Bendigo and Adelaide Bank Limited v Gaedtke
[2017] QDC 202
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- Bendigo and Adelaide Bank Limited v Gaedtke[2017] QDC 202
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Bendigo and Adelaide Bank Limited v Gaedtke[2017] QDC 202
Bendigo and Adelaide Bank Limited v Gaedtke[2017] QDC 202
DISTRICT COURT OF QUEENSLAND
CITATION: | Bendigo and Adelaide Bank Limited v Gaedtke [2017] QDC 202 |
PARTIES: | BENDIGO AND ADELAIDE BANK LIMITED (ACN 068 049 178) (plaintiff) v DEAN ALAN GAEDTKE (defendant) |
FILE NO/S: | 2484/2016 |
DIVISION: | Civil |
PROCEEDING: | Determination of Questions (prior to trial) |
ORIGINATING COURT: | District Court at Brisbane |
DELIVERED ON: | 28 July 2017 |
DELIVERED AT: | Brisbane |
HEARING DATE: | 21 July 2017 |
JUDGE: | Dorney QC DCJ |
ORDERS: |
|
CATCHWORDS: | ESTOPPEL – ESTOPPEL BY DEED OR CONVENTION – PARTIES – where group proceedings commenced under Pt 4A of Supreme Court Act 1986 (Vic) by lead plaintiff on behalf of himself and group members – whether defendant was a group member of the group proceedings – whether defendant is bound by Settlement Deed from group proceedings – whether defences precluded by reason of estoppel |
LEGISLATION CITED: | Corporations Act 2001 (Cth) Supreme Court Act 1986 (Vic) ss 33V, 33ZF Trade Practices Act 1974 (Cth) s 51AC Uniform Civil Procedure Rules 1999 (Qld) r 483 |
CASES CITED: | ABL Custodian Services Pty Ltd & Ors v Kunz [2016] SADC 145 Australian Securities Commission v Marlborough Gold Mines Ltd (1993) 177 CLR 485 Bendigo and Adelaide Bank Limited v Ling [2016] SADC 34 Bendigo and Adelaide Bank Ltd v Pekell Delaire Holdings Pty Ltd [2017] VSCA 51 Byrne v Javelin Asset Management Pty Ltd [2016] VSCA 214 Clarke & Ors v Great Southern Finance Pty Ltd (Receivers & Managers Appointed) (In Liquidation) & Ors [2014] VSC 516 Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589 Timbercorp Finance Pty Ltd (in liquidation) v Collins; Timbercorp Finance Pty Ltd (in liquidation) v Tomes [2016] HCA 44 |
COUNSEL: | P D Tucker for the plaintiff A D Gaedtke personally for the defendant |
SOLICITORS: | Results Legal for the plaintiff |
Introduction
- [1]In this proceeding, on 8 February 2017, Judge McGill SC ordered that specific questions be determined prior to trial as separate questions pursuant to r 483 of the Uniform Civil Procedure Rules 1999 (“UCPR”).
- [2]The Questions as expressed in that order were:
“(a)is the defendant, by the Settlement Deed referred to in paragraph 9 of the Further Amended Statement of Claim, estopped from:
- (i)denying that the Executed Loan Deed referred to in paragraph 2 of the Further Amended Statement of Claim is valid and enforceable against the defendant, save in respect of interest foregone by the plaintiff in accordance with clause 4.1.1 of the Settlement Deed; and
- (ii)pursuing the Counterclaim in this proceeding?”
- [3]Those Questions came before me on 21 July 2017.
- [4]In accordance with other orders made on 8 February 2017, affidavits had been filed before the hearing, subject to extension to those times. It was the filed affidavit evidence which both parties relied at the hearing, rather than any oral evidence. In addition to the plaintiff’s List of Material which was read, the defendant read his own affidavit, filed 31 May 2017.
