WWZ v State of Queensland[2023] QDC 62

DISTRICT COURT OF QUEENSLAND

Introduction

1. [1]
   On 19 October 2020 the applicant^[1] commenced a claim in this Court against the respondent for damages for personal injuries suffered while under the care of the respondent.
2. [2]
   On 20 April 2022 the parties participated in a mediation, the result of which was a compromise of the proceedings, evidenced by a document entitled “Release, Discharge and Indemnity” (“the settlement agreement”).  The terms of it provided, inter alia, for payment of $240,000, subject to certain deductions and allowances.  No payment has been made under the settlement agreement.  The applicant now applies for an order that the respondent pay $240,000 within seven days, and other ancillary orders.
3. [3]
   The respondent resists the application and seeks orders providing for a timetable for the filing of documents, including a Statement of Claim relating to the asserted debt, in lieu of the present application, and other pleadings including any application for summary judgment on the counterclaim. It contends that would effectively allow the dispute to be determined in a structured manner and in light of a recently pleaded counterclaim to set-off the monies claimed.

Factual summary

4. [4]
   The proceedings commenced in this court by the applicant against the respondent were for damages for personal injuries.  In short, he alleged he was physically and sexually abused while under the care of the respondent in both domestic and institutional settings.  Curiously, the material read on the application includes two different versions of the settlement agreement.  Both are signed by the applicant on 29 April 2022.  The version put on by the applicant is apparently signed on behalf of the respondent on 4 June 2022.^[2]  The version put on by the respondent is apparently signed by a different person on behalf of the respondent to that who signed the just mentioned version, on 6 May 2022.^[3]  Otherwise, the two versions are identical and, relevantly, state a factual background to the settlement and refer to an agreement to settle the proceedings, without any admission of liability, on certain terms. 

Relevantly they included:

1. “State of Queensland shall pay the plaintiff the sum of $240,000 inclusive of all heads of damages, interest and statutory refunds and inclusive of costs (“the settlement sum”) in full and final settlement of the claims.”^[4]
2. That payment of the settlement sum was conditional upon the respondent receiving certain nominated clearance letters and a Notice of Charge, and that interest was to accrue on and from 28 days after the receipt of the last statutory clearance or charge.^[5]
3. The release and indemnification of the respondent by the applicant was found at clause 4.1: 

“4.1. In consideration of payment by State of Queensland of its obligations described in clause 1, the plaintiff:

1. (a)
   releases and discharges the State of Queensland from any liability howsoever arising out of the facts and circumstances the subject of the Claims and at all times he was in the care of the State of Queensland; and
2. (b)
   indemnifies the State of Queensland against all claims which have arisen or which may arise in the future in relation to the facts and circumstances the subject of the Claims and at all times he was in the care of the State of Queensland.”

4. 4)“Claim means any actual or contingent claim, notice, demand, action, proceeding, litigation, investigation, judgment, damage, loss, cost, expense, liability or similar, however arising, whether present, unascertained, immediate, anticipated, future or contingent, based in contract, based in tort and/or arising from statute and whether involving a third party or party to this agreement which a party to this agreement has or but for the execution of this agreement has or but for the execution of this agreement may have had relating to or arising from:
   1. (a)
      the Abuse;
   2. (b)
      the plaintiff’s time in care;
   3. (c)
      any other dealings between the plaintiff and State of Queensland, prior to the date of this agreement;

For the avoidance of doubt, the Claims includes (sic) any alleged breach of duty and vicarious liability, where the statutory or tortious, and/or, fiduciary, relating to or arising from any of the matters referred to in paragraphs a) to c) above.”^[6]

5. 5)“Abuse means the sexual abuse, physical abuse, psychological abuse and/or any other abuse perpetrated in connection with sexual abuse or physical abuse of the plaintiff at all times he was in the care of the State of Queensland.”^[7]
6. 6)Clause 5 of the settlement agreement is entitled “Bar to action”.  The following subparagraphs are of relevance:

“5.1. This agreement may be pleaded in bar to any action, claim, demand or proceeding brought now or in the future by the plaintiff or on the plaintiff’s behalf having arisen or which may arise in the future out of the facts and circumstances the subject of the Claims at all times he was in the care of the State of Queensland.

