so that I
know I don’t owe you guys any more money.
Tripp: Yes, I will get it sorted out in the next two weeks. I will
send you a letter or something confirming closure of
your account and the wiping of the debt. However, if
you start up betting again, make sure you come back to
us and no one else.Defendant: Trust me, if I start up betting again it will be with you
guys, but I don’t intend to bet again.
Sportsbet agrees to forgo the Debt [of $3.867.846.18]. Each party hereby releases and forever discharges the other against any claim, action, suit, demand, costs, interest and any cause of action which it/he may have had against the other but for the execution of this
deed arising out of or in any way connected with the Betting and the
Debt.
| [24] |
In her par 7(a) of her affidavit sworn on 19 March 2009, Ms Owen states she Mr Tripp, if he started betting again “it will be with you guys” this was a promise which was made in exchange for being released from his indebtedness to the plaintiff.
In her affidavit sworn on 29 May 2008, Ms Owen annexes an open letter from Mr Finlay to Mr Tripp dated 10 December 2007. In par 23 of the letter, Mr Finlay stated:
My client advises that following a series of telephone conversations with you and your father in August and September 2007, Sportsbet agreed to wave and forgive the current balance in Betting Account No. 124536 of $3,867,846.18. Subsequently you have sent to my client a draft deed which not only provides for the forgiveness of the current balance in Betting Account No. 124536 of $3,867,846.18 but also seeks mutual releases. The issue of mutual releases was never discussed with, nor agreed by, my client as part of the oral agreement reached with Sportsbet for the forgiveness of the debt of $3,867,846.18.
The effect of Ms Owen’s evidence is that the defendant will be available to give evidence at the trial and she believes his evidence will be consistent with what is set out in par [17] to par [24] above.
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Annexures A, B and C to the affidavit of Ms Owen sworn on 19 March 2009 defendant’s betting accounts with the plaintiff. They reveal that before 3 August 2007 the plaintiff had forgiven the defendant debts totalling in excess of $1 million.
In support of its argument that the defence pleaded in par 15 and par 18 of the further amended defence and counterclaim, is embarrassing and unarguable, the plaintiff read: two affidavits of Mr Matthew Terence Tripp dated respectively 12 June 2008 and 23 March 2009 and an affidavit of Heather Joy Ross sworn on 13 June 2008.
In his affidavit sworn on 12 June 2008, Mr Tripp stated as follows. He is a director of the plaintiff company and he is authorised to make the affidavit on behalf of the plaintiff. He believes the defendant has no defence to the plaintiff’s claim for recovery of the debt of $3,867.846. In October 2007, he
did not forgive the debt owed by the defendant to the plaintiff. Between debt of $3,867,846 and there were without prejudice negotiations between him and the defendant which did not result in a resolution of the plaintiff’s claim. At no time between June 2007 and October 2007 did he, on behalf of the plaintiff, reach any agreement with the defendant about the forgiveness or discharge of the debt of $3,867,846. At no time from June 2007 to date has the defendant accepted any offer as alleged to resolve the issues outstanding between him and the plaintiff. The defendant did not make any promise or give any assurance to the plaintiff that if he resumed betting he would bet exclusively with the plaintiff. There is no truth in the defence pleaded in par 15 of the further amended defence and counterclaim.