Background
- [5]The judicial context of this separate determination is that the very Deed of Settlement referred to in the Questions has been considered in several recent first instance and appellate decisions. Furthermore, the general approach to the application of “pleading estoppel” principles has recently been considered by the High Court with respect to group proceedings, being of the kind in which the plaintiff and the defendant were also arguably involved, though they are different actual proceedings from those considered by the High Court.
- [6]The restricted group proceeding relevant here was commenced in 2011. It was one of 16 group proceedings commenced in the Supreme Court of Victoria on behalf of investors in Great Southern Managed Investment Schemes: see Clarke & Ors v Great Southern Finance Pty Ltd (Receivers & Managers Appointed) (In Liquidation) & Ors[1] at [4] and references to them as “the Great Southern proceedings”. In this specific group proceeding the lead plaintiffs had made allegations that the relevant Product Disclosure Statement (“PDS”) included representations which were misleading and deceptive. It was also alleged that the defendants, which included the plaintiff (“BEN”) and ABL Nominees Pty Ltd (“ABL Nominees”), were liable for losses suffered by the group members who had relied on those representations. There were sought, amongst other orders, declarations that the loans obtained to make investments were unenforceable and orders for the return of investors’ monies, or compensation under the Corporations Act 2001 (Commonwealth).
- [7]In order to understand those group proceedings – because it is necessary, in the end, to determine whether the defendant, Mr Gaedtke, was, in fact, a “group member” – it becomes necessary to consider first the loans in question which were at the heart of this specific group proceeding.
Loan agreement
- [8]The particular PDS was issued in 2007 by Great Southern Management Australia Limited (“GSMAL”). The particular managed investment schemes were called the Great Southern 2007 High Value Timber Project (“2007 HVTP”) and the Great Southern 2008 High Value Timber Project (“2008 HVTP”). That PDS was exhibited to the relevant affidavit material.
- [9]As for Mr Gaedtke, on 14 June 2007, he signed an Application for Term Finance; and signed further Applications concerning the investment, both of which were done on 15 June 2007. The latter Applications showed that the total number of Woodlots applied for was 16. All of those particular Applications have not been disputed to be have been executed by Mr Gaedtke. In particular, the former contained his driver’s licence (No. 16013271) and his date of birth (19 December 1964). The latter contained not only relevant home and work phone numbers, but also his date of birth, again.
- [10]As the Application for Term Finance acknowledged, the loan that was sought was for $200,000.00, plus loan fees of $2,250.00 (which were to meet the cost of the investment in the 16 Woodlots), and was to be provided by either of ABL Nominees or Great Southern Finance Pty Ltd (“GSF”). For that purpose, Mr Gaedtke provided a Power of Attorney to GSF to execute an identified loan deed. The exhibited documents showed a relevant attached loan deed. The PDS provisions concerning powers of attorney were set out in Section 8.
- [11]After the finance application was approved, a Loan Deed (with ABL Nominees as the other executing party) was executed by GSF on behalf of Mr Gaedtke; and then ABL Nominees provided the advance of $202,500.00 to make the investment. This was done by entering into a relevant Land and Management Agreement, again by the exercise of a power of attorney on behalf of Mr Gaedtke for the purposes of the investment. The business records of GSF, obtained by BEN so as to become the plaintiff’s own business records, showed: that loan amount; that total amount borrowed; that application being received on 15 June 2007; Mr Gaedtke being allocated Grower Number G39704 and MIS Project Code HVT 2007; the notation of the abovementioned driver’s licence; the creation of the loan on 30 June 2007; the designation of interest only instalments of $1,938.23; and the date of the receipt of the allotment for the defendant, being on 15 June 2007. In addition, those records showed the exercise of the relevant Power of Attorney on 30 June 2007. It should be noted that none of the entries in GSF’s records was challenged by Mr Gaedtke, though the validity of the various agreements were (for reasons advanced in his pleadings).
- [12]But evidence of advances for that loan and relevant interest payments was also provided by Mr Gaedtke’s 2007 tax return. In it, he claimed a tax deduction “loss” of $200,000.00 and interest payments. Tax deductions were also claimed in a subsequent year for interest.
