Meagher v McDonald[2025] QSC 84

SUPREME COURT OF QUEENSLAND

1. [1]
   There are two applications before the court, both of which depend for their resolution on the proper construction of a deed entered into on 16 May 2017 as well as the legal effect of a separate, but related, deed entered into on 20 February 2024. The plaintiffs’ application is for summary judgment pursuant to r 292 of the Uniform Civil Procedure Rules 1999 (Qld). The defendants cross-apply for summary judgment pursuant to UCPR r 293 or, in the alternative, for the plaintiffs’ amended statement of claim to be struck out pursuant to UCPR r 171.

Background

2. [2]
   On 10 June 2016, the second plaintiff, MCG Group Pty Ltd, obtained judgment in the Federal Court of Australia against Paul McDonald and Fitrus Pty Ltd. On 18 August 2016, a sequestration order was made against Mr McDonald with trustees in bankruptcy appointed. On 2 September 2016, Fitrus Pty Ltd was wound up in insolvency and liquidators appointed.
3. [3]
   By email dated 18 March 2017, an agreement was allegedly reached between the second plaintiff, the defendants (Kaye and Jacob McDonald) and Paul McDonald. The alleged agreement was said to relate to the Federal Court judgment, the sequestration order, and the winding-up order, all of which, again it was said, had been sought by the second plaintiff.
4. [4]
   On 10 April 2017, a proceeding on the alleged agreement was commenced in this court by the second plaintiff and its director, Bill McDonald, against the defendants and Paul McDonald.^[1] On 2 May 2017, Kaye McDonald filed a defence. On 8 May 2017, an application for summary judgment in that proceeding was filed on behalf of Bill McDonald and the second plaintiff.
5. [5]
   Subsequently, the parties to that proceeding agreed to settle their dispute with no admission as to liability on the terms set out in a Deed of Settlement dated 16 May 2017 (“2017 Deed”).

The 2017 Deed

6. [6]
   The 2017 Deed was entered into by the second plaintiff and Bill McDonald on the one hand and the defendants and Paul McDonald on the other. On its face, the defendants and Paul McDonald jointly and severally agreed to pay the sum of $2,300,000 to Bill McDonald, the second plaintiff or an entity nominated by Bill McDonald subject to the terms of the Deed.
7. [7]
   Of primary importance to these applications, clause 2 of the 2017 Deed obliged payment of the sum in three separate tranches, as follows:

“2. Terms of Settlement

1. Kaye, Paul and Jacob jointly and severally agree to pay or cause to be paid to Bill, MCG Group, or an entity nominated by Bill the Settlement Sum as follows:

1. by the release of the Trust Moneys pursuant to the Consent Order;

2. by payment of $650,000 within 30 days of the date of this Deed to the following account:

Account Name: Mills Oakley Law Practice Trust Account

…

3. the Balance Settlement Sum within 14 days of the Final Distribution.

2. Upon payment of the Trust Moneys in accordance with clause 2(a)(i) herein:

1. the Parties will take all steps necessary to dismiss the Summary Judgment Application by consent, with no order as to costs;

2. Bill and MCG Group (or their Associates) will not provide any further funding to the Liquidators or Trustees in Bankruptcy, and, except under compulsion of legal process, will not provide any further information and assistance to the Trustees or Liquidators;

3. Bill and MCG Group will indemnify Kaye, Paul and Jacob (jointly and severally) in respect of any and all remuneration, costs, charges and expenses of the Trustees in Bankruptcy and the Liquidators up to the date of this Deed.

3. Upon payment of that part of the Settlement Sum in accordance with clause 2(a)(i) and (ii) herein:

1. the Parties will take all necessary steps to bring the proceeding to an end by filing a Notice of Discontinuance;

4. upon payment of the Balance Settlement Sum in accordance with clause 2(a)(iii) herein:

1. Bill and MCG will execute in favour of Kaye a deed of assignment of all debts and/or causes of action to which they are otherwise entitled against Paul (whether known or unknown) or, at the election of Kaye, a comprehensive release and discharge of all such debts and/or causes of action.”