| [31] | show that after 3 August 2007, the defendant behaved inconsistently with | The purpose of the reference to the facsimile dated 28 September 2007 is to again. | |
| [32] | On the other hand, the request for the information made by the defendant on 28 September 2007 is not necessarily inconsistent with the defendant’s debt being forgiven by the plaintiff. It is not inconceivable that the defendant | ||
| written confirmation from the plaintiff that his debt was forgiven and | |||
| may have become concerned about his position because he had not received with written confirmation of the forgiveness of his debt. However, no explanation, as to why the information was sought, is given in any affidavit filed on behalf of the defendant. | |||
| [33] | In his affidavit sworn on 23 March 2009, Mr Tripp states as follows. In the course of a telephone conversation in August 2007, between the defendant and him, the plaintiff never forgave the defendant’s debt. The defendant never revealed to Mr Tripp he was betting with other bookmakers nor was Mr Tripp aware of any gambling activities the defendant engaged in with other bookmakers. There is no suggestion in correspondence between the defendant and the plaintiff or between Mr Ron Finlay and the plaintiff that the debt of $3,867,846 was forgiven, discharged or released. At no time has Mr Tripp received any deed of release executed by the defendant. | ||
| [34] | In her affidavit sworn on 13 June 2008, Ms Ross states that on 6 February 2008 and 28 April 2008 there were directions hearings held in the Court in this proceeding and at neither directions hearing did the solicitor appearing for the defendant tell the Court the plaintiff was barred from pursuing the | ||
| proceeding because the plaintiff had either forgiven the debt or the parties had settled their disputes. The plaintiff relies on the conduct of the defendant’s solicitor as evidence which shows the defendant’s debt had not been forgiven and the parties had not settled their disputes. If the defendant’s instructions were that the proceeding was barred then the solicitor for the defendant was bound to bring such matters to the attention of the Court. If the solicitor did not have those instructions then it was unlikely that the matter had been resolved. | |||
| [35] | defendant’s Darwin solicitor. On 10 December 2007 Mr Finlay, who was | ||
| In my opinion, not a lot of weight can be given to the conduct of the the defendant had filed his defence and, on 9 May 2008, the solicitors for the defendant wrote to the solicitors for the plaintiff stating the defendant would be asserting the parties’ had settled their dispute. | |||
| [36] | Mr Tripp is potentially of greater significance than the conduct of the | ||
| In my opinion, Mr Finlay’s sending of the letter of 10 December 2007 to Federal Court asserts the plaintiff, in effect, lacks the capacity to place valid bets with the plaintiff. | |||
| [37] | Alternatively, Mr Finlay’s two letters dated 10 December 2007 amount to an acceptance of a repudiation of the alleged agreement whereby the plaintiff is said to have forgiven the defendant’s debt constituted by Mr Tripp’s | ||
| delivery of the draft deed of settlement and release in October 2007. $17.8 million, which includes the sum of $3.8 million or thereabouts claimed by the plaintiff, and an offer to negotiate the resolution of the plaintiff’s claim for that amount. | |||
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| [39] |
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| [40] | Mr Tripp is incorrect when he says Mr Finlay never stated, in any correspondence with the plaintiff, the admitted debt was forgiven, discharged or released. In fact, in paragraph 23 of Mr Finlay’s letter to | ||
| Mr Tripp, dated 10 December 2007, he stated he was instructed the plaintiff had forgiven the defendant’s debt of $3,867,846. | |||
| [41] | defendant’s lawyers and emailed to Mr Griffiths by Mr Finlay on | ||
| Further, par 6 of the written Submission, which was prepared by the Mr Matthew Tripp and Mr Tripp senior to forgive the defendant’s debt of $3.867m and such forgiveness was not subject to any conditions including a release. | |||
| [42] | Another difficulty with Mr Tripp’s evidence is that it is largely assertion. He does not provide a detailed historical account of the contents of the conversations he had with the defendant in August and September 2007. Nor does he provide any details of the demands the plaintiff made for payment of the debt of $3,867,846. | ||
| The defendant’s argument about the defendant’s defence that the debt was forgiven. | |||
| [43] |
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| Consideration of the defence that the debt was forgiven by the plaintiff | |||
| [44] | put before the Court in a summary form all of the evidence relied on by the | ||
| Given that the defendant is required to use such diligence as is reasonable to out. It is manifestly hopeless. | |||
| [45] |
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| [46] | There is also force in the plaintiff’s submission that, even if the defendant promised to bet exclusively with the plaintiff in the future, the consideration said to flow from the promise was illusory. The promise was significantly qualified. Ms Owen’s evidence was the defendant said he did not intend to bet in the future. The consideration was past consideration as on the defendant’s case the plaintiff had already forgiven the defendant somewhere between $1 million and $4 million in debt on the basis that the defendant would continue to bet exclusively with the plaintiff. There was no evidence that a reasonable time had passed and the plaintiff had already received the full benefit of the defendant’s earlier promises. | ||
| [47] | Even if the agreement pleaded in par 15 of the further amended defence and counterclaim had been made by the parties, it is apparent the defendant had formed the view that the plaintiff had repudiated the agreement by failing to | ||
| provide written confirmation of the forgiveness of the debt and by giving the defendant a deed of release which contained mutual releases, and the defendant accepted the plaintiff’s repudiation of the agreement and had decided not to bet with the plaintiff in the future. Instead, the defendant sought to recover the money he had lost on losing bets. | |||
| The pleadings about the defence of settlement of the parties claims | |||
| [48] | In par 16 of his defence the defendant pleads: |
Mr Tripp also stated that on 28 September 2007, he received a facsimile signed by the defendant which stated:
Please provide a summary or print out of all wagers and other bets transacted through my account with Sportsbet Pty Ltd (including all debits and credits) for the period 1 September 2005 to 28 September 2007 and please mail it by express post to the address below.
