FEDERAL COURT OF AUSTRALIA Still v Investec Bank (Australia) Limited [2014] FCA 655 Citation: Still v Investec Bank (Australia) Limited [2014] FCA 655 Parties: MICHAEL ANTHONY STILL v INVESTEC BANK (AUSTRALIA) LIMITED File number: NSD 2601 of 2013 Judge: FLICK J Date of judgment: 20 June 2014 Catchwords: PRACTICE AND PROCEDURE – two offers made – acceptance of offer that remained open – offer that was accepted not subject to an implied term not to commence any further proceeding – discontinuance CONTRACT – implied term – not necessary to avoid an unworkable situation Legislation: Federal Court Rules 2011 (Cth) rr 25.10(a), 26.12(2), 26.14 Cases cited: Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41 Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589 Date of hearing: 3 June 2014 Place: Sydney Division: GENERAL DIVISION Category: Catchwords Number of paragraphs: 16 Counsel for the Applicant: Mr P M Knowles Solicitor for the Applicant: Birchall Legal Counsel for the Respondent: Mr A M Hochroth Solicitor for the Respondent: Herbert Smith Freehills IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 2601 of 2013 BETWEEN: MICHAEL ANTHONY STILL Applicant AND: INVESTEC BANK (AUSTRALIA) LIMITED Respondent JUDGE: FLICK J DATE OF ORDER: 20 JUNE 2014 WHERE MADE: SYDNEY THE COURT ORDERS THAT: 1. The parties are to bring in Short Minutes of Orders to give effect to these reasons within 7 days. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 2601 of 2013 BETWEEN: MICHAEL ANTHONY STILL Applicant AND: INVESTEC BANK (AUSTRALIA) LIMITED Respondent JUDGE: FLICK J DATE: 20 JUNE 2014 PLACE: SYDNEY REASONS FOR JUDGMENT 1 On 24 December 2013 the Applicant in the present proceeding, Mr Michael Still, filed an Originating Application and a Statement of Claim in this Court. An Amended Statement of Claim was filed in March 2014 and thereafter there was filed an Amended Defence. 2 Agreement between the parties has recently emerged and the Applicant seeks to file a Notice of Discontinuance. The only issue now dividing the parties is whether or not the agreement to settle the proceeding was subject to an implied term that the Applicant not commence any further proceeding "in relation to the same, or substantially the same, causes of action". 3 On behalf of Mr Still it is contended that the agreement was not subject to any such implied term and he seeks an order pursuant to r 25.10(a) of the Federal Court Rules 2011 (Cth). That rule relevantly provides as follows: Failure to comply with offer If, after acceptance of an offer by an offeree, an offeror fails to comply with the offer's terms, the offeree may apply to the Court for an order: (a) giving effect to the accepted offer… … Alternatively, an order is sought on his behalf that leave be given to file a Notice of Discontinuance pursuant to r 26.12(2)(c) of those Rules in a form in accordance with the express terms of the agreement reached and relevantly free of the constraint embraced within the implied term. Rule 26.12(2) provides as follows: Discontinuance (1) A party claiming relief may discontinue a proceeding in whole or in part by filing a notice of discontinuance, in accordance with Form 48. (2) The party may file the notice of discontinuance: (a) without the leave of the Court or the other party's consent: (i) at any time before the return date fixed in the originating application; or (ii) if the proceeding is continuing on pleadings - at any time before the pleadings have closed; or (b) with the opposing party's consent - before judgment has been entered in the proceeding; or (c) with the leave of the Court - at any time. 4 On behalf of the Respondent it is contended that the agreement was subject to the implied term constraining the freedom of Mr Still to commence any further proceeding in relation to the same or substantially the same matter. It, therefore, resists any order being made pursuant to r 25.10(a) to enforce the agreement free of that constraint and further maintains that it can withhold its "consent" for the purposes of r 26.12(2) because any agreement it reached as to discontinuance was subject to the implied term. It further submitted that it was premature for Mr Still to seek to invoke r 25.10(a) because there had not – as yet – been a "failure" to comply with the offer's terms. 5 It is concluded that Mr Still's position should prevail. 6 The simple fact is that on 30 April 2014 two "without prejudice" letters were forwarded by e-mail from the Respondent's solicitors to the solicitors for Mr Still. The first of those two letters, albeit received by an e-mail minutes before the second letter, took the form of an offer in accordance with this Court's Rules, namely a Notice of offer to compromise. The second of the two letters took the form of a Calderbank offer. 7 If attention is confined to the express terms set forth in the two letters, there were differences between the offers being made. Relevantly, the second of the two letters assuming the form of a Calderbank offer was different in that: the covering letter stated that the offer was expressed to be "by way of full and final settlement" of the proceeding; the offer was subject to a term that Mr Still signed a "deed of release"; and the offer was expressed to be open "until noon on Monday 12 May 2014" whereas the letter first received by way of contrast, was said to be "open to be accepted for 14 days". The annexed Deed of Release, relevantly contained terms that: Mr Still provide a "signed copy of notice of discontinuance in the terms of the notice set out in Schedule 1 within 3 days"; Mr Still "unconditionally releases the Group from all claims Mr Still has now or may have had in the future if the parties had not executed this deed"; and the "Group may plead this deed as a bar to any claim or proceedings by Mr Still in respect of any matters arising out of, touching on, referred to or contained in this deed". The notice of discontinuance which formed Schedule 1 to the Deed simply stated that "discontinuance is by consent on the following terms", namely "each party is to bear their own costs of the proceeding". Notwithstanding the form of that notice, and construed solely by reference to the terms of the Deed of Release, it was quite properly accepted by Counsel for Mr Still that it would be difficult to construe the terms of the discontinuance free of the constraints expressed elsewhere in the Deed. 8 On 14 May 2014 the solicitors for Mr Still forwarded to the solicitors for the Respondent a notice of acceptance of "your offer to compromise made on 30 April 2014". 