8. [8]
   The following terms and expressions of relevance to the proper construction of clause 2 of the 2017 Deed were defined in clause 1.1:

“ …

4. Balance Settlement Sum means $875,300.75, less any Distribution;

5. Bankrupt Estate means the bankrupt estate of Paul Gerard McDonald;

…

8. Consent Order means a consent order to be executed by the Parties contemporaneously with execution of this Deed in the Proceeding on the following terms:

1. The sum of $774,699.25 being the first defendant’s share of the proceeds of the sale of real property described as Lot 780 on RP910420, Title Reference 50178057 situated at 24 The Anchorage, Noosaville, presently held in the trust account of Mills Oakley pursuant to the order of this Court dated 4 May 2017, be paid to the plaintiffs, or to an entity nominated by the plaintiffs.

2. There be no order as to costs.

3. The Summary Judgment Application be adjourned to the Registry.

…

11. Distribution means any payment received by Bill or MCG Group (or their respective Associates) from the Trustees in Bankruptcy, including a final distribution;

12. Final Distribution means a Distribution received by Bill or MCG Group (or their respective Associates) upon the discharge of Paul from the Bankrupt Estate.

…

19. Proceeding means [the proceeding commenced in this court on 10 April 2017];

…

21. Settlement Sum means the amount of $2,300,000;

22. Summary Judgment Application means the application filed [in this court on 8 May 2017];

23. Trustees in Bankruptcy means Terry Grant van der Velde and Jason Shane Cronan [the trustees for Paul McDonald’s bankruptcy];

24. Trust Moneys means the amount of $774,699.25 being held in the trust account of Mills Oakley pursuant to the order of Justice Dalton of the Supreme Court of Queensland dated 4 May 2017 in the Proceeding;”

Subsequent events

9. [9]
   By around mid-June 2017, the payment obligations under sub-clauses 2(a)(i) and (ii) of the 2017 Deed were discharged by the release of the “Trust Moneys pursuant to the Consent Order” and the payment of $650,000 to the trust account of Mills Oakley. That triggered a number of events, that is to say, those specified in sub-clauses 2(b) and (c) of the 2017 Deed including dismissal of the summary judgment application on 18 May 2017 and discontinuance of the principal proceeding by the filing of a notice to that effect on 21 June 2017.
10. [10]
    All which then remained to be done was payment of the “Balance Settlement Sum” pursuant to clause 2(a)(iii) of the 2017 Deed, that is to say, “$875,300.75, less any Distribution” (clause 1.1(d)), which sum was agreed to be paid “within 14 days of the Final Distribution” (clauses 1.1(k), 1.1(l) and 2(a)(iii)). As such, both the quantum and timing of the final tranche payable under the 2017 Deed were agreed to be calculated by reference to the finalisation of Paul McDonald’s bankruptcy.
11. [11]
    On 17 August 2018, the second plaintiff was wound up pursuant to an order of the Federal Court with the first plaintiff appointed as its liquidator.
12. [12]
    On 30 September 2019, Paul McDonald was discharged from bankruptcy. On 2 October 2019, a “first and final dividend of 1.7 cents in the dollar” was declared by the trustees for the unsecured creditors of Paul McDonald’s bankrupt estate. Prior to that point in time, the second plaintiff lodged a proof of debt with respect to his bankrupt estate, but it was wholly rejected by the trustees. Bill McDonald did not lodge a proof of debt. In the result, neither the second plaintiff nor Bill McDonald received any distribution from the estate.
13. [13]
    Subsequently, demand was made on the defendants for payment of the “Balance Settlement Sum” and, when nothing was forthcoming, the plaintiffs’ solicitors forwarded a letter to the solicitors for the defendants on 25 July 2022 in which they formally affirmed the 2017 Deed on behalf of the plaintiffs and made a final demand for payment. The defendants were given until 28 July 2022 to do so. No part of the amount demanded has been paid.
14. [14]
    On 16 April 2023, Bill McDonald was made a bankrupt, with Nathan Schwarz and Scott Woods appointed as his trustees.