(iii) meeting between Mr Griffiths and Mr Finlay held at the
office of Storm Sustainability at South Yarra,
Further, or in the alternative, and in answer to the whole of the statement of claim, on or about 21 April 2008, the plaintiff and the defendant entered into a legally binding agreement to settle the matters that are the subject of these proceedings (Settlement Agreement).
Particulars
(i) In or about October 2007, the defendant offered to discharge the alleged debt by Mr Tripp giving the defendant a copy of an unexecuted Deed of Settlement
and Release, which constituted an offer to release the
defendant from the alleged debt on the basis of the
parties giving mutual releases.(ii) defendant, provided to Mr Griffiths, on behalf of the
plaintiff, a document entitled “Submission”, on a without
prejudice basis, prepared for the purpose of theOn 26 February 2008 Mr Finlay, on behalf of the statement inter alia that “any settlement which is reached would involve the execution of a deed of release with mutual releases and indemnities as well as covenants relating to confidentiality”.
On 27 February, during the course of a without prejudice from the plaintiff (and he did have such authority) to make an offer to the defendant to settle the matters then in dispute between the parties (which are the subject of these proceedings). Mr Griffiths made an offer to release the defendant from the alleged debt.
(iv) On 16 April 2008, in the course of a telephone discussion between Mr Finlay on behalf of the defendant, and Mr Griffiths, Mr Griffiths advised
Mr Finlay that the offer put to the defendant on
27 February has not been withdrawn or lapsed and it was
still capable of acceptance.(v) Alternatively to (iv), in the course of the telephone discussion on 16 April 2008 between Mr Finlay, on behalf of the defendant, and Mr Griffiths, on behalf of
the plaintiff, Mr Griffiths offered to release the
defendant from the alleged debt if the defendant released
the plaintiff from his claim (the subject of the cross
claim).(vi) The offer put or confirmed during the conversation between Mr Finlay and Mr Griffiths was accepted orally by Mr Finlay on behalf of the defendant during the course of a telephone conversation with Mr Griffiths on 21 April 2007 (sic).
In par 17 of the further amended defence, the defendant pleads that it was an express term of the Settlement Agreement that the plaintiff would not pursue the debt which is the subject of the statement of claim. In par 18 of the
further amended defence the defendant pleads that by reason of the matters
pleaded in par 16 and of the further amended defence the plaintiff cannot
bring or prosecute the matters that are the subject of the statement of claim.
