Bendigo and Adelaide Bank Ltd v Williamson & Anor

1. [1]

   HER HONOUR: This is an application by Bendigo and Adelaide Bank Ltd (the Bank) for judgment to be entered against Hugh Williamson, by reason of a Settlement Agreement entered into more than a year ago. The Bank seeks judgment for $400,000, being the monies to be paid by Mr Williamson under the Settlement Agreement, together with interest which has accrued and legal costs which have been incurred since the date of the agreement. The Bank also seeks its costs of the motion.

Facts

1. [2]

   On 19 August 2010, the Bank commenced these proceedings against Mr Williamson and Great Southern Finance Pty Ltd (in liquidation) (receivers and managers appointed) in the Supreme Court of Victoria. I gratefully adopt the summary of the procedural history of this matter since by Ward CJ in Eq in Bendigo and Adelaide Bank Ltd v Williamson [2017] NSWSC 939.

2. [3]

   Relevantly, the Bank claimed monies and interest due under a loan agreement entered into by Mr Williamson in connection with an investment made by him in a managed investment scheme, referred to as the Great Southern Plantations 2004 Project Managed Investment Scheme. The loan was for $282,000. The Bank acquired its interest in various loans made under that scheme following the assignment of those loans by Great Southern Finance Pty Ltd to Adelaide Bank Ltd in April 2009 and the subsequent transfer of Adelaide Bank Ltd’s rights to the Bank as approved under the Financial Sector (Business Transfer and Group Restructure) Act 1999 (Cth). The Bank claimed that Mr Williamson defaulted on the loan from around June 2009, and failed to comply with demands for repayment of the loan. Mr Williamson filed a Counter Claim.

3. [4]

   There were in fact a large number of proceedings in the Supreme Court of Victoria concerning the Great Southern Plantations 2004 Project Managed Investment Scheme: there were 16 group proceedings under Part 4A of the Supreme Court Act 1986 (Vic) and eight separate proceedings which were not group proceedings but which raised issues in common with some or all of the group proceedings and were heard together with them for the purpose of determining issues common to all of the proceedings.

4. [5]

   On 7 June 2013, Croft J stayed the Bank’s proceedings against Mr Williamson until one of the group proceedings, Proceeding No SCI 2011 06344 (the Kenny Proceeding), had been determined. These proceedings were stayed on Mr Williamson’s undertaking to be bound by any findings of fact and law in the Kenny Proceeding.

5. [6]

   On 11 December 2014, Croft J approved a settlement in proceedings concerning the management investment scheme, including the Kenny Proceeding. Notwithstanding the settlement, Croft J published the reasons for judgment which his Honour would have given if the settlement had not been reached: Clarke and Ors v Great Southern Finance Pty Ltd [2014] VSC 516.

6. [7]

   On 27 July 2015, the Bank’s then solicitors Allens Linklaters sent a “without prejudice except as to costs” letter to Mr Williamson’s solicitors, suggesting that Croft J’s judgment in Clarke v Great Southern Finance Pty Ltd indicated that Mr Williamson’s Counter Claim was doomed to fail and inviting him to consent to orders dismissing the Counter Claim with no order as to costs. More precisely, the letter stated:

7. [8]

   On 3 August 2015, Mr Williamson commenced proceedings against the Bank and Elders Rural Services Australia Ltd for alleged fraud in relation to the settlement of the purchase of a property called “Reevesdale” at Bungonia near Goulburn, seeking punitive damages of some $5 million. Mr Williamson says he was “advised to narrow it down to just Elders” and pressed his claim only against Elders. This is referred to by the parties as the Elders proceeding.

8. [9]

   On 29 January 2016, Croft J lifted the stay in these proceedings. In March 2016 and in February 2017, the Bank filed motions for summary judgment, the latter in the sum of $669,048.51 being the amount owing as at 21 February 2017 plus interest and costs. Neither motion was substantively determined by the court.

9. [10]

   On 27 April 2017, Mr Williamson filed Notices of Discontinuance against the defendants to the Counter Claim and discontinued the Counter Claim, and Croft J transferred these proceedings to the Supreme Court of New South Wales. Whether Mr Williamson discontinued the Counter Claim by reason of Allens Linklater’s letter of 27 July 2015 or otherwise is not known, nor does it matter for present purposes.