9 Subsequent to 14 May 2014 there was an exchange of correspondence between the solicitors focussing attention on the prospect that Mr Still sought to "reserve to himself the prospect of bringing further proceedings in relation to the same, or substantially the same, causes of action pleaded in these proceedings". 10 The conclusion that the settlement of the proceeding was subject to a notice of discontinuance being filed free of any implied term is, essentially, founded upon: the fact that there were differences in the terms in which the two letters dated 30 April 2014 were expressed – the form in which the first offer was expressed did not (but could have) made reference to a condition that no subsequent proceeding be commenced. There was no reason why the former letter forwarded on that date could not have expressed the same constraints as were expressed in the Deed of Release; the fact that the Calderbank offer was expressed to be by way of "full and final settlement", whereas the former offer was not so expressed; the fact that both offers were drafted with an obvious attention to detail and drafted by experienced legal advisers; and the fact that there were differences between the two offers being made and the fact that by 14 May 2014 the Calderbank offer had expired according to its terms and that it was only the former offer which remained open for acceptance. Although the terms of the Calderbank offer may have been subject to an implied term if attention was confined to the terms of the 30 April 2014 letter and the enclosed Deed of Release, the former letter of offer was expressed in terms free of any such potential room for argument. It is not considered necessary to give business efficacy to the offer first received to imply a term of the kind advanced on behalf of the Respondent. It forever remained a matter for the Respondent to express the terms upon which any offer of compromise was to be advanced for consideration. Three available options included discontinuance, judgment or dismissal. There may have been commercial reasons why any respondent would prefer that a proceeding be discontinued as opposed to (for example) an order that judgment be entered against it. In circumstances where a respondent is offering the payment of monies, there may equally be commercial reasons why such a respondent may consider that any offer expressed in terms of the dismissal of a proceeding against it would be unlikely to be favourably received by an applicant. But whatever the reason, the present Respondent expressed the offer in the terms conveyed in the letter of offer first received on 30 April 2014. The term sought to be implied, it may further be accepted, was not a term which both Mr Still and the Respondent "must have intended…to avoid an unworkable situation": cf. Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41 at 66 per Gibbs CJ. 11 Such a conclusion, it is further respectfully concluded, does no disservice to the commercial utility of proceedings being settled by way of discontinuance as opposed to proceedings being settled by way of (for example) a consent judgement. No proposition was advanced on behalf of the Respondent that any notice of discontinuance would always be subject to an implied term that no further proceeding be commenced arising out of "the same, or substantially the same, causes of action pleaded in these proceedings". Such an implied term in all such cases, it was correctly accepted, would be inconsistent with r 26.14 of the Federal Court Rules 2011 which provides as follows: Effect of discontinuance Discontinuance under this Division cannot be pleaded as a defence to a proceeding in relation to the same, or substantially the same, cause of action. 12 Although the focus of attention was sought to be shifted by Counsel for the Respondent from the effect of a notice of discontinuance to the consequences flowing from a settlement of a proceeding by way of compromise, any such clear distinction became obscured by the proposed Notice of offer to compromise being expressed in terms of an "offer to compromise these proceedings" on terms that "the Applicant discontinues the proceedings…". 13 The conclusion that the agreement between the parties to settle the proceeding, by way of a notice of discontinuance being filed and that such a discontinuance was not subject to the term sought to be implied by the Respondent, says nothing as to whether Mr Still may commence a subsequent proceeding which could potentially attract a submission that the subsequent proceeding was an abuse of process or a proceeding which could attract a submission invoking Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589. 14 It is thus concluded that the agreement between the parties is an agreement to discontinue the proceeding and that no term should be implied. 15 If such a conclusion was reached, there was agreement between the parties as to the form of orders to be made. Any question as to whether a Deed of Release would be accepted for filing was quite properly addressed by Counsel for the Respondent accepting that any "consent" which may be required would be forthcoming. It is unnecessary to resolve any question as to whether an offeror who seeks to impose an additional term to an offer after it has been accepted "fails to comply with the offer's terms" for the purposes of r 25.10(a) of the Federal Court Rules 2011. 16 Since the hearing, there has apparently emerged disagreement between the parties as to the form of orders to be made. It is thus proposed to deliver judgment and to direct the parties to bring in Short Minutes of Orders to give effect to these reasons within 7 days. THE COURT ORDERS THAT: 1. The parties are to bring in Short Minutes of Orders to give effect to these reasons within 7 days. I certify that the preceding sixteen (16) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Flick. Associate: Dated: 20 June 2014