…

5.3. The settlement sum has been negotiated, taking into consideration:

1. (a)
   the above;^[8]
2. (b)
   all of the plaintiff’s claims, including, without limitation, all claims relating to or arising from the alleged abuse, whether sexual, physical, psychological, and/or any other abuse perpetrated in connection with sexual abuse and/or physical abuse;
3. (c)
   any prior payments made by the State; and
4. (d)
   that this settlement has been entered into on a negotiated, and without admissions, basis.

5.4 In light of the above, it is the common intention of the parties that the settlement, as document (sic) by the agreement, is in full and final settlement of all claims that the plaintiff has, or may have in the future, against the State of Queensland in respect of the facts and circumstances the subject of the Claims and at all times he was in the care of the State of Queensland.”

7) The settlement agreement included a statement that the agreement contained the entire agreement between the parties with respect to its subject matter.^[9]

5. [5]
   The necessary releases and discharges were received by 17 June 2022 and the respondent was notified of that fact by letter dated 20 June 2022.^[10]  The applicant has not received any payment under the settlement agreement.
6. [6]
   On 5 October 2021, separate proceedings were commenced in this Court by a plaintiff, hereinafter named NW, against the present respondent for damages for personal injuries caused by physical and sexual assaults while he was in the care of the respondent.  In that statement of claim, NW specifically pleaded that the one occasion that he was physically and sexually assaulted was by the present applicant.  This claim was filed by the same firm of lawyers who at all relevant times acted (and continue to act) for the present applicant in these proceedings.  They apparently still act for NW.^[11]
7. [7]
   The respondent joined the present applicant as a third party in the NW proceedings and purported to serve a third-party notice and a Statement of Claim on him on 6 December 2021.  Although the applicant’s legal representatives in the present matter do not act for him in the NW proceedings, there is a dispute between the parties in the present matter whether the applicant was validly served at that time.  Whether validly served or not, for the purposes of the NW proceedings, the applicant’s current legal representatives in the NW proceedings were at least aware that the third-party documents existed by 28 July 2022,^[12] and probably earlier.
8. [8]
   As at the date of the hearing of this application, the applicant had not filed a defence to the third-party proceedings notice in the NW proceedings.
9. [9]
   The present proceedings have not been discontinued, no doubt because the settlement monies have not been paid.  On 19 August 2022, the day after being served with the present application, the respondent filed an Amended Defence in the present proceedings which in effect pleaded a counterclaim based on the indemnity referred to in clause 4.1 of the settlement agreement.  The respondent contends that this should be seen as a set-off to the applicant’s original claim, and hence to any debt owing under the settlement agreement.

The parties’ submissions

10. [10]
    The applicant’s submissions can be distilled to the following:

1. The agreed settlement figure is due and owing to the applicant.  There is no valid reason for the respondent to refuse to pay, and repeated demands for payment have been made to no avail.
2. The third-party material in the NW proceedings was only served on the applicant on 3 August 2022, and so the time for the filing of that defence had not arisen at the time this hearing was conducted. Accordingly, in considering any indemnity or contribution it must be remembered that the applicant’s conduct is not proven; he is only an alleged tortfeasor.
3. It appears that the respondent seeks an indemnity or contribution from the applicant in reliance on clause 4.1 of the settlement agreement and s 7 of the Law Reform Act 1995. It is accepted that the respondent could claim an indemnity or contribution pursuant to ss 6(c) and 7 of the Law Reform Act 1995, but clause 4.1 of the settlement agreement does not permit the counterclaim and indemnity in the present proceedings.
4. The refusal to pay, amounts to a wilful, or at least constructive, disregard of the respondent’s obligation under the settlement agreement.  Costs should be awarded on the indemnity basis.

