ILETRAIT PTY LTD v McINNES SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION PRIESTLEY, HANDLEY JJ and GROVE AJA 17 April 1997, 17 April 1997 CONTRACT — CONSTRUCTION OF TERMS OF SETTLEMENT respondents commence proceedings in District Court alleging breach of contractual obligation for particular periods within the three year period covered by the written agreement between the parties — proceedings in District Court settled — parties sign Terms of Settlement of District Court proceedings to which a Deed of Release is annexed — respondents subsequently bring further proceedings against appellants for breach of contractual obligations for the remainder of the three year period — appellants argue that Deed of Release released the appellant from all obligations under the contract — trial judge finds that on the proper construction of the Deed the appellants were only released from claims raised in original District Court proceedings — Held On appeal: the trial judge was correct in his construction of the Deed. Grant v John Grant & Sons (1954) 91 CLR 112. Priestley JA These proceedings arise from a business transaction between the appellants and the two respondents which was entered into between them in 1984. The transaction was documented and under it the appellants undertook obligations to the respondents. In 1985 the respondents commenced two District Court proceedings against the appellants alleging breach of obligations under the documentation they had entered into. The District Court proceedings claimed moneys due to the respondents up to 31 August 1985. The appellants' obligations to the respondents pursuant to the transaction covered a period of three years extending into 1987. The District Court proceedings were compromised between the parties who signed terms of settlement in April 1987, some months before the three year period of the appellants' obligations to the respondents was to run out. At the time of the settlement the amount due by the appellants to the respondents, if the respondents succeeded in their claims in the District Court, was approximately $30,000. That sum included interest on the amount that had been claimed to be due as at the end of August 1985. The terms of settlement were said to be by consent and without admission of liability and recited in each case that the statement of liquidated claim was to be dismissed. There was to be no order as to costs. The terms were not to be disclosed and an agreement between the parties was to be noted. That agreement was contained in a deed of the same date annexed to the Terms of Settlement. That deed was signed by the parties and in the case of the company Iletrait Proprietary Ltd, was executed under its common seal. The deed recited the entry into the 1984 transaction and its documentation. The deed also recited that the documentation contained or imposed obligations of a continuing kind upon the appellants during the three year period. The deed further recited that the respondents alleged that the appellants were liable to make certain payments and proceedings had commenced in the District Court to recover: "Such monies as the Releasors allege are presently owing." 2 UNREPORTED JUDGMENTS The proceedings in the District Court were then identified by the numbers they had in the District Court at Gosford. Finally the deed recited: "The parties hereto wish by this deed, to resolve once and for all the differences and disputes between them arising out of the allegations in the statements of liquidated claim by which the proceedings were commenced." The deed then witnessed that in consideration of payment by the appellants to the respondents of $22,000, the respondents released and forever discharged the appellants from all actions, proceedings, suits, claims, demands, costs, damages and expenses arising out of or in respect of the matters referred to in the recitals A, B, C and D to the deed. The deed then continued with further clauses of a kind familiar in deeds of release. The second clause ended by referring to the release being: "Tn respect of the matters referred to in the recitals A, B, C and D to this deed." In the third clause, the final phrase, and emphasis was placed upon this by the appellants' counsel today, was a little wider. It referred to the release being In respect of or arising out of the matters referred to in the recitals A, B, C and D to this deed.. " The dispute between the parties which has come to this Court concerns just what it was that was released by the Deed of Settlement. The respondents contended in the proceedings that have preceded this appeal, that the release extended only to obligations dealt with and claimed for in the two District Court actions and that they were entitled in respect of the appellants' obligations under the overall transaction between them concerning matters arising after the dates in respect of which monies were claimed in the District Court proceedings, that is, they contended the release was the perfection of the settlement of the District Court proceedings and did not release anything other than claims referred to in the District Court proceedings. On the other hand, the appellants contended that the release released them from all obligations under the documented transaction of November 1984, that is that on payment of the $22,000 provided for in the Deed of Release, the appellants had no further obligations to the respondents under the transaction. This point was argued before Mr Justice Dowd who dealt with it in reasons which he handed down on 28 April 1995. He found in favour of the respondents. He agreed with the construction of the release that treated it as a release only of claims raised in the District Court proceedings. That decision by him was part only of a wider claim before him in which the respondents sought to enforce the obligations of the appellants to them in respect of the remaining part of the period which followed the periods in respect of which they had brought their proceedings in the District Court. A number of issues were contested between the parties in those wider proceedings before Mr Justice Dowd but nothing in respect of them has been made the subject of this appeal. This appeal is limited solely to the question of construction that I have already described. Counsel for the appellants correctly observed that the point was a short one. He took the Court carefully through those parts of the deed which could be reasonably said to support the construction which he advocated. I do not think I need to deal with each of his arguments because they repeat very much what was said before Mr Justice Dowd and which he carefully recorded and dealt with in his reasons and because perhaps more importantly, the arguments he raises go to questions of impression of the meaning of the deed and are overcome by what seems to me to be very clearly conveyed by the words of the deed. URJ ILETRAIT PTY LTD v McINNES (Grove AJA) 3 In my view the deed in its context as an annexure to the Terms of Settlement of the two District Court proceedings is clearly expressed as a deed releasing: "The differences in disputes arising out of the allegations in the statements of liquidated claim in the District Court." In my opinion this recital and the subsequent reference in the body of the deed to all the recitals, including that recital, make it plain that what the document was doing was putting finally to an end all the disputes which could have been litigated under the District Court proceedings. By that I mean disputes as to the amounts claimed in those proceedings to be owing pursuant to the appellants' obligations to the respondents. I do not think the deed can reasonably be read as extending to potential claims the respondents might have against the appellants in respect of periods later than those referred to in the two District Courts Statements of Claim. In the High Court decision of Grant v John Crant and Sons, (1954) 91 CLR 112, the headnote I think accurately states the rule of long standing upon which that case was decided. The head-note says: "The general words in a release are limited always to that thing or those things which were specially in the contemplation of the parties at the time when the release was given." In my opinion it is clear that what should be taken from the materials the court is entitled to take into account in this case as having been in the contemplation of the parties at the time when the release was given, was the settlement of the two District Court proceedings then on foot and nothing more. I do not see in the deed any material which reasonably supports the view that the document was directed towards the release of the appellants from all their obligations under the documentation of the transaction into which they had entered with the respondents. It was directed only to that limited aspect of obligation which was raised by the District Court proceedings. My opinion therefore is that Mr Justice Dowd was correct in his construction of the deed, so that the appeal should be dismissed with costs. Handley JA I agree. Grove AJA I also agree. Priestley JA: The orders of the Court therefore are that the appeal is dismissed with costs. Counsel for the Appellant: D G M Bennett QC/G Kennedy Counsel for the Respondent: L V Stapleton Solicitors for the Appellant: Jennifer E Darin Solicitors for the Respondent: Nash Allen Williams & Wotton