In par 16 of the reply and defence to counter claim the plaintiff pleads:
As to paragraph 16 of the defence, without prejudice to the matters pleaded in paragraph 16.3 herein, the plaintiff denies each allegation in paragraph 16 of the defence as if each were set out seriatim and denied, and says:
1. If (which is denied) there was an offer as alleged in paragraph 16(i) of the defence, that offer was not accepted before it lapsed by the effluxion of time;
2. If (which is denied) there was a contract concluded that the debt be forgiven, on the consideration that the defendant bet exclusively with the plaintiff, that contract was breached by the defendant betting on and from that time with Sportingbet Australia Pty Ltd and other wagering operators (and the defendant continues to bet with Sportingbet Australia Pty Ltd under another name or names including the name “Brett Grant”) whereof the forgiveness of the debt is rescinded, and the amount claimed remains owing;
3. In any event paragraph 16 of the defence should be struck out as embarrassing, as:
3.1 Sub-paragraphs 16(iii) to (vi) plead matters subject to
without prejudice privilege, over which the plaintiff
has not waived privilege, and which do not constitute
communications said to amount to an operative offer
or acceptance, and in any event such plea is
irrelevant to any defence;3.2 The particulars subjoined are embarrassing and do
not support the claim in paragraph 16 of the defence;3.3 The particulars are otherwise embarrassing in that
they rely upon an unexecuted Deed of Settlement and
Release which was neither executed nor exchanged;3.4 The plea is in such conflict with the plea in paragraph
15 of the defence, that it cannot be pleaded in the
alternative thereto;3.5 At no time did either the defendant or Mr Finlay send
any correspondence asserting that the admitted debt
had been forgiven, discharged or released as alleged
in paragraphs 15 and 16 of the defence, and the plea
is an abuse of process, by reason of the fact that it is
foredoomed to fail, and should be struck out
accordingly;3.6
The particulars in sub-paragraph 16(vi) are embarrassing as no conversation or alleged acceptance could have taken place on 21 April 2007.
In par 17 of the reply to the further amended defence and defence to counterclaim, the plaintiff pleads that the plaintiff denies each of the allegations and the paragraph should be struck out as not being severable
from par 16 of the defence. As to par 18 of the defence, the plaintiff pleads in its reply to further amended defence and counterclaim that it denies each of the allegations and says that at no time has the defendant sought any
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relief or sought any stay of the proceeding based upon the allegations
pleaded in par 15 to par 18 of the further amended defence and
counterclaim.The evidence about settlement of the parties’ claims
In support of the defence of settlement the defendant relied on the affidavit of Mr Ronald Arthur Finlay sworn on 19 March 2009.
On 29 January, Mr Finlay had a meeting with Mr Griffiths at the office of Storm Sustainability in South Yarra in Melbourne. The meeting lasted for an hour and a half. At the meeting Mr Griffiths told Mr Finlay he was a
major shareholder of the plaintiff. He had been so since the establishment
of the plaintiff. The plaintiff was willing to discuss the $3,867,846 claimed
by the plaintiff but the plaintiff would not be paying any money to the
defendant.
On 26 February 2007, Mr Finlay emailed Mr Griffiths a document entitled “Submissions” which was prepared for the purposes of their discussions. The document set out the defendant’s position and the basis of his claims. Paragraph 102 of the Submission stated, “Clearly any settlement that is reached would involve the execution of a deed of release with mutual releases and indemnities as well as covenants relating to confidentiality”.
| [58] | 19 June 2008 is a file note that Mr Finlay made on 10 April 2008. The file |
| [56] | office of Storm Sustainability. During the meeting Mr Griffiths said to |
On 27 February 2007, Mr Finlay and Mr Griffiths had another meeting at the money.” Later in the meeting Mr Griffiths said, “The $3.8 million is on the table. The best you can do is nil.” However, nothing was resolved at this meeting other than it was agreed the parties would give further consideration to a formal mediation.
| [57] | During the course of the conversation, Mr Griffiths told Mr Finlay the |
On 4 April 2008, Mr Finlay and Mr Griffiths had a telephone conversation. lawyers were now 100 per cent certain that the plaintiff would win the case.