- [13]On 30 April 2009, the loan was assigned by ABL Nominees to Pirie Street Holdings Pty Ltd (formerly Adelaide Bank Limited) and then to BEN (pursuant to a merger which was given statutory effect). I find that, properly interpreted, notice of that assignment was given to Mr Gaedtke by letter dated 30 April 2009.
- [14]On or about 16 May 2009, the Great Southern Group went into voluntary administration and has subsequently passed into liquidation.
- [15]The terms of the Loan Deed included that:
- (a)by Clause 2, the Lender “will lend the funds to the Borrower” and that the “Funds are provided on the terms and conditions” of the Loan Deed;
- (b)by Clause 4.1 and Items 6, 7 and 8 of Schedule 1 and provisions of the Loan Repayment Schedule, “the Borrower must repay it to the Lender” 36 monthly interest only repayments of $1,938.23 commencing on 31 July 2007;
- (c)by Clause 4.1 and Items 7 and 8 of Schedule 1 and the Loan Repayment Schedule, “the Borrower must repay to the Lender” 83 monthly principal and interest repayments of $3,516.41 commencing on 31 July 2010 and a final repayment of $3,516.64 on 30 June 2017;
- (d)by Clause 5 and Item 9 of Schedule 1, the “Borrower must pay to the Lender” all overdue “Moneys Payable” (as defined) at a rate of 14.5% per annum, calculated daily and charged monthly;
- (e)by Clauses 15 and 16.1, an “acceleration event” would occur if “the Borrower, as the principal debtor or otherwise, fails to pay any Moneys Payable on the due date for payment” and, if such an event occurred, then “the Lender may demand immediate payment of the Moneys Payable”;
- (f)by Clause 19.1, the “Lender may at any time decide or otherwise transfer all or any of its rights, and may transfer all or any of its obligations”, under “the Loan Deed”; and
- (g)by Schedule 1, the Borrower was defined as Mr Gaedtke and the Lender was ABL Nominees.
- [16]As has been noted, this Loan Deed was executed on behalf of Mr Gaedtke, as the Borrower, by the relevant “duly appointed attorney” referred to earlier, though, as also noted earlier, the defendant disputed its ultimate validity as set out in his pleadings.
Plaintiff’s involvement in group proceeding
- [17]M+K Lawyers acted for the lead plaintiffs in each of the Great Southern proceedings. M+K Lawyers, by letter dated 3 March 2010, wrote to BEN’s then solicitors, Allens Arthur Robinson, stating that they acted on behalf of Mr Gaedtke and noting that the recipient firm acted on behalf of BEN. Besides advising that Mr Gaedtke was an investor in at least one Great Southern Managed Investment Scheme (“MIS”) Project, the letter contended that GSF was involved with the conduct of GSMAL which was misleading or deceptive or likely to mislead or deceive or, alternatively, that wrongful acts or omissions of GSF or GSMAL were acts or omissions “on behalf of” BEN rendering BEN liable. Further, it was contended that the Loan Agreement was illegal by reason of anti-competitive exclusive dealing though third line forcing and that BEN, through its involvement with GSF, was disqualified from enforcing loan agreements due to unconscionable conduct in breach of s 51AC of the then “Trade Practices Act” 1974 (Commonwealth). It was also contended that an alternative basis of claim was that the unlawful unconscionable conduct by GSMAL or GSF was engaged in “on behalf of” BEN and rendered BEN liable. The letter finally indicated that all further communications regarding such claims were to be made to M+K Lawyers.
- [18]Also, in early 2010, Mr Gaedtke ceased making payments in respect of the Loan Deed. Consequently, BEN caused letters to be sent to Mr Gaedtke, between 9 March 2010 and 22 September 2010, noting that Mr Gaedtke was no longer keeping up with interest repayment obligations in respect of the Loan Deed and advising that, in consequence, the entirety of the monies owing under the “Loan Deed” had become due and owing. That amount as at 22 September 2010 was stated to be $219,621.66.