11. [11]
    The respondent’s position is that the application should be dismissed, and instead orders made requiring the filing of an amended statement of claim in the present action, and a timetable set for the filing of material, including any application for summary judgment by the applicant on the amended statement of claim.^[13]  That is said to be justified because:

1. The applicant purports to make the present application under r 31 of the UCPR but has not pleaded an actual entitlement to the sum of $240,000, nor has he applied for summary judgment in the present action in reliance on the settlement agreement.
2. The respondent has an arguable - it says strongly arguable - case for a set-off against the applicant, whether it be a statutory set-off or one based in equity.
3. The terms of the settlement agreement do not preclude the respondent setting off the settlement figure against any liability it incurs in the NW proceedings.  As such, and given the amended defence in the present proceeding includes a claim for an indemnity to set-off any liability in the NW proceedings which has not been responded to, the present application for an order requiring immediate payment of the settlement figure must be refused. The appropriate order is to provide a timetable for the filing of documents, including any application for summary judgment by the applicant on the counterclaim.

Admissibility of evidence – a preliminary issue

12. [12]
    The applicant has read an affidavit on this application of a solicitor, Ms Nicole Miethke, sworn 22 August 2022.  The respondent objects to paragraphs 3, 6, 9 and 10 on the basis that the applicant’s application is for final relief and those paragraphs are based on information and belief, and thereby inadmissible.^[14]  The applicant contends that the present application “is an interlocutory application in a pending claim”^[15] and so assertions based on information and belief are admissible.
13. [13]
    Paragraphs 3, 6 and 10 are self-evidently assertions based on information and belief.  Paragraph 9 is not unambiguously such, but it (along with paragraphs 7 and 8 to which objection is not taken) deals with expected disbursements from the settlement figure.  The respondent has not satisfied me that the contents of that paragraph are based on information and belief, as opposed to the deponent’s own knowledge of the state of those affairs as the solicitor with carriage of the matter.
14. [14]
    With respect, the admissibility of paragraphs 3, 6 and 10 is not resolved by a determination of whether the application is interlocutory in nature, or not.  Although that was previously the test,^[16] r 430 of the UCPR introduced a change.  In Gallagher v Boylan^[17] Fraser JA held:

“The rule’s predecessor, O 41, r 3 of the Rules of the Supreme Court, allowed hearsay in “interlocutory motions or applications”. In Ex parte Britt, McPherson J (as he then was) analysed authorities which drew a distinction between “interlocutory” and “final” applications for various purposes and held that an application was final rather than interlocutory for the purposes of O 41, r 3 if “… the decision of the application will finally dispose of the rights of the parties, not merely as to the subject-matter of the particular application in question but also as to the ultimate dispute between the parties …”. The terms of UCPR r 430(2) differ from O 41, r 3 because the former focuses upon the nature of the relief sought in the application, rather than upon the nature of the application itself. Allowing for that textual change, I would state the applicable test as being that hearsay evidence is not made admissible by r 430 if the grant of the relief claimed in the application would finally dispose of the rights of the parties as to the ultimate dispute between the parties, rather than merely as to the subject matter of the application itself.” (footnote omitted)

15. [15]
    In my view, the granting of the applicant’s present application will not finally dispose of the rights of the parties as to the ultimate dispute between them.  The granting of the application would facilitate the timely payment of the amount sought under the settlement agreement, but it would not resolve the counterclaim in the present proceedings, nor the claimed indemnity in the NW proceedings.
16. [16]
    The impugned paragraphs of Ms Miethke’s affidavit sworn 22 August 2022 are admissible.

