Bendigo & Adelaide Bank Ltd v Gorczynski (No 3) [2016] NSWSC 55

Supreme Court New South Wales

Medium Neutral Citation: Bendigo & Adelaide Bank Ltd v Gorczynski (No 3) [2016] NSWSC 55 Hearing dates: 3 February 2016 Date of orders: 03 February 2016 Decision date: 03 February 2016 Jurisdiction: Common Law Before: McCallum J Decision: Determination under s 73 of the Civil Procedure Act 2005 that the matter listed for hearing on 19 November 2015 was settled between the parties in advance of the hearing date Catchwords: PROCEDURE – settlement of proceedings – dispute as to terms – whether appropriate for the court to determine of its own motion whether and on what terms the matter was settled – where defendant offered terms as to all substantial elements of the matter before the court – where offer accepted by plaintiff "subject to your client agreeing to execute the attached deed of settlement and release" – dispute as to aspects of proposed deed – construction of agreement informed by duty of parties to advance the overriding purpose Legislation Cited: Civil Procedure Act 2005, s 75 Cases Cited: Bendigo & Adelaide Bank Limited v Gorczynski (No 2) [2015] NSWSC 1345 Category: Procedural and other rulings Parties: Bendigo and Adelaide Bank Limited (plaintiff/respondent) Peter F Gorczynski (defendant/applicant) Representation: J Foley (solicitor for the plaintiff/respondent) Defendant/applicant self-represented

Solicitors: Gadens (plaintiff/respondent) File Number(s): 2009/293542 Publication restriction: None