- [19]The relevant Group Proceeding, which is alleged to have been the proceeding directly involving Mr Gaedtke, was brought in the Supreme Court of Victoria in the Commercial and Equity Division, Commercial Court and bore registry No SCI 2011 04071. That Group Proceeding was listed in Schedule 1 as the part of the total “Group Proceedings” covered in the affidavit of Stuart Graeme Walter filed in the Clarke proceeding. The affidavit was made by a solicitor who had “carriage and conduct” of the Clarke Group Proceeding and the plaintiffs in all those other Group Proceedings as listed in Schedule 1. In it, that deponent referred to the fact that the affidavit was made in support of an application for, amongst other things, an order pursuant to s 33ZF of the Supreme Court Act 1986 (Victoria) nunc pro tunc to the effect that the lead plaintiffs had the authority of the Group Members to enter into and give effect to the relevant Deed of Settlement and the transactions contemplated thereby for and on behalf of the Group Members and for an order approving the settlement of the Group Proceedings pursuant to s 33V(1) of that Act on the terms contained in the Deed of Settlement so executed on 23 July 2014. Later paragraphs in that affidavit deposed to the fact that orders made on 14 August 2014 (requiring M+K Lawyers to cause a copy of the Notice of Settlement to be sent to each of the group members by ordinary pre-paid post to the address of each of the group members identified from the scheme registers by 26 August 2014) were complied with and that those group members were previously identified from the scheme registers during the course of the “opt-out process” in the Group Proceedings. Exhibit SGW-1 was produced and shown to the deponent and stated to be a true copy of the list of “Group Members” so identified. Among the 20,991 group members so identified was Mr Gaedtke by reference to Matter No 195684 and the Grower ID of G39704. Similarly, in the relevant Deed of Settlement, in Schedule 4, Mr Gaedtke was similarly identified as a “M+K Client”.
- [20]The Deed of Settlement referred to earlier was part of the material filed in an application brought by summons seeking approval to settle the Great Southern Proceedings. It was filed on 6 August 2014.
- [21]On 11 December 2014, Croft J, in Clarke, approved the settlement of the Great Southern proceedings on the terms contained in the Deed of Settlement pursuant to the aforementioned s 33V of the Supreme Court Act 1986. Additionally, orders were made conferring on the lead plaintiffs in the Group Proceedings authority nunc pro tunc to enter into, and give effect to, the Deed of Settlement and the transactions made thereby, for and on behalf of the Group Members. In the reasons in Clarke, Croft J wrote that it was relevant to his consideration of whether to approve the Deed of Settlement as to whether its terms were fair and reasonable and that that involved a consideration of prospects of success and the benefits and burdens imposed by the Deed of Settlement, among which was a consideration of an objection about the acknowledgment of enforceability and validity of the Loan Deeds having the effect that Group Members would be precluded from raising individual claims in defences in respect of those deeds. For reasons which were set out at [90]-[132], Croft J held that the objections were outweighed by the benefits that he canvassed.
- [22]Before considering further matters, it is important to consider the terms of the Deed of Settlement.
Deed of Settlement
- [23]The title of the Deed of Settlement clearly shows that BEN was a party. Among the recitals, Recital K stated that the lead plaintiffs on their own behalf “and on behalf of all Group Members” made the allegations against the defendants and claimed the relief as set out in the various Statements of Claim in each of the relevant Group Proceedings. By Recital P, it was stated that, subject to Clause 10, the parties had agreed to resolve “the entirety of their disputes”, other than the Liquidators’ Claims, on the terms and conditions set out in the Deed.
- [24]In Clause 1.1, which set out the various definitions, “Claims” was extensively defined. It is unnecessary to canvass it here because it is also referred to in many of the authorities to which I will later have reference. In Clause 1.1, “Group Members” was defined to mean each person or entity falling within the “definition of a group member in any one or more of the Group Proceedings and who has not opted out of the Group Proceeding”. Thereafter, Clause 1.1 defined “Group Proceedings” to mean, among others, the Supreme Court of Victoria proceeding No SCI 2000 04071.
