Woodend Water Board & Anor v Hyan Enterprises Pty Ltd

[1991] HCATrans 237

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IN THE HIGH COURT OF AUSTRALIA

Office of the Registry

Melbourne No Ml2 of 1991

B e t w e e n -

WOODEND WATER BOARD and MADDOCK

LONIE & CHISHOLM

Appellants

and

HYAN ENTERPRISES PTY LTD

Respondent

MASON CJ
BRENNAN J
DEANE J
DAWSON J

TOOHEY J

Woodend 1 2/9/91

TRANSCRIPT OF PROCEEDINGS

AT ADELAIDE ON MONDAY, 2 SEPTEMBER 1991, AT 2.21 PM

Copyright in the High Court of Australia

MR J.D. MERRALLS, QC:  May it please the Court, I appear

with my learned friend, MR A.R. MONTEITH, for the

appellants. (instructed by Maddock Lonie

& Chisholm)

MASON CJ:  Do you appear on your own, do you, in the sense

that there is no appearance for the respondents or

other parties?

MR MERRALLS:  There is no appearance for the respondents. I

will announce that too, Your Honour, yes. I

understood that Your Honours were aware that there

was to be no appearance for the respondents.

MASON CJ:  I am not so sure that we are aware of anything in

this matter, Mr Merralls, but perhaps the name of

the respondent ought to be called outside the

Court; Hyan Enterprises Pty Limited. Yes, I see

there is an affidavit sworn on 30th, which

indicates there was to be no appearance for the

Josephs.

MR MERRALLS:  Yes, and there is also a letter from the

solicitors for Hyan Enterprises addressed to the

deputy registrar, which states that there is to be

no appearance for the respondents.

MASON CJ: Is that an annexure to the - - -

MR MERRALLS:  No, it is not, Your Honour, and I am not

responsible for the form in which it appears, but I

was instructed that the solicitors for the

respondents were informed that that would be a

sufficient form.	May I read that letter,
Your Honour.

MASON CJ: Yes.

MR MERRALLS:  It is addressed to the Deputy Registrar, High

Court of Australia, Melbourne Office of the

Registry, 200 Queen Street, Melbourne.

Dear Sir,

Hyan Enterprises Pty Ltd and Woodend Water

Board

We refer to our recent discussion and write to

confirm our advices that our client, Hyan

Enterprises Pty Ltd, will abide any orders

that the Court may make as a consequence of

the appeal of Woodend Water Board including an
order that each party to the appeal bear its
own costs of the appeal and of the hearing

before the Court on 2 September next.

Woodend(2) 2 2/9/91

We have also had the opportunity of reading

the Affidavit of Mark Stephen Henry sworn the

26th day of August 1991 and the exhibits

thereto.

With respect to the Affidavit, we advise that

insofar as paragraphs 3,S,7,9,10,13,14 and 21

depose to matters within our knowledge we are

able to confirm the accuracy of the statements

contained therein.

With respect to paragraph 6, the statements

contained therein are to our knowledge correct

save that not all of the Plaintiffs referred

to executed the Deed of Undertaking in the

form of the Deed exhibited to the Affidavit

and marked "MSH3". A very small number of the

Plaintiffs did not execute the Deed, although

all Plaintiffs conducted themselves as, in

effect, bound by the provisions of the Deed.

With respect to paragraph 15 of the Affidavit,

it is true that the Plaintiffs have agreed

upon distribution of the said sum of

$5,700,000 in principle although at the time

of writing two only of the Plaintiffs are to

formally confirm that agreement.

The remaining paragraphs of the Affidavit deal with matters of which we do not have direct

knowledge and we are otherwise unable to

comment.

We trust this will be of assistance to you and

to the Court in the hearing and determination

of the appeal on 2 September next.

And that letter is from Messrs Arthur Robinson &

Hedderwicks, Solicitors.

If it please the Court, we have prepared a summary

of argument which I hand up.

BRENNAN J:  What is the relief you seek at the end of the

day, Mr Merralls?

MR MERRALLS:  We seek the order set out in the appeal book

at pages 108 and 109, varied to provide a different

order for costs. That is to say that each party

abide its own costs in this Court and in the court

below, that being agreed in the terms of release

and settlement. I wonder whether the Court would

find it more convenient if I put the cart before

the horse and went to the terms of settlement first

and then took Your Honours to the substantive

points of the appeal. If Your Honours are not

familiar with the case, may I say just briefly that

Woodend(2) 3 2/9/91

it concerns the fate of moneys that were paid to a

firm of solicitors in settlement of an action by

the Woodend Water Board v American Home Assurance,

it being the public liability risks insurer of the

Woodend Water Board, in respect of the Woodend

Water Board's liability for claims arising out of a

very severe bush fire which destroyed a number of

houses and properties on Mount Macedon near
Melbourne, some years ago.

