Troupakis v Adams [1999] FCA 609 (3 May 1999)

Last Updated: 9 July 1999

No Question of Principle

FEDERAL COURT OF AUSTRALIA

Troupakis v Adams [1999] FCA 609

STAVROS TROUPAKIS v W G B ADAMS & ORS

NO. VG 577 OF 1998

HEEREY J

3 MAY 1999

MELBOURNE

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY	VG 577 OF 1998

BETWEEN:	STAVROS TROUPAKIS Plaintiff
AND:	WILLIAM GEORGE BISHOP ADAMS and OTHERS Defendant
JUDGE:	HEEREY J
DATE OF ORDER:	3 MAY 1999
WHERE MADE:	MELBOURNE

THE COURT ORDERS THAT:

1. Answer the question

"In exercising the absolute discretion conferred upon the defendants pursuant to paragraph 5 of the terms of settlement referred to in paragraph 8 of the statement of claim, were the defendants required to (a) act fairly and reasonably; (b) have due regard to the interests of the plaintiff; (c) act in good faith and honestly; (d) refrain from acting capriciously and/or for an ulterior purpose."

(a), (b), (c) and (d) - No.

2. Order that the plaintiff pay the defendant's costs of 27 November 1998, 14 December 1998 and 3 May 1999.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY	VG 577 OF 1998

BETWEEN:	STAVROS TROUPAKIS Plaintiff
AND:	WILLIAM GEORGE BISHOP ADAMS and OTHERS Defendant

JUDGE:	HEEREY J
DATE:	3 MAY 1999
PLACE:	MELBOURNE

REASONS FOR JUDGMENT

1 This is the trial of a separate question pursuant to an order which I made on 14 December 1998. It will make for easier understanding if I first say a little about the background of this matter. The plaintiff, Mr Stavros Troupakis, was the accredited representative of the defendants, who are the trustees of the estate of the late George Adams, of a Tattersalls business in Cleveland Road, Ashwood. The agreement was for a period of three years expiring on 3 February 1995.

2 The defendants declined to renew the appointment. In February 1996 Mr Troupakis issued proceedings in the Supreme Court of Victoria alleging that an employee of the defendants had made a contractual arrangement with him for an extension for a further three years. He sought an injunction to restrain the defendants from terminating his appointment.

3 On 18 March 1996 the plaintiff's application for an interlocutory injunction came on for hearing in the Practice Court. He was then represented by counsel, as were the defendants. Counsel signed terms of settlement which relevantly included the following terms:

"2. The parties agree that the accreditation agreement and the outlet agreement respectively defined in paragraphs 2 and 3 of the statement of claim shall remain in force and in effect until 31 January 1997.

3. Unless earlier determined pursuant to clause 4 hereof, the said agreements shall thereupon be discharged and the plaintiff shall cease to be an accredited representative of the defendants, notwithstanding any other provision as to the termination of such appointment contained in such agreements.

4. The said agreements shall forthwith be discharged upon the defendants appointing as an accredited representative any person introduced to the defendants by the plaintiff as a proposed accredited representative in his stead.

5. In the event of such introduction the defendants shall as soon as they practicably can make all such investigations and inquiries as they may require in their absolute discretion to determine whether any such person so introduced shall be appointed as an accredited representative. Nothing herein contained limits the defendants' absolute discretion to appoint or to refuse to appoint any person as an accredited representative."

Subsequently the plaintiff nominated four different people as representatives. All were rejected by the defendants. On 12 March 1997 the plaintiff commenced the present proceeding in the Supreme Court, alleging in substance that in rejecting the persons nominated by him, the defendants acted capriciously and in bad faith. There was also raised an issue as to whether the terms of settlement were confined to the written document or included verbal terms agreed on as between counsel.

4 The matter came on for trial before Ashley J in the Supreme Court on 20 October 1998. Counsel for the defendants proposed the determination of a preliminary question. However, his Honour declined to deal with the preliminary question or any other aspects of the trial because counsel who had appeared for the plaintiff in the earlier action was well known to his Honour and to other judges of the Supreme Court on the basis of personal friendship. So his Honour cross-vested the matter to the Federal Court. The preliminary question was in these terms:

"In exercising the absolute discretion conferred upon the defendants pursuant to paragraph 5 of the terms of settlement referred to in paragraph 8 of the statement of claim, were the defendants required to (a) act fairly and reasonably; (b) have due regard to the interests of the plaintiff; (c) act in good faith and honestly; (d) refrain from acting capriciously and/or for an ulterior purpose."

5 The matter having been assigned to the docket of another judge of this court who could not deal with the matter because he was a personal friend of counsel who had appeared for the defendants in the Supreme Court, the matter came on before me on 14 December 1998 and I ordered that the preliminary question I have mentioned be tried as a separate issue pursuant to O 29 r 2(a) of the Federal Court Rules.

6 As I made clear in earlier discussions with counsel and the plaintiff when this matter was called on, I treat this preliminary question as relating only to the construction of the document headed Terms of Settlement signed on 18 March 1996 and I have not been concerned to decide whether there were in fact, as alleged by the plaintiff, any verbal terms of settlement agreed upon at that time or any other time.

7 In that setting, I think that the term "absolute discretion" has to be given its ordinary and literal meaning. It means that the defendants can decide, for whatever reason seems good to them, whether or not to appoint any person proposed by or introduced by the plaintiff. To use the language of Sheller JA in Topfelt Pty Ltd v State Bank of New South Wales Ltd (1993) NSW Conveyancing Reports 55-676 at 59,858:

"To my mind the expression "may in its absolute discretion" is a composite one which emphasises the agreement of the parties that the decision of the mortgagee as to which of the various powers set out in clause 18.2, if any, it will exercise is a matter for it and it alone."

8 I think what at first blush might seem the surprising possibility that the parties agreed that the defendants might act dishonestly, in bad faith, capriciously etc etc is answered by a practical consideration. It is this: however unfounded allegations of bad faith, capriciousness and the like are, if they are to be entertained and contested in litigation, the defendants, would be put to great trouble, cost and inconvenience. Indeed as was put on behalf of the plaintiff by his uncle, Mr Sklivas, who with leave assisted him in presenting his case. "Let the case proceed for five days. We have nothing to lose." I think somebody in the position of the defendants are properly entitled to protect themselves by terms of settlement that would prevent just that.

9 So the real significance of the expression "absolute discretion" to my mind is that the parties are agreed that such challenges or disputes or agitation are to be shut out. The defendants are to have the right to decide whether or not they shall appoint a representative, and that is that.

10 The commercial setting of the agreement supports that conclusion. A representative of the defendants is somebody handling their money and also is responsible for the commercial reputation. In deciding whether to entrust any person with that responsibility, the defendants, like any employer, are entitled to make inquiries, which may be discreet. They are not obliged to act like a judicial decision-maker and give reasons for the decisions that they make.

11 So for those reasons I answer the questions (a), (b), (c) and (d), no.

12 I will order that the plaintiff pay the defendants' costs of 27 November, 14 December and today. Costs otherwise are reserved.

I certify that the preceding twelve (12) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Heerey.

Associate:

Dated: 3 May 1999

Counsel for the Applicant:	Mr Sklivas
Counsel for the Respondent:	Mr Branagan
Solicitor for the Respondent:	Abbott Stillman & Wilson
Date of Hearing:	3 May 1999
Date of Judgment:	3 May 1999