- [25]Also in Clause 1.1, “Loan Agreements” was defined to mean the loan agreements under which monies were advanced to Scheme Members to finance their interest in managed investment schemes of the defined kind. Thereafter, both “Loan Balance” and “Loan Deeds” were defined, respectively, in ways which included the “money to be payable” to one of the BEN parties under a Loan Deed and which included a loan “subsequently assigned by ABL Nominees to one or more of the BEN Parties”.
- [26]Further definitions in Clause 1.1 included that “PDS Claimants” meant all Scheme Members with a Claim which related to or arose out of any PDS and that “Scheme Members” meant the members who invested in any management investment scheme in or post-1998 of which GSMAL “is or was the responsible entity”.
- [27]Clause 2 dealt with conditions precedent. Clause 2.2.1 stated that settlement between all parties to the Agreement was subject to and conditional upon the Supreme Court of Victoria making an order pursuant to s 33ZF of the Supreme Court Act 1986 to the relevant effect. Clause 2.2.2 referred to the Scheme of Arrangement being approved by the Court on terms which contained the key features described in Clause 3, amongst other aspects.
- [28]Part of the Scheme of Arrangement in Clause 3 was stated, by Clause 3.1.1, to contain the “key feature” of contribution by Insurers of GSMAL of $3,550,000.00 to a pool of funds to be distributed by the Scheme Administrators to the PDS Claimants.
- [29]In Clause 4, aspects of the settlement of claims involving the BEN Parties were set out. In that clause, there were details of the waiver of interest, the delay in commencing or continuing debt recovery proceedings and the acknowledgement by the lead plaintiffs “for and behalf of themselves and all Group Members” that they “admit the validity and enforceability of the Lead Plaintiffs’ Loan Deeds and the Group Member’s Loan Deeds”. Again, particularly by Clauses 4.1.10, 4.1.12, and 4.1.13, reference was made to the release of claims, the agreement of non-pursuance and the pleading of the “Settlement Deed” “as a bar or defence”. Finally, by Clause 4.1.20, upon the approval of the Deed of Settlement, the parties agreed that the Group Proceeding Debt Recovery proceedings would be stayed and that the Group Proceedings would be dismissed with no orders to costs insofar as they involved, amongst other things, claims by the lead plaintiffs and the Group Members against the BEN Parties.
- [30]Clause 6 of the Settlement Deed dealt with the settlement of claims involving the Great Southern Companies and their directors. Reference was made in Clause 6.1.1 to the insurers of GSMAL paying the sum of $20,205,000.00 to the M+K Trust Account to be dispersed, amongst other ways, as to $20,000,000.00 to the M+K Clients, “with each M+K Client receiving the sum calculated pro rata to the amount paid by each M +K Client to M+K”. In addition, Clause 6.1.1.2 referred to the payment of $3,550,000.00 to the Scheme Administrators to be dispersed to the PDS Claimants in accordance with the terms of the Scheme of Arrangement.
- [31]Schedule 2 defined the Bendigo and Adelaide Bank Limited entities as including ABL Nominees and Pirie Street Holdings Pty Ltd (formerly Adelaide Bank Limited).
- [32]Schedule 3 defined the Great Southern Companies. And, as already noted, Schedule 4 defined the M+K Clients.
Subsequent matters
- [33]In a response to a Notice to Admit Facts delivered by the plaintiff in this proceeding, Mr Gaedtke acknowledged that he received emails sent to him, amongst others, by M+K Lawyers. Between 12 December 2014 and 17 November 2015, those emails made reference to the approval of the “Settlement Deed”, to an acknowledgement by Mr Gaedtke of that advice (with the consequence that he stated that it would “basically” mean that he would get “the legal fees back”), and to the fact that the final amount that he would receive was $39,030.00. There was also a reference to a reminder of the importance of him returning a vote of “Yes” when he received the Scheme of Arrangement voting material in December 2015. The response by Mr Gaedtke to the Notice to Admit Facts also acknowledged that he was paid monies in relation to the Deed of Settlement which were “equal to, or similar to, that figure described” in the relevant email. Additionally, the plaintiff confirmed that he authorised the electronic lodgement of relevant income tax returns that referred to those claims for a “net loss” of $200,000.00 and for interest expenses of $23,259.00 and $26,141.00 over successive years.