This proceeding and these applications

15. [15]
    On 5 August 2022, the plaintiffs commenced the subject proceeding against the defendants through the filing of a claim and statement of claim. By the amended claim filed on 12 December 2023, the following relief is sought:

1. An order that the defendants specifically perform clause 2(a)(iii) of the 2017 Deed by paying to the plaintiffs the sum of $875,300.75 within seven days from the date of the order;

2. Alternatively, recovery of the sum of $875,300.75 as a debt due and owing under the 2017 Deed;

3. Interest on the sum of $875,300.75 pursuant to s 58 of the Civil Proceedings Act 2011 (Qld) from 16 October 2019 until the date of judgment or earlier payment; and

4. Costs.

16. [16]
    The amended statement of claim filed on the same day alleges that “a final dividend was declared” in Paul McDonald’s bankruptcy on 2 October 2019 and that this “resulted in the second plaintiff and [Bill] McDonald receiving a $nil final distribution”.  It is then pleaded that the amount sought to be recovered ($875,300.75) thereby became due and payable 14 days later, that is to say, on 16 October 2019.
17. [17]
    Amended defences were separately filed for the respective defendants on 8 January 2024. In them, the defendants denied any amount was due and payable to the plaintiffs because, it was pleaded, neither Bill McDonald nor the second plaintiff received a “Final Distribution” within the meaning of the 2017 Deed and that, accordingly, “the time for payment by the [defendants] as provided for in the Deed … has not arisen and the [defendants have] no obligation to pay the Balance Settlement Sum”. It was also pleaded that, “to the extent that … the [plaintiffs seek] to infer that the lack of any entitlement to a dividend or receipt of a distribution from the Bankrupt Estate on the part of [Bill McDonald or the second plaintiff] is a Final Distribution under the terms of the Deed of Settlement, the allegations are denied because they do not reflect a proper interpretation of the Deed”.
18. [18]
    The plaintiffs filed amended replies to the amended defences on 19 January 2024. They effectively joined issue with the defendants’ denials and alleged that “the legal conclusion pleaded in the [amended defences] as to the time for payment by the [defendants] and the [defendants’] obligation to pay the Balance Settlement Sum is wrong”.
19. [19]
    Prior to the amendment of the pleadings just discussed, the application and cross‑application were filed and made returnable on the same day. They came before Kelly J on 30 November 2023 when, inter alia, directions were made to facilitate the hearing on a later date. His Honour also ordered that Bill McDonald’s trustees in bankruptcy be added as third defendants to the proceeding.

The 2024 Deed

20. [20]
    However, on the day before the hearing of these applications, the newly added third defendants reached a negotiated resolution of the whole proceeding against them with the plaintiffs. This agreement was recorded in a Deed of Acknowledgment dated 20 February 2024 (“2024 Deed”). A Notice of Discontinuance was filed by the plaintiffs with respect to the trustees on the same day.
21. [21]
    Clauses 2, 3 and 4 of the 2024 Deed are relevantly in these terms:

“2   Acknowledgements and Warranties

2.1 The Trustees acknowledge, warrant and represent that the Bankrupt Estate of William James McDonald has no entitlement to the Claimed Amount and the Bankrupt Estate of William James McDonald will not make any Claim for the Claimed Amount in the future against the Liquidator, the Company, Kaye Leanne McDonald and Jacob Paul McDonald.

…

2.3 The discontinuance of the Proceeding as against the Trustees will be without prejudice to any rights that the Liquidator and the Company have against Kaye Leanne McDonald and Jacob Paul McDonald in or incidental to the Proceeding. For the sake of completeness, those rights will not be adversely affected by the discontinuance of the Proceeding as against the Trustees.

3  Release and Discharge

3.1 Upon the obligations in clause 2 herein being fully complied with, the Parties release and discharge each other from all and any Claims relevant to the subject of the Proceeding, besides any claim that the Parties may have to enforce this Deed.