The insurer disputed liability on the policy; the Woodend Water Board sued it; the proceedings

were settled at the court door upon terms that the

sum of $3 million should be paid to the solicitors

for the Board to be held as was provided by terms

of settlement which are set out at pages 74 to 77
of the appeal book. There were a few more than

80 claims. An action was brought by one of the

claimants, Hyan Enterprises, seeking various forms

of order relating to the $3 million. It was held

by Mr Justice Cummins at first instance in the

supreme court that the $3 million, the sum was held

upon trust for the claimants; an appeal was taken

to the Full Court, which in substance affirmed the

order at first instance although varied the precise
terms of it, and in particular varied it by

providing how the entitlement of the claimants, the

beneficiaries, was to be established. The result

of the order was that everyone was, in effect,

hamstrung, because nothing could be paid out of the

fund until the liability of the Board to all of the

claimants had been determined.

The matter was subsequently settled as between

all but one of the claimants, that is the Josephs

and the Board, and two documents were executed,

they being documents described as a deed of release

and settlement and a deed of abandonment of rights, which are exhibited to Mr Henry's affidavit and are

documents MSH7 and MSH9.	The critical provisions
of those documents are in MSH9, the deed between

American Home Assurance Company Pty Limited and the

Board and the solicitors.	The provision by
paragraph 1 :

That the Insurer hereby abandons its rights

under paragraphs 4(c),5,6 and 7 of the Terms

of Settlement.

Now, those rights were that, if anything remained of the $3 million after the payment of damages or claims in settlement of the claimants and legal

expenses, the balance of the fund was to be paid by

the solicitors to the Board and an amount

equivalent to that sum was to be paid by the Board

to the insurer. Well, it appears that there is not

the remotest chance of there being any sum left

Woodend(2) 4 2/9/91

over as the claims, on anybody's view, exceed $9

million perhaps or even greater, vastly greater

than $3 million, so the insurer has abandoned its

rights under that paragraph.

The second clause of the deed provides:

That the Board and the Solicitors hereby agree

to apply the total sum held by the Solicitors

as part of the amount of $5,700,000.00

referred to in the Terms of Settlement in

accordance with the Release and Settlement.

and:

That the Board agrees to provide the Insurer with a full and proper account of all moneys held by the Solicitors pursuant to the Terms of Settlement (including all income and

outgoings) within fourteen days of a written

request by the Insurer.

Now, the other document is MSH7, which is the

release and settlement. A document in similar form

has been executed by all, apparently, but two or

three, of the claimants. That is, I think I

mentioned, MSH7. The claimant agrees to certain

things; on page 4 of the document:

A. To release and forever discharge the

Board from any demands, claims, causes of

action, suits of whatever kind arising as

a result of the bushfire.

B. To bear the claimant's costs in relation

to the proceeding referred to in

Recital (1) (including the costs of discontinuance) and to indemnify the

Board from any liability therefor.

That is the primary action by the claimant.

C. To take all steps practicable to facilitate the Board's obtaining an order

from the High Court of Australia setting

aside the order of the Supreme Court of
Victoria in proceeding No 4352 of 1990 -

That is this proceeding -

and an order that the Board is absolutely entitled to the settlement amount and the

interest thereon.

DEANE J:  Mr Merralls, why is it conditional on this Court

doing something?	I mean, obviously there is a gap
in the parties.

Woodend(2)	2/9/91
MR MERRALLS:	Yes, it is because there is a gap in the

parties.

DEANE J:  What is the gap?

MR MERRALLS: Well, it is because there was only one

plaintiff in the original proceeding, Hyan

Enterprises. There ought to have been a

representative audit, but there was not one, so the

view was apparently taken that we have to soldier

on with our appeal and this whole settlement was

made conditional upon the appeal being granted,

because there is an order of the supreme court

which is in place.

DEANE J: But, if all the parties who could be interested in

the trust under the supreme court's order were

parties to this arrangement - - -

MR MERRALLS:  They are not.

DEANE J: Well that is what - - -

MR MERRALLS: There is one - the Josephs are not.

DEANE J: It is only the Josephs, is it?

MR MERRALLS:	Yes.
DEANE J:	I see.

BRENNAN J: It is only the Josephs who have not indicated

their agreement, but there are others who have not

executed the instrument, it seems.

MR MERRALLS: Well apparently two others have not executed

the instrument, Your Honour, yes, although the

solicitors - there is a committee of solicitors who

act as a sort of steering committee on behalf of
the claimants, the claimants being represented by
three firms of solicitors - or it is now four, as one has changed its solicitor recently. The writer

of the letter from Messrs Arthur Robinsons, I
think, is the secretary of that committee; it co-

ordinates the claims and apparently that committee

is going to determine the distribution of the

funds. The Board has agreed to provide an

additional $2.7 million of its own funds and the

other parties, I understand, are reconciled to the

Josephs pursuing their claim against the Board and

it being satisfied out of the Board's resources;

the Board having sufficient resources to meet the

Josephs' ,claim, but not the total claim.