Judgment 1. HER HONOUR: These proceedings have come before me on a number of occasions. On 22 September 2015, for the reasons recorded in my judgment published that day, I ordered that the plaintiff bank pay into Court the sum of $5,253.10: see Bendigo & Adelaide Bank Limited v Gorczynski (No 2) [2015] NSWSC 1345. On the same date, I referred Mr Gorczynski to the pro bono panel for legal assistance. The kind of assistance specified in the order was advice and representation in relation to the issue of Mr Gorczynski's and the bank's respective entitlement to the fund ordered to be paid into Court. Mr Glissan of counsel accepted the pro bono referral and represented Mr Gorczynski thereafter. 2. The matter of Mr Gorczynski's and the bank's respective entitlement to the fund paid into Court was listed to be heard by me on 19 November 2015 with the anticipation that Mr Glissan would appear for Mr Gorczynski that day. On the morning of that day, the Court received an email from Mr Foley, the solicitor for the bank, sent with the consent of Mr Glissan, informing the Court that the parties had resolved all matters presently before the Court subject to the exchange of a deed of settlement. It is Mr Gorczynski's position, confirmed both by his evidence and information provided to the Court by Mr Glissan, that Mr Gorczynski was not aware of the fact that that email had been agreed by the two lawyers to be sent to the Court. Mr Gorczynski took the view that there was no binding agreement, since the position communicated by Gadens on behalf of the bank was expressed to be subject to the execution of the proposed deed. Mr Gorczynski opposed some of the terms sought to be included in the deed and accordingly took the view, contrary to the position understood by the two lawyers, that the matter was not settled. The parties were continuing to discuss disputed aspects of the deed. I stood the proceedings over for a week in the hope that the parties would be able to resolve those disputes. 3. When the proceedings next came before me, I raised the issue whether it would be appropriate for the Court to exercise its authority under s 73 of the Civil Procedure Act 2005 (NSW) to determine the question whether the parties had reached a binding agreement. Since that date, although neither party seeks such a determination, each party has put on evidence directed to that issue. Separately, Mr Glissan has now ceased to act for Mr Gorczynski. 4. The proceedings were listed before me again today. At the outset of the hearing, as I had foreshadowed on the previous occasion, I enquired of the parties whether it would be appropriate for me to proceed to exercise the authority conferred by s 73 of the Civil Procedure Act 2005 to determine whether, and on what terms, the matter initially listed for hearing on 19 November 2015 (namely, the respective entitlement of the parties to the small fund paid into Court pursuant to my orders made that day) had been settled between the parties. Mr Foley, who appears for the bank today, confirmed that the bank makes no application for the Court to determine any such question but does not oppose the Court's proceeding to determine that question of its own motion. Mr Foley had put on, in anticipation of that course, an affidavit setting out in careful detail the negotiations resulting in what he understood to be the settlement of the proceedings as at 19 November 2015. Mr Gorczynski had also put on an affidavit responding to that evidence and setting out his own position in respect of the settlement. 5. I took the view that, in the circumstances revealed by those two affidavits, it would be appropriate for the Court to enquire into and determine the question whether the settlement of which the Court was informed by email on 19 November 2015 was binding. 6. Section 73 of the Civil Procedure Act provides: 73 Power of court to determine questions about compromises and settlements (1) In any proceedings, the court: (a) has and may exercise jurisdiction to determine any question in dispute between the parties to the proceedings as to whether, and on what terms, the proceedings have been compromised or settled between them, and (b) may make such orders as it considers appropriate to give effect to any such determination. (2) This section does not limit the jurisdiction that the court may otherwise have in relation to the determination of any such question. 1. Although there is no express reference in the section to any authority of the Court to determine any such question of its own motion, the existence of such authority seems to me to be necessarily implicit when the section is read together with the provisions of s 56 of the Act. The content of that section is well-known but it is pertinent to repeat that, under s 56(2), the court has a duty to seek to give effect to the overriding purpose of facilitating the just, quick and cheap resolution of the real issues in the proceedings and that, under ss (3), a party to civil proceedings is under a duty to assist the Court to further that purpose and, to that effect, to participate in the processes of the court. 2. In circumstances where a hearing date with an estimate of half a day was lost on the understanding that two legal representatives for the respective parties to the dispute considered that a binding settlement had been reached, and having regard to the small amount in dispute, I determined that it would be appropriate for the Court to embark upon that course in furtherance of the overriding purpose. 3. Having considered the evidence before the Court today and heard submissions from both parties, I have reached the conclusion that there was a binding settlement between the parties as at 19 November 2015 as to the substantive matters in dispute between them which were due to be heard that date, substantially on the terms recorded in the deed. In reaching that conclusion, I have taken the approach that the Court should construe the negotiations between the parties to achieve a settlement in a way that is informed (objectively) by the content of the duties to which I have referred under s 56 of the Act. That in turn informs the question whether the acceptance of the offer, viewed objectively, was conditional. 4. Mr Foley's affidavit makes plain that, on 18 November 2015, an offer was communicated to him by Mr Glissan on behalf of the plaintiff as to the substantive matters in dispute relating to the fund paid into Court. The offer reflected little by way of compromise on the part of Mr Gorczynski but offered the end of the dispute. By email dated 18 November 2015, Gadens communicated the plaintiff's agreement to the settlement terms communicated in that offer "subject to your client agreeing to execute the attached deed of settlement and release". The terms of the deed proved to be the sticking point as a result of which Mr Gorczynski, at least, apprehended that there was no binding agreement as at that point in time. It seems to me, however, that having regard to the content of the duty of each party under s 56, the Court should construe an exchange of offer and acceptance relating, as it did here, to the principal issues in dispute as being subject to an implied term that each party would act reasonably and in good faith, in accordance with the duty under s 56, in seeking to record the settlement on the premise that the settlement itself would be binding from that point. 5. I have heard argument from Mr Gorczynski this morning as to the aspects of the deed presented by Gadens which concerned him. Two principal sticking points arose in his mind. One was the content of clause 4(a), which was in the following terms: Upon execution of this Deed the Borrower unconditionally and irrevocably releases and discharges the Bank from all Claims which they may have or which but for this deed would, could or might at any future time have or have had against the Bank in respect of or arising out of any issue relating to the manner in which the Bank dealt with the Surplus Funds. 1. Mr Gorczynski's concern in respect of that clause derived from the definition of the term "Claims". Focussing acutely on the broad definition of that term, he apprehended that the release would preclude him from pursuing a separate application he wishes to make in respect of the bank's calculation of the sum of $730,429.04 which it deducted from the proceeds of sale (resulting in the "surplus funds" referred to in recital K to the deed). It is clear enough from the correspondence between the parties that his apprehension was misplaced, but it was a genuine apprehension he held and it, I think, became the principal sticking point for the settlement. To allay his concerns, the bank later consented to the inclusion in proposed consent orders to give effect to the settlement of the following order: That the defendant has liberty to apply with respect to matters other than these orders. In particular, information as to how the plaintiff calculated the sum of $730,429.04 which it deducted from the proceeds of sale of the property for subject of the proceedings. 1. Mr Gorczynski apprehended that, notwithstanding that express acknowledgment, the settlement deed might preclude him from taking any further step if he does, in fact, ascertain that the bank deducted too great a sum from the proceeds of sale. In my view, it is plain on a reading of the deed that Gadens, or rather the bank, had no such intention and that is not what the deed says. In referring to "surplus funds", the deed plainly refers to the fund in fact calculated at the time the sale was settled. If it later transpires that the bank's calculation was wrong, I see nothing in the deed to preclude Mr Gorczynski from pursuing any claim for such additional surplus funds. In any event the important point is that the deed reflects the actual agreement in that respect. 2. The second principal concern Mr Gorczynski had was with a non-disparagement provision inserted in the deed. I understand why the bank would seek to have such a clause inserted but, if one seeks to analyse the position as at 19 November 2015 by the objective test appropriately applied in construing an agreement, I do not think that is a condition which could be implied as a term of the agreement reached by offer and acceptance the previous day and in the correspondence to which I have referred. I would respectfully share Mr Gorczynski's concern that the insertion of such a clause is an inappropriate fetter on his freedom of speech. The clause is not one which a bystander would think to have been necessarily or obviously a term of the settlement reached. I do not think it formed part of the agreement. 3. There is one further matter which needs to be recorded. Proposed clause 6 of the deed recorded that the borrower had obtained independent legal advice prior to executing the deed and that he gave a warranty to that effect in reliance on which the bank proceeded to enter the deed. In the events that have occurred, the deed will not be executed. What I propose to do is to make a determination, under s 73, as to the terms on which the matter to be heard by me in November last year was settled between the parties. It follows that no such warranty is given by Mr Gorczynski or able to be relied upon by the bank, since that was never the fact. 4. Otherwise, it seems to me that, on an objective analysis of the exchanges that took place between the parties and noting the matters of clarification later agreed upon, the matter of the parties' respective entitlement to the fund paid into Court was settled as at 19 November 2015 and agreed to by the bank in advance of the hearing and that the terms on which that matter was settled were substantially those recorded in the deed of settlement which appears at pages 13 to 20 of the exhibit to Mr Foley's affidavit sworn 28 January 2016, subject to the exclusion of clause 5(c) and clause 6. For those reasons, I consider it appropriate to make orders in the terms of the consent orders which appear at pages 54 to 55 of Mr Foley's affidavit.