10. [11]

    On 9 May 2017, Mr Williamson’s solicitors ceased to act for him and he has appeared in this court in person. Mr Williamson is a retired solicitor.

11. [12]

    The Bank promptly filed another application for summary judgment on the grounds that Mr Williamson’s defence had no prospect of success. On 17 July 2017, Ward CJ in Eq dismissed the application for summary judgment without prejudice to the Bank’s ability to make a further application in the future, directed Mr Williamson to amend a proposed amended defence and referred the parties to a court annexed mediation: Bendigo and Adelaide Bank Ltd v Williamson [2017] NSWSC 939.

12. [13]

    On 18 August 2017, the Bank and Mr Williamson agreed to settle the proceedings at a mediation. The Settlement Agreement, signed by the Bank and Mr Williamson, provided:

13. [14]

    On 23 August 2017, Ward CJ in Eq noted that the matter had settled and stood the proceedings over.

14. [15]

    In November 2017, the Elders proceeding were heard by Johnson J who reserved his judgment. His Honour’s judgment has not been handed down.

15. [16]

    In February 2018 and April 2018, Ward CJ in Eq stood these proceedings over, ultimately to the Registrar’s List on 2 October 2018, to allow for payment to be made by 30 September 2018 as had been agreed by the parties.

16. [17]

    On 25 September 2018, Mr Williamson emailed the Bank’s solicitor seeking further time to permit Johnson J to publish his decision in the Elders proceeding and thus to enable Mr Williamson to pay the Settlement Sum. Mr Williamson indicated that, if the Bank was not amenable to his request then, “I will take action which will make it quite impossible to enter any judgment.”

17. [18]

    On 27 September 2018, Mr Williamson filed a Statement of Claim in the District Court of New South Wales against the Bank, being proceedings 2018/295495. Mr Williamson claimed to have been misled and deceived by the Bank’s barrister at the mediation. In particular, Mr Williamson says that he sought reassurances from the Bank’s barrister than the monies the subject of the loan had in fact been advanced and, based on the assurance of the barrister, agreed to settle the proceedings. Mr Williamson pleads that the reassurance was incorrect as demonstrated by Bendigo and Adelaide Bank Ltd v Howard [2018] NSWSC 383, a judgment of Davies J delivered seven months after the mediation. Mr Williamson sought an order from the court to set aside the settlement under section 52 of the Trade Practices Act 1974, although I note that this Act was replaced by the Australian Consumer Law in 2011.

18. [19]

    Mr Williamson served the Statement of Claim on the Bank’s solicitor and told the solicitor that he did not have the funds to pay the Settlement Sum. Further emails ensued. Mr Williamson made plain that he did not presently have the funds to pay the Settlement Sum but anticipated having the funds when Johnson J handed down his judgment. Mr Williamson proposed that the Bank await the outcome of the Elders proceeding or, in the event that Mr Williamson was unsuccessful before Johnson J, the outcome of an appeal which he indicated he would bring. If the Bank agreed to his proposal, then Mr Williamson offered not to prosecute the District Court proceedings. The Bank was unmoved and indicated that it intended to press for entry of judgment on 2 October 2018 and to enforce the judgment without further delay.

19. [20]

    The Settlement Agreement required Mr Williamson to pay the Settlement Sum to the Bank by, at the latest, 30 September 2018. Mr Williamson did not do so.

20. [21]

    On 2 October 2018, the matter was listed before Registrar Walton for directions. Mr Williamson gave evidence that, by reason of something said by Registrar Walton, he understood that judgment had been awarded in his favour in the Elders proceeding. The Registrar’s comment, according to Mr Williamson was, “Why not wait: the judgment will enable him to pay”. It seems to me, by this comment, the Registrar was simply enquiring of the Bank whether it was prepared to defer enforcing judgment until the outcome of the Elders proceeding rather than giving any indication as to what the outcome of those proceedings was going to be. Clearly enough, Johnson J has not given his judgment and therefore no-one knows what that judgment will be until his Honour has done so.

Law

1. [22]

   Although the Bank did not identify the power of the court to make the orders sought, the court has power to make orders to give effect to any agreement or arrangement arising out of a mediation, including hearing evidence as to the fact that an agreement or arrangement has been reached and as to the substance of the agreement or arrangement: section 29, Civil Procedure Act 2005; see for example Grant v Grant [2012] NSWSC 725 at [41]; Edwards v Trapman [2014] NSWSC 1089.