BRENNAN J: Under the Full Court's order, the Josephs have a

contingent interest in the fund.

Woodend(2) 6 2/9/91

MR MERRALLS:  The Full Court's order does have that effect,

yes.

BRENNAN J:  What do the Josephs know about these

proceedings?

MR MERRALLS:  Oh, the Josephs know a lot about these

proceedings. There is another affidavit which has

been sworn by Mr Henry. In fact the Josephs were

nearly going to be represented in these proceedings

by my learned friend, Mr Nash.

MASON CJ: This is the affidavit of 30 August?

MR MERRALLS:  It is, Your Honour. Does Your Honour desire

me to read it or - - -?

MASON CJ:  No, there is no occasion to read it; we have the

affidavit.

MR MERRALLS:  I might say that I have also spoken to

Mr Nash; he told me the advice he had given the

Josephs.

DEANE J:  Can I delay you for just a little bit longer? I

understand why this material should be before the

Court in terms of a matter of disclosure, but how

else is it relevant to the performance by this

Court of its function under the present state of authority relating to fresh material being placed

before the Court on an appeal?

MR MERRALLS:  I do not think it is, Your Honour, apart from

the order for costs.

DEANE J:  I follow, and it will possibly make us feel guilty

if we do not make the order that will produce the

sensible result.

MR MERRALLS:  Oh yes, we are always happy to impose as much

undue influence upon the Court as we can within the

bounds of legitimate professional conduct, Your

Honour.

BRENNAN J: Is there any occasion, in an action constituted

between one of the erstwhile plaintiffs and the

Water Board and the solicitors for the Water Board,

for the making of a declaration as to the terms on

which th~ defendant's solicitors hold moneys in

trust for the defendant Board?

MR MERRALLS:  Your Honour asked me that question in the

special leave application - - -

BRENNAN J:  Oh, did I.

Woodend(2) 7 2/9/91

MR MERRALLS:  - - - and the answer I gave then was that it

was an odd proceeding. I do not know why it was

instituted in this way. Representative orders

obviously should have been sought, but an order has

been obtained which, although inter partes,

declares the individual beneficiary's right, in

circumstances in which that right must be no

different from the rights of other persons

similarly placed. That is the only answer I can

give, Your Honour.

BRENNAN J: Well, why should not, at the end of the day,

this Court, if your argument otherwise is correct,

simply make an order which has the effect of

dismissing the notice of motion?

MR MERRALLS:  I hope that it would not upset the apple cart

with the settlement, Your Honour.

BRENNAN J: Well, I appreciate the desire to preserve the

stability of the apple cart.

MR MERRALLS:	May I take Your Honour to the conditional - on page 5, it being "the judgment be set aside"; that
is all right. "The Board agrees to take all steps
practicable to facilitate the obtaining of orders
from the High Court of Australia to the effect of
setting aside the order".  "That the Board is
absolutely entitled to the settlement amount and the interest thereon", and that "The costs of the parties to the proceedings both before the Supreme
Court of Victoria and the High Court are borne by
the parties who incurred them".  So if I
strenuously endeavour to persuade the Court that
that order should be made, I think the Board cannot
be said to have been in breach of the condition,
Your Honour, and if the order made by
Mr Justice Cummins was set aside, I would think
that both honour and the terms of this document
would be satisfied.
DEANE J: Well now, apart from costs, does that involve more

than what His Honour put to you or asked you about?

MR MERRALLS:  No, I do not think so.

DEANE J: Which means that we have all the parties to the

litigation agreed as to the substantive order and

as to costs, is that right?

MR MERRALLS:  Yes, that is so. My attention, Your Honour,

is drawn to paragraph DD of the terms of

settlement:  "Should the High Court fail or refuse

to make the orders to the effect of the proposed
orders as set out in paragraph CC then this release

and settlement should be voidable at the option of

either party". Even so - - -

Woodend(2)	2/9/91
DEANE J: But, I mean, we need to be very precise about

this.

MR MERRALLS:  Yes.

DEANE J: Is it correct that, in terms of an action relating

only to property interests, we have all the parties

to the litigation agreeing that orders should be

made, setting aside the substantive orders made

below and making different provisions as to costs?

MR MERRALLS:  The answer to that question is yes,

Your Honour.

BRENNAN J:  I do not see that answer supported in the

affidavit relative to the Josephs.

MR MERRALLS:  I am assuming in answer that the question

related to only the parties to the action.

DEANE J: Yes, it did.

