Redchip Constructions Pty Ltd v Ourari
[2023] QCAT 110
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- Unreported Judgment
- Redchip Constructions Pty Ltd v Ourari[2023] QCAT 110
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Redchip Constructions Pty Ltd v Ourari[2023] QCAT 110
Redchip Constructions Pty Ltd v Ourari[2023] QCAT 110
QUEENSLAND CIVIL AND ADMINISTRATIVE TRIBUNAL
CITATION: | Redchip Constructions Pty Ltd v Ourari [2023] QCAT 110 |
PARTIES: | REDCHIP CONSTRUCTIONS PTY LTD (applicant) v ANNE OURARI (respondent) |
APPLICATION NO/S: | BDL141-20 |
MATTER TYPE: | Building matters |
DELIVERED ON: | 24 March 2023 |
HEARING DATE: | On the papers |
HEARD AT: | Brisbane |
DECISION OF: | Senior Member Brown |
ORDERS: |
|
CATCHWORDS: | CONTRACTS – CONSTRUCTION AND INTERPRETATION OF DOCUMENTS – INTERPRETATION OF MISCELLANEOUS CONTRACTS AND OTHER MATTERS – whether parties compromised their rights in respect of the claims the subject of the proceeding as a result of entering into a deed of settlement and release – whether terms of the deed entered into by parties operated as immediate discharge of claims and counterclaims of parties in proceedings then pending – requirement to construe deed so as to give it the meaning intended by the parties – intention is to be determined objectively by reference to what a reasonable person would think – deed required to be read as a whole – intention of parties expressed in deed that proceeding would remain on foot until such time as parties had discharged their obligations under the deed Blue Moon Grill P/L v Yorkey's Knob Boating Club Inc [2006] QCA 253 McDermott v Black (1940) 63 CLR 161 Osborn & Anor v McDermott & Anor [1998] 3 VR 1 Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165 |
APPEARANCES & REPRESENTATION: | This matter was heard and determined on the papers pursuant to s 32 of the Queensland Civil and Administrative Tribunal Act 2009 (Qld) |
Applicant: | Quinlan Miller & Treston Lawyers |
Respondent: | Saal & Associates Lawyers |
REASONS FOR DECISION
- [1]This is a proceeding in respect of a building dispute. A preliminary issue falls to be determined: did the parties compromise their rights in respect of the claims the subject of the proceeding as a result of entering into a Deed of Settlement and Release in 2020?
- [2]The parties entered into a contract for Redchip Constructions Pty Ltd (‘Redchip’) to undertake renovations at Ms Ourari’s residence. The parties fell into dispute. Redchip filed an application for domestic building dispute claiming, inter alia, the balance owing under the contract. Ms Ourari filed a counter-application claiming, inter alia, liquidated damages and damages for breach of contract relating to alleged defective and incomplete work.
- [3]In October 2020 directions were made for the parties to file their statements of evidence. Neither party complied with the directions. On 16 December 2020 the parties entered into the Deed of Settlement and Release (‘the Deed’).
The Deed of Settlement and Release
- [4]The salient features of the Deed are:
- (a)Ms Ourari was required to pay the settlement sum of $30,000.00 to Redchip upon Redchip satisfying its obligations under the Deed – clause 3.1;
- (b)Redchip was required to:
- Give Ms Ourari written notice permitting her to take possession of the works and deliver the keys to Ms Ourari’s solicitor – clause 3.5;
- Undertake further specified works within three months from the date of the Deed – clause 3.6;
- Undertake the specified works – clauses 3.6.1 to 3.6.16.
- (c)Redchip consented to the adjournment or stay of the proceeding to a date after the completion of the specified works – clause 3.10;
- (d)Within 14 days of completing the works and receiving the settlement sum, Redchip would withdraw its application – clause 3.11;
- (e)After being notified that Redchip had withdrawn its application, Ms Ourari would withdraw her counter-application – clause 3.12;
- (f)Ms Ourari retained her rights under the building contract against Redchip, including for all works under the contract, including the items of work required to be carried out by Redchip under the deed with respect to the Queensland Home Warranty Scheme – clause 3.13;
- (g)The defects liability period under the building contract would commence from the date of practical completion of the works undertaken by Redchip in accordance with the Deed – clause 3.14.
- (h)Clauses 3.1 to 3.17 are stated to be in full and final satisfaction of all claims between the parties with respect to the Dispute.
- (a)
- [5]The deed defines the ‘Dispute’ as meaning, inter alia, the dispute the subject of the tribunal proceeding between Redchip and Ms Ourari.