I interpose here that annexure “G” to the affidavit of Ms Owen sworn on had discussed which was where the litigation between the parties should be conducted. Mr Griffiths also told Mr Finlay his legal team had advised the plaintiff they should conduct the litigation in the Northern Territory. The advice was strongly supported by Mr Matthew Tripp and Mr Nick Tyshing who wanted to run the proceeding in the Northern Territory.
| [59] |
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In respect of an important aspect of the telephone conversation on 16 April 2008, there is potentially a significant inconsistency between Mr Finlay’s typed notes of the telephone discussion between him and Mr Griffiths and his hand written notes of the telephone discussion. In the relevant part of his typed notes of the telephone conversation, Mr Finlay records the following:
[Mr Griffiths] again warned me that his lawyers are going to play it
very hard. They will play the man!
He then said the reason that they [the plaintiff] are being so
aggressive is they believed “they had done the right thing” and it wasFinlay and Moraitis who “first bounced the ball”.
I asked him to explain what he meant by doing “the right thing” and
he said Matthew Tripp had spoken with Stephen, he had already
agreed to write off $4 million and agreed to write off a further$3.8 million provided you “don’t come chasing me”.
He affirmed that they were still prepared to settle on the basis that
“we keep the $11 million and write off the $7.8 million”.In the relevant part of his handwritten notes of the 16 April 2008 telephone conversation, Mr Finlay records the following:
Will play the man!
Bigger issue – always said we were going to settle.
Right thing – write off $3.8m
Don’t come chasing me.
Tried to do the right thing – “Finlay/M bounced the ball”.
We keep $11.0m. Write off $7.8m.
Will very messy
Opp’ty to settle – each walk away/pay own costs
Option never off table
Speak on behalf of the company – yes.
Mr Finlay gives yet another version of this part of the conversation in paragraph 25 of his affidavit sworn 19 March 2009. He states as follows:
As I have recorded in both my handwritten notes and my typed course of the 16 April 2008 discussion:
written file note of the 16 April 2008 discussion, Mr Griffiths made
an offer to settle the dispute the subject of these proceedings.We always said we are going to settle
We will do the right thing and write off the $3.8 million
| [64] |
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| [65] | and Mr Finlay. Mr Griffiths apologized for the delay in getting back to |
We keep the $11 million and write off $7.8 million
This is an opportunity to settle on the basis that each party walk away and pay their own costs. This option has never been off the table.
| [63] | telephone discussion he specifically asked Mr Griffiths if he spoke on behalf |
In par 24 of his affidavit, Mr Finlay stated that during the 16 April 2008 made to explain the difference in the two lots of notes about the telephone discussion.
On 28 April 2008, there was a telephone conversation between Mr Griffiths and Mr North QC want to run a test case on unconscionability. The decision had been taken out of his hands. Mr Finlay told Mr Griffiths that, “I thought you had authority to settle it and the offer was still open.”
After the telephone conversation on 28 April 2008, Mr Finlay sent an email to Mr Griffiths which stated:
Further, to our telephone conversation yesterday afternoon, based on my detailed file notes, may I remind you of some recent history of our telephone conversations:
1. On 16 April we spoke by phone and amongst other things I said to you: “Is settlement still an option?”
2. You replied with words to the effect: “So far as I am concerned, settlement is always an option, my door is always open and the offer to walk away is an offer that has never been taken off the table”.
3. I then asked you if you had authority to make that decision and you said, “I am speaking for 80 percent of the shareholders and I have the authority”.
4. I then said that I would pass this information on and get back to you with the Moraitis final decision.
5. On 21 April we again spoke by telephone and I said, “Stephen has agreed to settle on the basis that each party walks away and pays their own costs and that we enter into a deed of mutual release including confidentiality provisions”.
6. You then said that you would have to speak to Matt.
7. In our 28 April telephone conversation you said a decision had been made not to settle and to run it as a test case.
8. I responded by saying that I thought you had authority to settle on the basis we previously discussed.
Taken with your unconditional agreement to proceed to mediation, the agreed appointment of a mediator and then your lawyers’ decision to unilaterally terminate the mediation, I cannot now be sure of who should be talking about misleading and deceptive conduct.