…

4 Plea in bar

4.1 The Parties agree that the release and discharge provided in clause 3 of this Deed may be pleaded by the Parties, as a bar to any Claim by the Trustees, any person on behalf of the Trustees, or the Bankrupt Estate of William James McDonald, which is the subject of the said release and discharge. For the sake of completeness, this means that the release and discharge provided in clause 3 of this Deed may be pleaded as a bar to any Claim by the Trustees, any person on behalf of the Trustees, or the Bankrupt Estate of William James McDonald for the Claimed Amount.”

22. [22]
    For the purposes of these provisions, “Trustees” was defined to mean the trustees of the bankrupt estate of Bill McDonald, “Liquidator” to mean the first plaintiff, “Company” to mean the second plaintiff and “Claimed Amount” to mean “the moneys claimed by the Liquidator and the Company in the Proceeding pursuant to the Deed of Settlement, being the amount of $875,300.75”: Clause 1.1.
23. [23]
    On 26 February 2024, the defendants’ solicitors forwarded an email to the plaintiffs’ solicitors (as well as the trustees) in which they advised their view that the acknowledgements contained in clause 2.1, the release and discharge in clause 3.1 and the terms of clause 4 of the 2024 Deed were “promises made, for valuable consideration, for the benefit of” the defendants. They then stated that:

“We are instructed, and you are hereby notified, that our clients accept the benefit of thereof.”

24. [24]
    The defendants thereby sought to engage s 55 of the Property Law Act 1974 (Qld) and, although this was an issue which was only raised towards the end of the hearing of the applications, the parties were agreed to that it could (and should) be dealt with. To that end, supplementary affidavit material was filed along with supplementary written submissions as to the legal effect of the 2024 Deed.

Applicable principles

25. [25]
    By UCPR r 292, the court may give judgment for a plaintiff against a defendant for all or part of the plaintiff’s claim if satisfied that: (1) the defendant has no real prospect of successfully defending all or part of the claim; and (2) there is no need for a trial of the claim or the part of the claim. Similarly, its counterpart, UCPR r 293, allows for the giving of judgment for a defendant against a plaintiff for all or part of the plaintiff’s claim if the court is satisfied that: (1) the plaintiff has no real prospect of succeeding on all or part of the claim; and (2) there is no need for a trial of the claim or part of the claim.
26. [26]
    It is of course well-established that summary judgment ought not be granted “unless it is clear that there is no real question to be tried”.^[2] The onus is on the applicant for judgment to make out a prima facie case for summary judgment and, once this has been established, the evidentiary onus shifts to the respondent.^[3] Whether applying under UCPR r 292 or UCPR r 293, both limbs must be satisfied: the respondent must have no real prospect of success and there must be no need for a trial. To the point, the UCPR are not intended to “dispense with the need for a trial whether there are issues which should be investigated at the trial”.^[4]
27. [27]
    So far as the construction of the 2017 Deed and the 2024 Deed are concerned, as commercial agreements, each must be construed as a whole. Their meaning is to be determined objectively by reference to their text, context, and purpose. The meaning is what a reasonable businessperson in the position of the parties to the instrument would have understood it to mean.^[5] The deeds must be construed to avoid making commercial nonsense or working commercial inconvenience. In this regard, the court is entitled to approach the task of giving a commercial agreement a businesslike interpretation on the assumption “that the parties intended to produce a commercial result”.^[6]
28. [28]
    It should also be recorded that, on the hearing of the applications, the defendants objected to some of the affidavit material filed in support of the plaintiffs’ application to the extent reliance might be placed on any of it to construe the terms of the 2017 Deed.^[7] However, none of the plaintiffs’ material was relied on for that purpose and, as such, the objection fell away.^[8] To be clear, I have undertaken the process of construction solely by reference to the 2017 Deed. I have not had regard to any extrinsic evidence to do so, whether as contained in the affidavits about which objection was taken or otherwise. The evidence was however admissible, and has been taken into account by me, for different purposes – to determine when Bill McDonald was discharged from bankruptcy, when the final distribution of his estate took place and what, if any, dividend was paid.