- [6]Clause 4.1 of the Deed provides:
Save for anything expressly stated to the contrary in this deed, (Redchip) and (Ms Ourari) acknowledge that execution of this deed will act as a complete and absolute bar to any claim, in a Court or Tribunal, brought by either party against the other or brought by a third party on behalf of a party against the other, including any assignment of a claim by a third party, but does not act as a bar in relation to any claim or proceeding commenced with respect to (Ms Ourari’s) non-payment of the Settlement Sum to (Redchip) or otherwise relating to enforcement of the terms of this deed or relating to a breach of it.
- [7]Clause 7.5 of the Deed provides:
This deed may be pleaded as a full and complete defence by the parties to any Claim commenced, continued or taken by another party to this deed or on its behalf of any of the matters referred to in this deed.
What the parties say
- [8]Redchip says:
- (a)Clause 4 of the deed operated to discharge the proceedings on the execution of the deed and in place thereof create new obligations and particularly:
- The payment by Ms Ourari of the settlement sum;
- The performance by Redchip of the further building works.
- (b)Redchip was not required to complete the work under the original contract but rather specific items of work as referred to in the deed thus creating new obligations to perform work;
- (c)The preservation of Ms Ourari’s contractual rights under clause 3.13 did not preserve the rights claimed in the proceedings;
- (d)Ms Ourari is entitled under the deed to sue in respect of any rights preserved by clause 3.13;
- (e)The requirement to perform work after the execution of the deed should be construed as Ms Ourari taking that promise in place of any rights under the original contract;
- (f)The effect of the execution of the deed was an accord and satisfaction with the result that the proceedings were extinguished.
- (a)
- [9]Ms Ourari says:
- (a)The deed does not operate to prevent her from taking further steps in the proceeding;
- (b)The deed remains executory until such time as the satisfaction is completed;
- (c)The deed is an accord executory. Redchip must complete the works set out in clause 3.6 before any bar to further steps in the proceeding can arise.
- (a)
Accord and satisfaction, accord executory and accord and conditional satisfaction
- [10]The essence of an accord and satisfaction is the acceptance by the promisee of something in place of the promisee’s cause of action and until it is provided the cause of action remains alive.[1] Where there is accord and satisfaction the agreement for compromise may be enforced, because the previous cause of action has gone having been ‘satisfied’ by making of the new agreement constituted by abandonment of the earlier cause of action in return for the promise of other benefit.[2]
- [11]The difference between an accord and satisfaction and an accord executory was explained by Dixon J in McDermott v Black:
The essence of accord and satisfaction is the acceptance by the plaintiff of something in place of his cause of action. What he takes is a matter depending on his own consent or agreement. It may be a promise or contract or it may be the act or thing promised. But, whatever it is, until it is provided and accepted the cause of action remains alive and unimpaired. The accord is the agreement or consent to accept the satisfaction. Until the satisfaction is given the accord remains executory and cannot bar the claim. The distinction between an accord executory and an accord and satisfaction remains as valid and as important as ever. An accord executory neither extinguishes the old cause of action nor affords a new one…
…of accord and satisfaction there are two cases, one where the making of the agreement itself is what is stipulated for, and the other, where it is the doing of the things promised by the agreement. The distinction depends on what exactly is agreed to be taken in place of the existing cause of action or claim. An executory promise or series of promises given in consideration of the abandonment of the claim may be accepted in substitution or satisfaction of the existing liability. Or, on the other hand, promises may be given by the party liable that he will satisfy the claim by doing an act, making over a thing or paying an ascertained sum of money and the other party may agree to accept, not the promise, but the act, thing or money in satisfaction of his claim. If the agreement is to accept the promise in satisfaction, the discharge of the liability is immediate; if the performance, then there is no discharge unless and until the promise is performed.[3]
- [12]There is also a third category of agreement – an accord and conditional satisfaction. This category was explained by Phillips JA in Osborn v McDermott:
Thus, there are three possibilities, not two. First, there is the mere accord executory which, on the authorities, does not constitute a contract and which is altogether unenforceable, giving rise to no new rights and obligations pending performance and under which, when there is performance (but only when there is performance), the plaintiff's existing cause of action is discharged. Secondly, at the other end of the scale is the accord and satisfaction, under which there is an immediate and enforceable agreement once the compromise is agreed upon, the parties agreeing that the plaintiff takes in satisfaction of his existing claim against the defendant the new promise by the defendant in substitution for any existing obligation. Somewhere between the two, there is the accord and conditional satisfaction, which exists where the compromise amounts to an existing and enforceable agreement between the parties for performance according to its tenor but which does not operate to discharge any existing cause of action unless and until there has been performance.