Contrary to par 3 of his email dated 29 April 2008, nowhere in any of Mr Finlay’s file notes of the telephone conversation is it recorded that Mr Griffiths said “he was speaking for 80 percent of the shareholders and
have the authority [to settle the dispute]”.
On 29 April 2008, Mr Griffiths responded by email saying that, as a result of all of the work the plaintiff’s lawyers had done, the plaintiff was of the opinion the case was the best possible test case to run in order to deal with large professional gamblers and their associates who want to win big, but
when they lose big they want to blame the bookmaker for their losses and say that the bookmaker acted unconscionably or dishonestly. Mr Griffiths also stated he never has, and he never will, engage in any form of deceptive
or misleading conduct and he resented the implication that he had done so.
On 30 April 2008, Mr Finlay sent a further email to Mr Griffiths in which he stated:
I noticed that in your email you have not addressed the very issue I
raised in my email. You stated to me unequivocally that you had the
authority to make the decision to settle, that the offer was on the
table and had never been taken off the table yet you could not
deliver. It was on the basis of your representations (that you had
authority and that the offer was still open) that I took those
statements to my meeting with the Moraitis family and their advisors.
The conversation we had was less than two weeks ago. If you say to
me directly that you had authority to settle and the offer is still on
the table and you renege, I do not know how to describe that conduct.
I trusted you.On 9 May 2008, the solicitors for the defendant wrote to the solicitors for the plaintiff advising that the defendant would be pleading in his defence a defence that on 21 April 2008 the plaintiff had compromised its claim against the defendant.
In support of its application that the defence of settlement was manifestly hopeless the plaintiff relied on two affidavits of Mr Grant Alfred Griffiths sworn on 3 June 2008 and 23 March 2009 respectively.
In his affidavit sworn on 3 June 2008, Mr Griffiths states as follows. No agreement of the type pleaded in par 16 of the further amended defence or any other settlement agreement at all was ever made by Mr Griffiths with Mr Finlay. At no time did he ever receive any correspondence that such an
| [73] | The conversations between him and Mr Finlay were held on a without |
documents’. He first met Mr Finlay on 29 February 2008 in his office at
South Yarra. On 10 April 2008, he advised Mr Finlay by telephone that
negotiations had been completed and the plaintiff wished to proceed to
Court. There were further negotiations and discussions between him and
Mr Finlay on 16 April 2008. However, he totally refutes the suggestion that
he ever accepted or said any words whatsoever that could lead Mr Finlay to
assume he had agreed to accept any offer to settle the proceeding. On
21 April 2008, Mr Finlay telephoned Mr Griffiths and he offered to settle on
the basis that each party walks away and pays their own costs and the parties
enter into a deed of mutual release including confidentiality provisions. He
did not accept Mr Finlay’s offer. On 28 April 2007, he telephonedagreement was made on 21 April 2008 nor did he receive any ‘release discussions or negotiations.
In his affidavit sworn on 23 March 2009, Mr Griffiths stated as follows. reached would involve the execution of a deed of release. At no time was any deed of release executed by either party as no settlement was reached arising out of their negotiations. Moreover, at no time had Mr Griffiths received any draft settlement agreement from Mr Finlay whether containing terms of confidentiality or releases or at all.
Mr Griffiths appears to be operating under a misapprehension that a “without prejudice” agreement is neither complete nor binding until confirmed by an “open” agreement. This is not so. Once a “without prejudice” offer is accepted, a complete contract is established which is
| [75] |
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binding on both parties[17]. Further, the principle that without prejudice
communications cannot be put into evidence without the consent of both
parties does not exclude communications in the event of an agreement. It is
also well established that without prejudice material will be admissible if
the issue is whether or not negotiations resulted in a settlement[18].The plaintiff’s argument about the defence of settlement
| [77] | parties had reached agreement about all of the terms of the alleged |
Consideration of the plaintiff’s arguments about the defence of settlement
None of the arguments pressed on behalf of the plaintiff demonstrated that the defence of settlement pleaded in par 16, par 17 and par 18 of the further amended defence and counterclaim was manifestly hopeless. The plaintiff’s first argument gives rise to a factual dispute which can only be resolved at trial.