The proper construction of the 2017 Deed

29. [29]
    Leaving to one side the issue raised regarding the legal effect of the 2024 Deed, the outcome of both summary judgment applications (as well as the defendants’ strike‑out application) turns on the proper construction of clause 2(a)(iii) of the 2017 Deed, and the current versions of the pleadings reflect the respective positions of the parties in that regard.
30. [30]
    The defendants submitted that, because neither Bill McDonald nor the second plaintiff received any dividend from the bankrupt estate of Paul McDonald, the “Balance Settlement Sum” was not due and payable. In support of their argument, the defendants pointed to the definition of that expression (i.e. “$875,300.75 less any Distribution”) as well as the definitions of “Distribution” (i.e. “any payment received by Bill [McDonald] or [the second plaintiff] … from the Trustees in Bankruptcy, including a final distribution”) and “Final Distribution” (i.e. “a Distribution received by Bill [McDonald] or [the second plaintiff] … upon the discharge of Paul [McDonald] from the Bankrupt Estate”). The defendants argued that, absent a payment received by either Bill McDonald or the second plaintiff, it could not be said there had been either a “Distribution” or a “Final Distribution” within the meaning of the 2017 Deed. Emphasis was placed on the definition of the latter expression because, it was contended, this required a payment to be received before it could be said there had been a “Final Distribution” within the meaning of clause 2(a)(iii) of the 2017 Deed. It followed, they argued, time did not commence to run under that provision and no sum was therefore due and payable. They submitted that unless the Deed was construed in this way the word, “received”, where it is used in the definitions of “Distribution” and “Final Distribution” would have no work to do. Thus, it was argued, the parties must be taken to have contemplated the receipt of a distribution in at least some amount to go in reduction of the “Balance Settlement Sum” payable under the 2017 Deed. The defendants went on to submit on the strength of their construction that the amended statement of claim was fatally flawed because the plaintiffs did not allege a term could be implied in the 2017 Deed to overcome that construction or otherwise seek to rectify the agreement recorded in it.
31. [31]
    It should immediately be observed that, because Paul McDonald’s bankruptcy ended without payment of any dividend to Bill McDonald or the second plaintiff, the defendants’ construction, if accepted, would mean no sum would ever become payable under clause 2(a)(iii). It would also mean that the agreed mutual releases and discharges under the 2017 Deed would never come into effect because their operation is only triggered “upon satisfaction of clause 2”.^[9] The absurdity of such a contractual result hardly requires further explanation in the context of a commercial instrument under which the defendants plainly agreed to pay a total settlement amount of $2,300,000 in three tranches, net of any distribution from the bankrupt estate of Paul McDonald. However, the commercial nonsense this would produce is underscored by the realisation that, if the defendants’ construction is correct, the payment of a single dollar by way of dividend on 2 October 2019 would indisputably have given rise to an obligation on the part of the defendants to pay $875,299.75 by 16 October 2019 but, because nothing was received by way of dividend, not a single cent of the $875,300.75 agreed to be paid under the provision will ever be payable. No reasonable businessperson in the position of the parties to the 2017 Deed would have understood its terms to carry that meaning or produce that result.
32. [32]
    Furthermore, the 2017 Deed must be construed as a whole and, when that is done, it becomes clear the parties intended that, if nothing was received to reduce the settlement sum that was otherwise payable as the final tranche under their agreement, the whole sum would be payable. The definition of “Balance Settlement Sum” contemplates that very circumstance through use of the expression, “less any Distribution”. Likewise, although “Final Distribution” is defined by reference to “a Distribution received”, “Distribution” is defined to mean “any payment received ... including a final distribution”. Put another way, the circumstance that no distribution (or payment) might be made from the estate of Paul McDonald was expressly contemplated by the parties to the 2017 Deed.
33. [33]
    Plainly, clause 2(a) of the 2017 Deed operates in such a way that the primary obligation (to pay $875,300.75) is to be discharged in accordance with the machinery provisions which follow (clauses 2(a)(i) and (ii)). These specify the timing and mode of payment of the three tranches by which the “Balance Settlement Sum” was agreed to be paid. None of what there appears can be properly construed to derogate from the full force and effect of that primary obligation. Furthermore, to the extent the obligation to pay the final tranche becomes payable within 14 days of the “Final Distribution”, the meaning of that expression is informed by the definition of “Distribution” which, as I have found, contemplates the circumstance that no payment is received by Bill McDonald or the second plaintiff from the bankrupt estate of Paul McDonald.
34. [34]
    It follows that the defendants’ construction cannot be accepted. Instead, on the proper construction of the 2017 Deed, the parties agreed the final tranche would be paid by the defendants within 14 days of the final distribution from the estate of Paul McDonald on his discharge from bankruptcy, regardless of whether any payment was actually received by Bill McDonald or the second plaintiff by way of dividend from that estate.