Where there is a mere accord executory, no suit can be maintained upon the compromise unless and until there has been performance, and then suit is ordinarily unnecessary. Upon default in performance, the plaintiff's existing cause of action continues unaffected. With accord and satisfaction, either party may sue upon the compromise, but only on the compromise and for nothing else: the original cause of action has gone. Where there is accord and conditional satisfaction, the plaintiff is bound to await performance and accept it if tendered, but if there be no performance, then the plaintiff may proceed according to general principles called into play when any agreement is repudiated: the plaintiff may either treat the agreement (the accord) as at an end and proceed on his original cause of action; or he may, at his option, sue on the compromise agreement, in place of the original cause of action.[4]
Consideration
- [13]The focus of consideration of the effect of the deed is upon what the parties agreed to rather than the categorisation of the deed as an accord and satisfaction, an accord executory or an accord and conditional satisfaction. As with any commercial document, the deed must be construed so as to give it the meaning intended by the parties. That intention is to be determined objectively by reference to what a reasonable person would think was intended.[5]
- [14]Clause 4.1 of the deed cannot be read in isolation from the provisions of the deed as a whole. Clauses 3.10, 3.11 and 3.12 clearly contemplate agreement by the parties that the proceeding would remain on foot until such time as the works were performed by Redchip and the settlement sum paid by Ms Ourari. The reference in clause 4.1 to the execution of the deed by the parties acting as an immediate and absolute bar to any claim by either party must be construed in this context.
- [15]In Blue Moon Grill P/L v Yorkey's Knob Boating Club Inc[6] the Queensland Court of Appeal considered terms of settlement which included the following clause:
Upon performance by the [defendant] and [the plaintiff] of the terms of this settlement the current Supreme Court proceedings between the parties in this matter be dismissed with no order as to costs, and the parties hereby discharge and release each other from any actions, claims or demands of whatsoever nature or howsoever arising out of this matter, and agree to instruct their solicitors to sign such documents and take such steps as are necessary to give effect to the terms of this agreement.
- [16]Keane JA (as his Honour then was), with whom the other members of the court agreed, observed:
If the parties had assumed an obligation immediately to procure the discharge of the current proceedings upon the signing of the terms of settlement (on the basis that the current proceedings fell within the class of "actions, claims or demands" identified in the second component of cl 5), there would be no reason of real substance for keeping those proceedings on foot. The rights and liabilities involved in the current proceedings would be immediately at an end, and the claims in those proceedings would be unenforceable. The discharge in the second component of the terms of settlement document could be pleaded by the defendant as a complete answer to the plaintiff's claims before the terms of settlement had been performed. Thus, on the view taken by the primary judge, in the event of a failure to perform the terms of settlement, the only action which the plaintiff could bring would be an action for breach of the terms of settlement. Such a result would, in my respectful opinion, be inconsistent with the intent of the parties as expressed in the introductory words of cl 5.[7]
- [17]Consistent with the reasoning in Blue Moon Grill P/L v Yorkey's Knob Boating Club Inc there would be no reason for the present proceeding to remain on foot if clause 4.1 operated to extinguish the parties existing rights. Again, the words of Keane JA are apposite for present purposes:
Secondly, it is frequently the case that the parties to a commercial dispute will wish to ensure that, in the event of a default in performance of settlement terms, the innocent party, ie the party not in breach of the settlement terms, will be able to enforce to the fullest extent possible the rights which it claims existed prior to the compromise and which would have been diminished by the terms of the compromise had it been carried into effect. A party to an action may be willing to accept less than what it believes to be its true legal entitlements in exchange for prompt and certain settlement, while wishing to ensure that, if prompt performance of the settlement should not occur, it will be at liberty then to enforce its original rights to the fullest extent which the law will allow. The parties may seek to ensure that they are not limited by the terms of settlement to the rights conferred by the settlement in the event of a failure by one party to perform its side of the settlement. In my view, the language of the introductory words of cl 5 affords an indication of just such an intention.[8]
- [18]If, as the Deed provides, the proceedings remain on foot, what is the purpose of the proceedings if the rights the parties seek to exercise have been extinguished? The only explanation is that the proceedings would be a vehicle for any interlocutory applications required to be brought including in the event that there was non-compliance with the terms of the deed. This raises the question whether, if the Deed operated as an accord and satisfaction, the dispute remained a building dispute. It seems to me that there must be some doubt as to the jurisdiction of the Tribunal in respect of any dispute relating to compliance with the terms of the Deed.[9]Although, in light of the conclusion I have reached as to the effect of the deed, it is unnecessary for me to decide this issue the question mark over the jurisdiction of the Tribunal to determine any dispute relating to compliance with the Deed further underscores the construction of the Deed I prefer.