The plaintiff’s second argument, gives rise to an issue as to whether the acceptance of the alleged substantive offer by Mr Finlay, it had already been accepted by the parties that settlement would be by way of a deed of release and would include a term about confidentiality and Mr Griffiths’ offer was made on this basis. This issue will involve an inquiry into the content of all communications between Mr Finlay and Mr Griffiths before 21 April 2007. The Court will not be in a position to consider those communications in full until the hearing of the case at trial.
| [79] |
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It is reasonably arguable that the defendant’s contention that Mr Finlay’s reference to confidentiality obligations did not have the consequence that his communication with Mr Griffiths constituted a counter offer because the
condition of confidentiality is in the nature of a formality to be dealt with in the context of a written document and did not detract from the finality of the substance of the bargain. The defendant’s contention can only be fully
considered at a trial.
The defensive operation of the counterclaim
In par 7, par 12 and par 14 of the further amended defence and counterclaim the defendant pleads the following:
In answer to paragraph [7, 12 or 14 as the case maybe] of the statement of claim, the defendant admits that as at … he owed a debt to the plaintiff in the sum of [$2,242,144, $1,627,702 or $3,867,846 as the case maybe] but says:
(a) that he is entitled to setoff against the plaintiff’s claim so much of the sums claimed in the counterclaim as is sufficient to extinguish it; and (b) that by reason of the matters alleged in the counterclaim, he is entitled to relief that would have the effect of extinguishing the debt.
The plaintiff’s argument against the defendant relying on the causes of action pleaded in the counterclaim in a defensive manner
In support of the argument that par 7, par 12 and par 14 should be struck out and the plaintiff should have judgment in the sum of $3,867,846 the plaintiff argued as follows. The only possible basis of a plea of setoff which is
available to the defendant would be a setoff in equity. However, it is a
fundamental requirement that for there to be an equitable setoff there must
be such a connection between the claim and the counterclaim that the
counterclaim could be said to impeach the plaintiff’s claim[23]. There is no
such connection in this proceeding because what the counterclaim attacks as
unconscionable is the plaintiff’s acceptance of any of the defendants bets or
it is asserted the plaintiff owed and breached a duty of care in accepting the
defendant’s debts. Whereas the plaintiff’s cause of action is based on a
series of transactions whereby the plaintiff advanced the defendant credit
and the defendant failed to repay the money advanced to him by the
plaintiff. Therefore, no equitable setoff arises in this proceeding. The
defendant’s counterclaim does not allege that the plaintiff’s conduct in
advancing the defendant credit was unconscionable or a breach of a duty of
care. It is the acceptance of the defendant’s debts which is said to be
unconscionable or a breach of duty of care. The transactions of repetitively
lending money on the one hand and placing bets on the other are not
dependent transactions in the requisite sense.
| [82] | defendant cannot be sustained. In my opinion, for the reasons submitted by |
Consideration of the plaintiff’s argument about setoff
In my opinion, the plaintiff’s argument that no setoff is available to the Both the causes of action pleaded in the defendant’s counterclaim are so directly connected with the plaintiff’s claim that it would be unjust to allow the plaintiff to recover without taking into account the defendant’s claims[24]. The circumstances are such as to attract the intervention of a court of equity.
The deficiencies in the counterclaim
The plaintiff argued that par 20 to par 37 inclusive and par 40 to par 56 inclusive of the further amended defence and counterclaim were defective on a number of grounds. The defendant met the plaintiff’s argument on many occasions by foreshadowing an application to amend the further amended defence and counterclaim. In the circumstances, save for one particular matter addressed below, I consider that it is inappropriate to rule in respect of this part of the plaintiff’s application until, and subject to, the defendant filing an application to amend the further amended defence and counterclaim.
| [84] |
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Dux litis
As the defendant bears the burden of proof both in relation to defence of settlement and the causes of action pleaded in its counterclaim the defendant should be dux litis.