MR MERRALLS:  Yes. Because of the presence of people like

the Josephs, and perhaps the two parties who have

not yet executed - - -

DEANE J: But if orders were made which effectively vacated

all orders made below there would be nothing that

bound the Josephs to their detriment.

MR MERRALLS :  No.

DEANE J: Indeed, there would be really nothing that bound

anybody to his or her detriment by reason of the

course of the litigation.

MR MERRALLS:  Yes, that is so, Your Honour.

MASON CJ: It appears that there is no resistance on the

part of any member of the Court to the orders you

seek, Mr Merralls.

BRENNAN J:	To the setting aside it.
MASON CJ:	I am sorry, to the setting aside of the

orders -

MR MERRALLS:	Not positive.
MASON CJ:	- - - that were made by the Full Court of the

Supreme Court.

MR MERRALLS:  Yes. Would Your Honours permit me to speak to

my instructing solicitor for a moment?

MASON CJ: Yes.

Woodend(2) 9 2/9/91

MR MERRALLS:  Yes, that order would be sufficient,

Your Honour.

MASON CJ: That is setting aside all the orders that were

made by the supreme court, Full Court and the trial

judge.

MR MERRALLS:  Yes, that would be so, because that would

include the orders for costs and there would be no

order for costs in this Court.

MASON CJ:  Mr Merralls, we think in the light of the

discussion, it might be desirable if the matter was stood down in the list until perhaps after the next matter and you could submit to the Court a form of

order that you might ask us to make, either in the

form of short minutes or something of that

character. Is that inconvenient personally to you?

MR MERRALLS: It is not terribly convenient, Your Honour,

but what time would that be, Your Honour?

MASON CJ: Say, half an hour. Could you manage it in that

time?

MR MERRALLS:	Yes.
MASON CJ:	You can interpose in the next proceedings.

MR MERRALLS: If that would - - -

MASON CJ: It is understood, of course, Mr Merralls, the

your submission of short minutes or a form of

order, is in response to a request from the Court.

MR MERRALLS:	Yes.
MASON CJ:	In other words, your submission of the short

minutes is not to be regarded as placing you in any

difficulty so far as the undertakings in the deed

are concerned.

MR MERRALLS: Yes, we are pleased that that should be so,

Your Honour.

TOOHEY J:  Mr Merralls, could I just ask you this: the

orders presently sought include an order that the

judgment of the appeal division of the supreme

court be set aside does not purport to touch the

judgment below. Is there anything left of the

judgment below, if the judgment of the appeal

division be set aside?

MR MERRALLS:  Yes, there is, Your Honour. The order that we

sought goes beyond that.	We sought an affirmative
order.

Woodend(2) 10 2/9/91

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TOOHEY J:  Yes, but - - - \,...\~-~------ :: -,

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MR MERRALLS: That is, affirmative answers to the questions.

DEANE J:  What the Court is suggesting to you, as I

understand it, is that the short minutes by consent

of all the parties to litigation set aside the
orders of the Full Court and substitute therefor an

order setting aside the orders of the primary judge

MR MERRALLS: 

That is, as I understand it, Your Honour, yes.

completeness, I would imagine, even though it is
not necessary, say that each party pay his, her or
its own costs of the proceedings at each level.

DEANE J: 

- - - which will leave nothing at all and, for

MR MERRALLS: 

Yes, if Your Honour pleases.

MASON CJ: Very well, the matter will stand down

accordingly, Mr Merralls. The Court will take a

short adjournment, because the parties counsel in

the next case are not here.

AT 2.53 PM THE MATTER WAS ADJOURNED

UNTIL LATER THE SAME DAY

UPON RESUMING AT 3.05 PM:

MASON CJ: Yes, Mr Merralls.

MR MERRALLS:  If the Court pleases, we apologize that we do

not have typing facilities.

MASON CJ:	No, that is understandable.
MR MERRALLS:	We have drawn up a minute of the proposed

order· and I propose to read it into the record if

that would be to the Court's convenience.

MASON CJ: Yes.

MR MERRALLS:	By consent of the parties, order:
(1) that the order of the appeal division of
the Supreme Court of Victoria be set aside;
(2) that in lieu thereof it be ordered that
the order of Mr Justice Cummins be set aside;

Woodend(2} 11 2/9/91

(3) that each party bear its own costs of t~e
proceedings before Mr Justice Cummins, the

appeal to the appeal division, and of the

appeal to this Court including all reserved

costs.

MASON CJ:  Now, Mr Merralls, in the particular and special

circumstances of this case the Court does think it
appropriate to make a consent order, and the
consent order will be in terms of the minutes of

order that you have just read into the record.

MR MERRALLS: If the Court pleases.

AT 3.07 PM THE MATTER WAS ADJOURNED SINE DIE

Woodend(2) 12 2/9/91