The service of the third-party notice – another preliminary issue

17. [17]
    As earlier noted, on 5 October 2021 the NW proceedings were commenced. On 6 December 2021 the respondent filed a third-party notice naming the present applicant.  The respondent concedes that unless leave were to be obtained, the notice had to be filed two clear days earlier.  Leave has not yet been sought to remedy that defect.^[18] The applicant asserts that, therefore, there are no third-party proceedings on foot^[19] and, even if there are, they were not served on the applicant until 3 August 2022. 
18. [18]
    The submission that the failure to obtain leave to issue the third-party notice out of time means that there are no proceedings on foot can be dealt with in short compass.  A failure to comply with the UCPR is an irregularity and does not render the third-party notice a nullity.^[20] The notice must be treated as irregular but nonetheless valid. The third-party proceeding is taken to have commenced on 6 December 2021.^[21]
19. [19]
    It is uncontroversial that a third-party notice must be served personally.^[22]  However, a solicitor may accept service on behalf of a party, and service is taken to be effected unless the served party proves that the solicitor did not have authority to accept service.^[23]  Notably, the onus to prove the lack of authority falls on the party otherwise deemed to have been served.
20. [20]
    On the evidence before me:

1. On 29 November 2021 a solicitor for the respondent sent an email to the applicant’s solicitor, Ms Miethke, with the applicant’s full name in the subject line asking if she had instructions to “accept service of court documents for” the applicant.  Ms Miethke replied on the evening of 1 December 2021 that she did.  Service was then purportedly effected by email on Ms Miethke on 6 December 2021.^[24]
2. On 8 December 2021 and again on 13 December 2021, Ms Miethke spoke to a solicitor for the respondent and said, in effect, that her firm could not act for the applicant in the third-party proceedings, that she could not accept service of the documents, that she had spoken to the applicant and advised him to seek legal advice about those proceedings and had sent the material to him.^[25] It can therefore be accepted that she had received and considered the documents.
3. Later on 13 December 2021, Ms Miethke emailed the solicitor to confirm that her firm does not have instructions to act for the applicant in the third-party proceedings.  She asked that service be effected directly.^[26] 
4. By letter dated 13 January 2022, the respondent purported to serve the applicant directly with the third-party material by registered post.^[27]  There is an issue about whether the applicant personally received it when it was signed for on delivery on 17 January 2022.^[28]  This is a dispute that I need not determine.
5. On 8 March 2022 the respondent’s solicitor wrote to the applicant, by registered post, asserting that service had been effected on 7 December 2021 and notifying the applicant of an intention to apply for default judgment.^[29]
6. On 28 July 2022 another firm of solicitors wrote to the respondent’s solicitors indicating that they act on the applicant’s behalf, asking for copies of all documents and indicating they had the documentation for the third-party proceedings.  Subsequent correspondence between those solicitors resulted in service of the third-party material by email on 3 August 2022.^[30]

21. [21]
    There is no dispute service was effected on 3 August 2022.  The issue is whether it was also effected on or about 6 December 2021.  The reason for setting out a full chronology is to demonstrate why I accept that the applicant had personally received the third-party material by mid-January 2022, and probably by mid‑December 2021.  The last time the material was sent to the applicant was under cover of a letter dated 13 January 2022, and he apparently gave that material, or the material that had been sent to him in mid-December 2021, to the solicitors who became involved on his behalf seemingly in or about July 2022.
22. [22]
    In my view it is relevant to understand when the applicant had personal knowledge of the third-party proceeding, as opposed to being formally served with material, given fairness considerations arise in the equitable set-off asserted by the respondent.
23. [23]
    In any event, I am satisfied on the material before me that the third-party proceedings were served on the applicant by virtue of r 115 of the UCPR on or about 6 December 2021.
24. [24]
    While I accept that on 8 December 2021 those solicitors indicated that they could not act in the third-party proceedings, Ms Miethke had earlier indicated that she could accept service of documents on behalf of the applicant, and there was no qualification as to what material could be served. As earlier noted, she had clearly received the documents emailed to her.  Further, there is no direct evidence that authority was not held.  In my view, there is a difference between material being validly served with a later realisation of a conflict of interest on the part of the solicitors and invalid service in the first place. The applicant has not cited any authority that acceptance of service is conditional on the nature of the material served in the absence of any express caveat having been notified to the serving party.
25. [25]
    In those circumstances, it is open to consider that the authority was held by the solicitors to accept service, but upon the realisation there was a conflict of interest, the applicant was given the documentation personally and advised to get other legal representation.  Given the view that I have taken, the material was properly served.  The applicant has not demonstrated the contrary to be the case.