- [34]It is to be observed that the real gist of the complaint by Mr Gaedtke in the present District Court proceeding is set out in paragraphs 5 and 6 of his document entitled “Notice to Dispute Facts”, dated 22 June 2017.
Defendant’s defences
- [35]Since the Questions concerning the effect of the Deed of Settlement relate to defences raised, it is necessary to canvass, albeit briefly, those defences.
- [36]Paragraph 12 of the Further Amended Statement of Claim had pleaded both that the “Settlement Deed was and remains binding on the defendant and that the defendant remains liable to pay” moneys under the Loan Deed. In response, Mr Gaedtke, in his Further Amended Defence, in dealing with that paragraph 12, besides alleging the non-preclusion or non-prevention arising from the construction of the “Settlement Deed”, denies the allegation about liability “because” of the matters referred to in paragraphs 1D, 2A, 4A and 5A and, or alternatively, 5AA in that defence. Reviewing the matters raised in those paragraphs, it is only necessary, for present purposes, to conclude that they raise “defences” which were, at least arguably, not expressly canvassed in Victorian Group Proceeding No SCI 2000 04071. The cases presented to the Court by Mr Gaedtke only go to these defences and, therefore, need only to be considered if there is no estoppel. There is no evidence of undue influence in the execution of the Deed of Settlement.
Relevant authorities
- [37]In Timbercorp Finance Pty Ltd (in liquidation) v Collins; Timbercorp Finance Pty Ltd (in liquidation) v Tomes[2], the High Court was concerned with, similarly to this proceeding, loans provided to investors to fund investments in managed investment schemes where group proceedings had been brought pursuant to the Supreme Court Act 1986 (Victoria) by a lead plaintiff on behalf of himself and group members alleging misrepresentations and failure to disclose information about risks. There was no issue in that proceeding that the various respondents were, in fact, “group members in a group proceeding”. The issue that primarily concerned the plurality of French CJ, Kiefel, Keane and Nettle JJ was whether the estoppel arising by reference to the principle identified in Port of Melbourne Authority v Anshun Pty Ltd[3] (“Anshun”) estopped the respondents from pursuing their defences “because they could and should have raised them for determination in the group proceeding”: at [5]. The question of what defences might be pursued by such respondents was, as here, ordered to be determined as a separate question. There, as in this proceeding, there was an “opt out” notice; but both respondents “did not elect to opt out”, though some “investors did”: at [19]. Among the defences alleged by one of the respondents was that no agreement had been concluded “by reason that the person who purported to execute the loan documentation” on that respondent’s behalf “had not been appointed as his attorney”. That is similar to, but not identical with, one of the defences raised by Mr Gaedtke. After identifying that the estoppel in the High Court case was an “Anshun estoppel”, the plurality stated that it would, if applicable, preclude the assertion of a claim or of an issue of law or fact if the claim or issue was so connected to the subject matter of the first proceeding to make it unreasonable, in the context of the first proceeding, for the claim or issue not to have been made or raised in it: at [27]. The plurality held that the lead plaintiff was not “the privy in interest” of the respondents with respect to their individual claims: at [39]. The relationship of “privies in interest” was held to be limited, in terms of the group proceedings, to the claims made by the lead plaintiffs in the group proceeding: at [29]. As the plurality held, “group members are bound by the determination of the claims giving rise to the common questions” (emphasis added): at [52]. That, as they noted, left for consideration “the question of whether the respondents themselves are estopped from raising” their individual claims in “the proceedings” then being considered: at [53].
- [38]In Timbercorp Finance, the plurality held, ultimately, that the grounds of relevance and reasonableness were not made out such that the Anshun estoppel, as identified, would not prevail.