- [19]Clause 4.1 of the Deed refers to ‘any claim, in a Court or Tribunal, brought by either party against the other or brought by a third party on behalf of a party against the other, including any assignment of a claim by a third party …’. The clause itself does not provide any assistance in determining what ‘any claim’ means. Properly construed the reference to ‘any claim’ does not, in my view, refer to the present proceeding. This construction is supported by the reference in the clause to ‘any claim, in a Court or Tribunal…’. There is nothing before the Tribunal to suggest that there were other proceedings on foot in a court nor proceedings involving third parties. This tends to suggest that the clause refers to any future claim that might arise, rather than the existing proceeding. If the clause was to be construed as contended for by Redchip then much clearer language was required.
- [20]The construction of clause 4.1 which I prefer is consistent with the clauses of the Deed requiring the proceeding to remain on foot. The application would only be withdrawn upon the occurrence of:
- (a)The completion of the works by Redchip pursuant to clause 3.6; and
- (b)The issuing by Redchip of a notice of practical completion and Redchip complying with clause 25 of the general conditions of the building contract;[10] and
- (c)The payment of the settlement sum by Ms Ourari.
- (a)
- [21]The counter-application would only be withdrawn after the above steps had been completed and Ms Ourari received notice that the application by Redchip had been withdrawn. The original building contract also remained on foot as was made clear by clause 3.3 of the Deed requiring Redchip to comply with clause 25 of the contract and clause 3.14 of the Deed providing that the defects liability period pursuant to clause 27 of the general contract conditions would commence from the date of practical completion pursuant to clause 25.
- [22]Further support for my preferred construction of clause 4.1 may be found in clause 3.18 of the deed which provides that clauses 3.1 to 3.17 are in full and final satisfaction of ‘any and all claims’ between Redchip and Ms Ourari ‘with respect to the dispute’ (emphasis added). The deed defines the ‘dispute’ as being, inter alia, the subject of the proceeding. That definition clearly encompasses both the claim by Redchip and the counter-application by Ms Ourari. On a proper construction, until such time as the requirements of the deed were complied with the by the parties, the dispute was not the subject of a final compromise. It should also be added here that clause 4.1 makes no reference to the ‘dispute’ which, again, tends to indicate that the clause does not operate to compromise the rights of the parties rights in respect of the dispute the subject of the proceedings.
- [23]The words of Keane JA are of direct relevance for present purposes:
More importantly, however, while the evident desirability of bringing certainty to the parties' commercial relationship may be accepted, it does not follow that one should therefore conclude the parties intended immediately to discharge the existing proceedings by entering into the terms of settlement. The parties would be exposed to the uncertainties involved in the termination of the terms of settlement and the renewal of the pending litigation only as the result of the breach of the terms of settlement by one party and the exercise by the innocent party of a choice to continue with the current proceedings rather than to enforce the terms of settlement. The certainty provided by the terms of settlement would be jeopardised only by a breach of those terms, and then only if the party not in breach were to choose to pursue its rights in the pending proceedings. The party in breach could hardly be heard to complain about such a result brought about by its own breach of contract.[11]
- [24]In my view, the Deed operates as an accord and conditional satisfaction. The proceedings remained on foot while Ms Ourari awaited the performance by Redchip of its obligations under the Deed. There is a dispute between the parties as to whether those obligations have been discharged. It is clear from Ms Ourari’s submissions that she considers the agreement at an end and intends to proceed with her counter-application.
- [25]The proceeding should continue in the Tribunal to enable the application and the counter-application to be determined.
Conclusion
- [26]The answer to the preliminary question is as follows: Upon the proper construction, the Deed of Settlement and Release dated 16 December 2020 does not operate to extinguish the rights of the parties in respect of the current proceeding.
- [27]I will make directions for the parties to file statements of evidence and for the matter to proceed to a compulsory conference.
Footnotes
[1]McDermott v Black (1940) 63 CLR 161, 183 per Dixon J.
[2]Osborn & Anor v McDermott & Anor [1998] 3 VR 1, 8 per Phillips JA.
[3]McDermott v Black (n 1) 187 per Dixon J.
[4]Osborn & Anor v McDermott & Anor (n 2) 10 per Phillips JA.
[5]Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165, 178 per Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ.
[6][2006] QCA 253, [12] per Keane JA.
[7]Ibid, [23].
[8]Ibid, [26].
[9]See for example Samimi v Luong [2006] CCT B176-04, Anderton v Parkes Horticultural Services Pty Ltd (1997) Q Law Rep 48 per McGill DCJ, Concept Concrete Constructions Pty Ltd v Kurtz [2008] CCT BD055-07.
[10]Clause 25 required, inter alia, Redchip to give to Ms Ourari a defects document, notice of practical completion and final claim which in turn triggered an entitlement on the part of Ms Ourari to give written notice stating her requirements for the works to reach practical completion which in turn required Redchip to take further steps to achieve practical completion.
[11]Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (n 5) [32].