2. [23]

   Under section 73 of the Civil Procedure Act, the court:

3. [24]

   The Court’s powers under section 73 have been considered by the Court of Appeal in Grave v Blazevic Holdings Pty Ltd [2012] NSWCA 329 per Campbell JA at [3]-[5]; Jingalong Pty Ltd v Todds [2015] NSWCA 7 at [62] per Sackar AJA with whom Meagher and Leeming JJA agreed. More recently, in Gorczynski v Bendigo and Adelaide Bank Limited [2016] NSWCA 170, Basten JA noted that section 73 confers power on the court to deal with settlements in the proceedings to which they relate. At [6]-[7]:

4. [25]

   Mr Williamson, by his affidavit and his oral submissions, put forward three reasons why the Bank’s motion for judgment should fail.

5. [26]

   First, judgment in the Elders proceeding is imminent and he expects that he will be awarded ample damages to enable him to pay the Settlement Sum. Second, the Bank’s insistence on enforcing its judgment is an attempt by the Bank to help Elders, which Mr Williamson says the Bank owns, by effectively depriving Mr Williamson of a judgment in his favour in the Elders proceeding. Mr Williamson pointed to the without prejudice letter from Allens Linklaters of 27 July 2015 as evidence of a previous attempt by the Bank to act in this manner, although the letter does not support the submission made by Mr Williamson. Third, Mr Williamson points to the personal hardship that will follow.

6. [27]

   Whilst I am sympathetic to Mr Williamson’s personal situation, and well appreciate that entry of judgment against him may have serious financial consequences including bankruptcy, the Bank is nonetheless entitled to judgment in accordance with the Settlement Agreement. So much was contemplated by its terms, which set a final date for payment even in the absence of judgment in the Elder proceedings. In the event that Johnson J awards Mr Williamson damages, then Mr Williamson will still be entitled to the fruits of that judgment. If Mr Williamson is bankrupt then his trustee in bankruptcy may have need of some of the damages to pay Mr Williamson’s creditors and Mr Williamson would likely be discharged from bankruptcy.

7. [28]

   Mr Williamson did not rely upon the allegations made in the District Court proceedings, nor did he seek a stay of these proceedings pending determination of the District Court proceedings. Indeed, Mr Williamson’s submissions rather proceeded on the basis that the Settlement Agreement was valid and binding. It appears to me that proceedings were commenced in the District Court in an effort to prevent the Bank entering judgment in this court which the Bank had indicated to Mr Williamson it intended to do, and I would not have been minded to grant a stay under section 67 of the Civil Procedure Act had I been asked to do so. The District Court proceedings appear to me to have been filed for the purpose of frustrating the Bank’s application for judgment in this Court and are of insufficient apparent merit to stay these proceedings on the Court’s own motion: see, for example, In the matter of Webuildem Pty Ltd and In the matter of Maroun Investments Pty Ltd [2012] NSWSC 708 per Black J cf Mills v Futhem Pty Ltd [2011] NSWCA 166 per Campbell JA.

8. [29]

   Stephen Flamer-Smith of the Bank deposed that the Bank has incurred legal costs and disbursements excluding GST since the date of the Settlement Agreement in the sum of $12,247.90. It is not entirely clear to me why the Bank is entitled to its legal costs and disbursements on a complete indemnity basis. It may be that the loan agreement between the Bank and Mr Williamson provided for this, but such documentation was not in evidence before me, nor contained in the Settlement Agreement. The Settlement Agreement provides that Mr Williamson will consent to the entry of judgment against him in accordance with the agreement “and any costs incurred by the plaintiff after the date of this agreement in obtaining judgment”. I do not think the terms of the Settlement Agreement clearly indicate a departure from the ordinary rule that costs are on a party and party basis and that is the order I am prepared to make.

9. [30]

   The Court makes the following orders.

   1. (1)

      Judgment in favour of the plaintiff against Hugh Williamson in the sum of $403,863.01, being the Settlement Sum plus interest until 16 November 2018.

   2. (2)

      Order Mr Williamson to pay the Bank’s costs from 18 August 2017 to date, including the costs of the amended motion filed on 6 November 2018, on a party and party basis.