- [39]As concluded by the Court of Appeal of the Supreme Court of Victoria in Bendigo and Adelaide Bank Ltd v Pekell Delaire Holdings Pty Ltd[4], Timbercorp Finance did not deal with the question of a settlement deed. The Court held that it does not follow from the proposition outlined by the plurality in Timbercorp Holdings that a plaintiff in a group proceeding cannot “settle” that proceeding in a manner that affects the individual claims of group members: at [56]. The Court held that the argument about the inability to settle “proceeded on the erroneous assumption that the observations of the High Court in Timbercorp, a case in which the group proceeding went to judgment, apply with equal force to group proceedings which are settled”: at [56]. In a footnote, the Court stated that there was nothing in the reasons in Timbercorp to indicate “that a group proceeding could not be settled on terms extending beyond the common issues”: at fn 51.
- [40]In Pekell Delaire Holdings, the Court wrote that it would be “highly surprising” if Part 4A of the Supreme Court Act 1986 “precluded parties to a group proceeding from resolving the common claims between them on terms which also bring finality to other issues outstanding between those parties or, in the case of a plaintiff, the group members that plaintiff represents”; and further observed that “(f)ull releases of all outstanding claims, whether at issue in the relevant proceedings or not, are not uncommon” and that such a submission “if correct, would impose a remarkable constraint on those negotiating settlements of group proceedings”: at [57].
- [41]Lastly, in Pekell Delaire Holdings, in approving of observations made in Byrne v Javelin Asset Management Pty Ltd[5], it was held that s 33ZF of the Supreme Court Act 1986 “enables a Court approving a proposed settlement of a group proceeding to make orders binding a plaintiff, group members and other parties to the settlement or authorising a plaintiff to enter into and give effect to the settlement on behalf of group members”, further holding that such “an order supplies the privity which, as the High Court observed in Timbercorp, is otherwise absent in respect of the individual claims of group members”: at [58]. The Court added that this approach “then enables the group proceeding to be settled on whatever terms the parties have agreed and the Court has approved” because “the privity which absent in respect of a judgment is able to be provided by virtue of the court’s orders when approving a settlement”, with Timbercorp and Byrne being “addressed to different situations”: also at [58].
- [42]What is important about Pekell Delaire Holdings is that the Victorian Court of Appeal was considering the exact same judgment by Croft J, in approving the same Deed of Settlement, on 11 December 2014. As the court noted (at [11]), the “definition” of “a Claim” set out in that paragraph “travels well beyond” the pleaded issues in the group proceeding: at [54].
- [43]In Australian Securities Commission v Marlborough Gold Mines Ltd[6], the High Court held that decisions of an intermediate appellate court on indistinguishable provisions should be accorded precedential value: at 492. Where, as here, the Court of Appeal of the Supreme Court of Victoria has considered exactly the same legislation involving the same Deed of Settlement being approved by the same Justice, the precedential value is indisputable. This is despite the fact the application in Pekell Delaire Holdings was one to set aside a statutory demand and that other issues were also canvassed in that case (including whether the particular respondent fell within the definition of “group members”).
- [44]Nevertheless, Byrne does squarely raise the issue that such a deed is “obviously binding on only group members” but that, in “order to be a group member, it is necessary to satisfy” a requirement of the relevant statement of claim in the group proceeding: at [42].
- [45]Although my attention has been brought to other cases, particularly those at first instance in South Australia (see ABL Custodian Services Pty Ltd & Ors v Kunz[7] and Bendigo and Adelaide Bank Limited v Ling[8]), they do not take the analysis that I have just undertaken any further. It should also be noted that both those cases involved a full examination of all the relevant issues in the relevant proceeding and not just a determination of a separate question posed for decision, although clearly there were common matters which were agitated and decided.
Approach to be taken
- [46]Given the questions framed for separate determination and given the analysis of the relevant cases, if I were to find that Mr Gaedtke was a “group member” within the terms of the Deed of Settlement dealt with by Croft J in Clarke, then the answer to the question would be “Yes”.