Costs of the cross-vesting application
The plaintiff seeks costs of the cross-vesting application and an order that the costs be immediately enforceable and taxable. The defendant accepts that costs should follow the event in the cross-vesting application but
opposes and order that costs be immediately enforceable and taxable. The defendant submits that costs should not be taxed immediately because the plaintiff ought to have reasonably anticipated the cross-vesting application
and the full burden of the costs order will fall on a natural person.
| [87] | application was a discrete application which was made at an early stage of |
The plaintiff argues that the cost orders it seeks should be made because the costs orders would disadvantage the defendant or hinder the defendant in the preparation and presentation of his case.
I accept the plaintiff’s submissions. In my opinion an order should be made that the defendant is to pay the plaintiff’s costs of the cross-vesting application and such costs are to be immediately enforceable and taxable.
Orders
[89] I make the following orders:
1. Paragraph 15 and the related pleading in par 18 of the further amended defence and counterclaim are struck out.
2. The defendant is to be dux litis at the trial of this proceeding.
3. The defendant is to pay the plaintiff’s costs of the cross-vesting application and such costs are to be immediately enforceable and taxable.
I will hear the parties further as to the costs of the application for summary judgment.
-----------------------------------
[1] Hereafter referred to as “the 2004 agreement”.
[2] Hereafter referred to as “the 2006 agreement”.
[3] Australian Can Co Pty Ltd v Levin & Co Pty Ltd [1947] VLR 332 at 334 – 5.
[4] Fancourt v Mercantile Credits Ltd (1983) 154 CLR 87 at 99.
[5] (2000) 201 CLR 552 at par [57].
[6] For a fuller discussion of the principles see N Williams Civil Procedure Victoria at pp 3359 to 3386.
[7] Suburban Homes Pty Ltd v Ward [1928] VLR 267; Symon and Co v Palmer’s Stores (1903) Ltd
[1912] 1 KB 259 at 263 - 4.
[8] r 22.04 Supreme Court Rules.
[10] R 22.04(2) Supreme Court Rules; Re LJ Young Manufacturing Co [1900] 2 Ch 753.
[9] Hausman v Abigroup Contractors Pty Ltd [2009] VSCA 288 par [55].
[11] Geoffrey W Hill & Associates v King (1992) 27 NSWLR 228.
[12] Cloverdell Lumber Co Pty Ltd v Abbott (1924) 34 CLR 122 at 128 – 9.
[13] Country Estates Pty Ltd v Leighton Contractors Pty Ltd (1975) 49 ALJR 173.
[14] N Williams Civil Procedure Victoria par I 22.04.15.
[15] Evans v Bartlam [1937] AC 473.
[16] Commonwealth Development Bank of Australia v Karastavrou (VSC, Beach J, No 4558/1995, 12
November 1996, unreported).
Dixon CJ and Fullagar J at 110; Tomlin v Standard Telephones [1969] 1 WLR 1378.
[18] Tomlin v Standard Telephones [1969] 1 WLR 1378; Austotel Management Pty Limited v Jamieson
[17] Taller man & Co Pty Limited v Nathan’s Merchandise (Victoria) Pty Limited (1957) 98 CLR 93 per
(1995) 57 FCR 411 at 416; Needlework Warehouse Pty Limited v Chansonette Pty Limited (2005) 226
ALR 252 at [84].
[19] Federal Commissioner of Taxation v Orica Ltd (1998) 194 CLR 500 per Gummow J at [116].
[20] Thompson v Australian Capital Television Pty Ltd and Other (1996) 186 CLR 574 per Gummow J at
610.
21 Osborn & Bernotti t/as G04 Productions v McDermott t/as RA McDermott & Co & Karmine Pty Ltd
[1998] 3 VR 1 at 8.
[22] El-Mir & 1 Or v Risk [2005] NSWCA 215 at [52].
[23] Forsyth v Gibbs [2009] 1 Qd R 403.
[24] Murphy v Zamonex (1993) 31 NSWLR 439 at 465.
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