Consideration of the determinative issues

26. [26]
    The respondent contends that as the present application is neither an application for summary judgment^[31] nor in truth an interlocutory application, the applicant should be required to plead its claim and thereby allow the exchange of pleadings, including the raising of the counterclaim and indemnity.  That, it is said, would also allow an application for summary judgment to be brought by the applicant plaintiff, if he wished.
27. [27]
    While it is true that the applicant could not point to any power to award judgment on the application in its present form, other than the general power under s 68 of the District Court of Queensland Act 1967, a power does in fact exist at r 658 of the UCPR provided that “the nature of the case requires” that the order be made. In that sense the applicant is entitled to proceed as he has, but it does require an assessment of whether the settlement agreement is immediately enforceable against the respondent.  That is an issue of construction of the settlement agreement.
28. [28]
    Clause 4.1(b) of the settlement agreement appears at face value to grant the indemnity that the respondent now relies on. However it is, in my view, not clear that the respondent would be entitled to in fact rely on that indemnity as an equitable set-off in the present proceedings, as its submissions suggest it is more soundly entitled to. 
29. [29]
    While there seems to be an indemnity granted in the settlement agreement, and there is an absence of a “no set-off clause” in that agreement^[32] and there would seem to be the necessary connection required to establish an entitlement to an equitable set-off,^[33] there are some features that tend against allowing the reliance on that equitable set-off.  Notably, they include the fact that the settlement agreement does not specifically refer to the NW proceedings, nor that the third-party proceedings had been commenced, and served, well prior to whatever date the settlement agreement was finally executed. 
30. [30]
    While I make no final determination, it may, after full argument, be considered to be fundamentally unfair to allow reliance on the counter- claim and indemnity as a set-off in those circumstances, and where the respondent effectively seeks to quarantine the settlement amount to call upon in the event that both the applicant’s and respondent’s liability are each established in the NW proceedings when that quarantining is not recognised for in the settlement agreement itself.  On the other hand, I have accepted that the applicant was personally aware of the third-party proceedings well before the execution of the settlement agreement and he might be thought to have been aware of a risk that the sum would be “quarantined” when he entered into the settlement agreement. Also there has been no application for a freezing order over the proceeds of the settlement.  That is another feature which might be relevant to the reliance on an equitable set-off, if that is what is to be relied upon.
31. [31]
    In my view, these are all reasons why detailed and more focussed submissions, based on such evidence as the parties consider appropriate directed specifically to those issues are required.  The submissions before me were not sufficiently focused on those issues given the nature of the present application.  This is the course that would have followed had the applicant sought to enforce the settlement agreement by a fresh Claim, or by applying for summary judgment on the counterclaim in the present proceedings.
32. [32]
    Also, to allow the present application would be in effect giving judgment for the plaintiff in the broader proceedings without determining the counterclaim which is also on foot.
33. [33]
    For those reasons the respondent’s proposed orders are appropriate or, to use the nomenclature in r 658 of the UCPR, I am not satisfied that the nature of the case requires the orders sought by the applicant.  I do accept an appropriate means of progressing the conflict between the parties is by adopting the form of orders proposed by the respondent.
34. [34]
    In deference to the applicant, and as indicated in the course of oral submissions, I will allow the parties to make submissions as to the appropriate timetable proposed, but the applicant’s application will otherwise be refused.

Costs

35. [35]
    I will hear the parties as to costs, by way of written submission with the expectation that the issue will be determined on the papers.