- [47]In response to paragraph 8(a) of the Further Amended Statement of Claim (which alleged that the defendant was a member of the Group Proceeding No SC1 2011 04071 on the basis that the defendant did not opt out of the Group Proceeding on or before 27 April 2012), Mr Gaedtke, by paragraph 8 of his Further Amended Defence, admitted that he was such a “member”. Despite that admission, it is necessary to examine whether, on the evidence, that has been established (on the balance of probabilities). There is no cogent evidence that an “opt out” decision was made by Mr Gaedtke. Rather, the contrary can readily be inferred from the receipt of these monies distributed by M+K Lawyers and accepted by him.
- [48]From the evidence that I have canvassed, I find that each of the plaintiff and ABL Nominees was a defendant in that Group Proceeding. In addition, Mr Gaedtke has not suggested in any way that the Deed of Settlement examined here was not approved by Croft J on 11 December 2014.
- [49]The clear inference from an examination of the documentary evidence canvassed above together with admissions made by Mr Gaedtke in paragraph 1D of the Further Amended Defence is that it is established, on the balance of probabilities, that he became a party to the loan agreement for, and received by way of advance, $200,000.00 (which is the subject of the plaintiff’s claim), and that he was bound by its terms – apart from any defences which have been raised in the Further Amended Defence that might be able to be maintained but for any estoppel “by deed”.
- [50]The definition in the relevant Amended Statement of Claim in No SCI 2000 04071 of “Group Members” was contained in paragraph 2. In particular, it alleged that the “proceeding is commenced by the plaintiffs on their own behalf and on behalf of all persons who at any time during the period between 16 February 2007 and 30 June 2007 inclusive, acquired and/or held an interest as a member in the 2007 HVT Scheme and/or 1 July 2007 and 30 June 2008 inclusive acquired and/or held an interest as a member in the 2008 HVT Scheme”. Additionally, it has not been put in issue that the exclusion contained in paragraph 2(e) is applicable. It can be readily inferred from the identified documents executed by Mr Gaedtke (which he did not contest that he signed), the documents held by the plaintiff as “business documents”, the admissions made by Mr Gaedtke in response to the Notice to Admit Facts, and the terms of the Deed of Settlement itself that Mr Gaedtke, at the time that the Deed of Settlement took effect by approval of the Supreme Court of Victoria, was a “Group Member”. As indicated above, there is no evidence presented by him that he ever opted out, and his own actions, particularly those concerned with filing tax returns and receiving a distribution, confirm the conclusion that I have reached.
Conclusions on the Questions posed
- [51]Given that I have found, on the evidence, that Mr Gaedtke, as defendant, was a “Group Member” within the meaning given to that term in the relevant Deed of Settlement approved by Croft J in December 2014, I would answer the questions ordered for separate determination as: “Yes”.
- [52]That conclusion flows from the fact that Pekell Delaire Holdings drives me, by its precedential effect, to the inevitable decision that the relevant Deed of Settlement estopped Mr Gaedtke from denying that the “Executed Loan Deed” referred to in paragraph 2 of the Further Amended Statement of Claim is valid and enforceable against him, save in respect of interest foregone by the plaintiff in accordance with Clause 4.1.1 of the “Settlement Deed”. As for the Counterclaim, since its premise is that the “Settlement Deed” does not estop Mr Gaedtke from seeking the declarations, restitution, and, or alternatively, damages set forth in the claims referrable to the Counterclaim, the same conclusion must be reached.
- [53]The “alternative” estoppel pleaded in paragraph 3 of the Amended Answer (filed 21 February 2017) does not fall within the ambit of the Questions. But even if it did, it does not arise for determination here. In any event, I have significant reservations concerning how an “ineffective” precluding Deed can found a “Deed Representation”.
Costs
- [54]Given the outcome that I have reached and the decision that I have made, I form the preliminary view that the defendant should pay the plaintiff’s costs of the hearing. Nevertheless, in order to give both parties time to consider the costs issue, I will permit written submissions on costs, limited to two pages, to be filed within two business days of the decision being pronounced.