Be\ DATE OF ORDER WHERE MADE IN THE FEDERAL COURT OF AUSTRALIA WESTERN AUSTRALIA DISTRICT REGISTRY ) No. WA G26 of 1983 ) ) GENERAL DIVISION BETWEEN 4 JELIN PTY. LIMITED Applicant AND 3 MURDOCH PTY. LIMITED Respondent ORDERS JUDGE MAKING ORDER Morling J. 5 October 1983 Perth THE COURT ORDERS: 1. The application is refused. 2. The matter is adjourned to 9.30 a.m. on 12 October 1983. IN THE FEDERAL COURT OF AUSTRALIA ) ) WESTERN AUSTRALIA DISTRICT REGISTRY ) No. WA G26 of 1983 ) ) GENERAL DIVISION BETWEEN: JELIN PTY. LIMITED Applicant AND: MURDOCH PTY. LIMITED Respondent MORLING J. 5 October 1983 . EX TEMPORE REASONS FOR JUDGMENT This is an application by Murdoch Pty. Limited, the respondent to proceedings brought by Jelin Proprietary Limited. The application is made pursuant to order 20, rule 2 of the Federal Court Rules. Although the particular part of the rule is not identified in the application, I think 1t reasonably clear that the respondent claims that either the proceedings brought by the applicant disclose no reasonable cause of action or that they are vexatious or are an abuse of the process of the court. It is unnecessary for me to state the facts in any detail. It is sufficient to say that scme time ago a lease of 2. commercial premises in the Mount Hawthorn Plaza Shopping Centre was entered into between the respondent as lessor and the applicant as lessee. In the statement of claim it is alleged that certain misrepresentations were made by or on behalf of the respondent, which representations were misleading and which caused the lessee to enter into the lease. After the lease was entered into the lessee took possession of the premises but appears to have failed to pay all or some of the rental due under the lease and also all or some of the other payments required to be made to the lessor. Proceedings in the Local Court of Western Australia and in the Supreme Court of Western Australia have been taken between the parties. The proceedings in the Local Court were by the lessor for recovery of amounts alleged to be due to it under the lease and the proceedings in the Supreme Court were taken by the lessee alleging, inter alia, misrepresentations on the part of the lessor prior to the entry into the lease. On 6 August 1982, after certain discussions had been held between representatives of the parties as to a possible compromise of their disputes, a letter was brought into existence and signed by a representative of both parties. The letter refers to an agreement reached to resolve the parties' disputes on an amicable basis. The agreement was expressed in the following terms: 3. "AR six month rent-free period is to be granted ) Sets out on the lease commencing from the date of this ) terms in correspondence .... that this dealing ..... ) Letter. There were certain other terms of the agreement to which it is unnecessary to refer. According to Mr James Lowe, a director of the applicant, at the time he signed the letter, Mr Johnston, a director of the lessor company, said words to Mr Lowe to the effect that - "If you did drop the legal action, you can start it again in six months time, but by then the centre would be booming and there would be no need for anyone running to solicitors." Both Mr Johnston and Mr David Thomas, the manager of the Hawthorn Plaza Shopping Centre, vigorously denied that any such words were spoken. Mr Davis, who appeared for the respondent, which is the applicant on the option, has submitted a powerful case that the letter of 6 August 1982 and the events which followed the signing of that letter constitute an accord and satisfaction of the claims that each party had against the other as at that date. He pointed cut, correctiy in my opinion, that the allegations made in the statement of claim in this court are virtually identical to the allegations Made by the applicant in the Supreme Court proceedings. He therefore submits that there is no prospect that the applicant will succeed in the proceedings in this court because those proceedings have already, in effect, been compromised by the agreement reached on 6 August 1982. He has adverted to the commercial improbability of the lessor agreeing to give various considerations referred to in the letter of 6 August 1982 and, at the same time, agreeing that the lessee could recommence its proceedings at some time in the future. He says that although, on the face of the affidavits, there is a dispute between the witnesses as to what was said at the time of the signing of the letter, Mr Lowe's account of the conversation 1s so improbable that it should be rejected. I see the force of this submission and I do not say it will not succeed at the trial, but I have not seen the witnesses in the witness box and I do not think it would be proper for me to determine where the truth lies on that issue without seeing the witnesses. Moreover, I perceive the force of Mr _ Davis' submission that, on any construction of the letter of 6 August 1982, it ought not to be held that it contemplated that the lessee would be entitled to bring fresh proceedings in this court based on the allegations made in the proceedings in the Supreme Court of Western Australia which 5. the lessee agreed to withdraw; but unfortunately for Mr Davis' client I think that when account is taken of the disputed conversation it 1s not possible for me to say that on no possible view of the facts, or on no possible construction of the letter, can the applicant in the present preceedings succeed. The words "withdraw its legal action" could, on one view of the facts, be construed as amounting to no more than an agreement to discontinue the legal actions then extant. If that view is taken, it would be a compliance with that term of the agreement merely to withdraw the proceedings in the Supreme Court. There would be no restriction on either party commencing fresh proceedings at some time in the future should a final compromise of their disputes not be reached. The authorities on the question of whether a party should be permitted to continue with his action, notwithstanding the apparent weakness of it, have been considered in many cases. I need do no more than refer to General Steel Industries Incorporated v Commissioner for Railways, New South Wales, 112 C.L.R. 125, particularly at pp-129 to 130, per Barwick C.J. I do not think that I can say on the facts of the present case that, to use the words of the Chief Justice in 6. the General Steel Industries' Case, the applicant's case is so obviously untenable that it cannot possibly succeed, or that its case is "so manifestly faulty that it does not admit to argument" or that I am satisfied that it "cannot succeed". I should say that in his argument Mr Davis has referred to the decision of the High Court in McDermott v Black, 63 C.L.R. 161. I do not think the decision in that case is of much assistance in the present case. McDermott's Case was not a striking out case. Although the case states the law on accord and satisfaction, I do not think that it is the law on accord and satisfaction which is the problem in the present case; rather it is whether, on the facts of the present case, there was such an accord and satisfaction as prevents the applicant from maintaining the present proceedings. For these reasons I do not think the motion should succeed. However, Mr McKerracher for the applicant has indicated a willingness that the issue whether the present proceedings are barred by an accord and satisfaction should be determined as a preliminary issue. Because it seems to be agreed between the parties that this would be a convenient course to adopt, I would be minded to agree to the giving of some appropriate directions to ensure that this is done. I therefore propose that the matter stand 7. over for a few days to enable the parties to bring in some agreed directions, to enable that matter to be considered. Unless the parties would find it inconvenient, I propose to list the matter at 9.30 a.m. on Wednesday of next week, when I will give further directions as to the further hearing of the matter. I certify that this andthe S/x (¢) preceding pages are a true copy of the Reasons for Judgment herein of his Honour Mr. Justice Morling. Associate patea:r S //0/8 3