The legal effect of the 2024 Deed

35. [35]
    As earlier touched on (at [23] and [24]), the defendants contend that the 2024 Deed was an agreement for their benefit within the meaning of s 55 of the Property Law Act. That benefit, they argued, was accepted by them by the email forwarded by their solicitors on 26 February 2024. They submitted that the trustees of the estate of Bill McDonald, standing as they were in the shoes of the bankrupt, were until that point in time joint creditors with the second plaintiff with respect to the debt provided for under the 2017 Deed.^[10] Further, it was argued, because of their acceptance of the benefit to them under the 2024 Deed, the second plaintiff can no longer maintain any action against them because it is now “a single joint creditor with no ability to seek execution of any [judgment] as against the … defendants in respect of the” 2017 Deed. The common law rule which the defendants sought to invoke in this regard is to the effect that “an accord and satisfaction effected with only one of two joint creditors operates to discharge the joint debt”.^[11] In short, the defendants contend that the 2024 Deed, an instrument to which they were of course not parties, had the consequence (on acceptance by them of the benefit under it) of releasing them from any obligation under the 2017 Deed to pay the second plaintiff the final tranche that I have found to be due and payable under it.
36. [36]
    The defendants’ contentions in these several respects cannot be accepted.
37. [37]
    First, a fundamental premise for these contentions is that the second plaintiff was a joint creditor with the trustees with respect to the same, joint debt. However, although that may have been an accurate characterisation of the legal relationship between the second plaintiff and Bill McDonald at the time when the 2017 Deed was entered into, by the time the 2024 Deed came into being, Mr McDonald was bankrupt and his trustees, as the defendants well knew, were disclaiming any interest at all in the debt payable under the 2017 Deed. As such, the debt could no longer be regarded as a joint debt owed to joint creditors.^[12] On proper analysis, although the second plaintiff and Bill McDonald had the same interest in performance of the payment obligation under clause 2(a) of the 2017 Deed, the trustees disclaimed any interest at all by the time the 2024 Deed was executed. There is accordingly no room for the operation of the common law rule on which the defendants seek to rely.
38. [38]
    Second, although it may be accepted that s 55 of the Property Law Act was engaged, the benefit under the 2024 Deed to which the defendants are entitled is confined to the right to plead the acknowledgement, warranty and representation in clause 2.1 in answer to any claim by the trustees. Nothing was conferred on the defendants as strangers to that agreement to affect the plaintiffs’ rights to pursue them for the debt due under the 2017 Deed. Put simply, although the trustees promised not to seek recovery against, relevantly, the defendants, the right on the part of the plaintiffs to continue the proceeding against the defendants was expressly preserved: clause 2.3. In no sense could it be said that the defendants secured any benefit under the 2024 Deed to be released from that proceeding.
39. [39]
    In short, the 2024 Deed cannot stand in the way of recovery of the whole of the amount sought by the plaintiffs as due and owing under the 2017 Deed.

Disposition

40. [40]
    For these reasons, the defendants have no real prospect of successfully defending the plaintiffs’ claim and there is no need for a trial of the claim, or any part of it. The plaintiffs are accordingly entitled to summary judgment on the whole of their claim and the cross-application brought by the defendants for summary judgment or, in the alternative, the striking-out of the amended statement of claim must be dismissed with costs.
41. [41]
    I shall direct the parties to bring in minutes of order to reflect that outcome including the amount to be awarded by way of judgment, interest and costs.