Allen v G Developments Pty Ltd - [2019] QCA 287

SUPREME COURT OF QUEENSLAND

CITATION:

Allen v G Developments Pty Ltd & Anor [2019] QCA 287

PARTIES:

JOHN ALLEN (AS TRUSTEE FOR THE BUNDAMBA TRUST)
(appellant)
v
G DEVELOPMENTS PTY LTD
ACN 116 332 220
(first respondent)
GARRICK GRAHAME BULL
(second respondent)
RICHARD JAMES GARNER
(third respondent)
ALEXANDER SCOTT HAGAN
(fourth respondent)
DALIBOR STEVANOVIC
(fifth respondent)

FILE NO/S:

Appeal No 6416 of 2019
SC No 11245 of 2016

DIVISION:

Court of Appeal

PROCEEDING:

General Civil Appeal

ORIGINATING COURT:

Supreme Court at Brisbane – [2019] QSC 107 (Bradley J)

DELIVERED ON:

6 December 2019

DELIVERED AT:

Brisbane

HEARING DATE:

29 October 2019

JUDGES:

Morrison and Philippides JJA and Mullins AJA

ORDERS:

1.   Appeal allowed.

2.   Paragraphs 2 and 6 of the orders made by Bradley J on 24 May 2019 are set aside.

3.   The first and second respondents must pay the appellant the sum of $1,972,220.52.

4.   The first and second respondents must pay the appellant’s costs of the proceeding below on and from 18 August 2018.

5.    The first and second respondents must pay the appellant’s costs of the appeal.

6.   The costs of the application for security for costs filed on 26 July 2019 are the respondents’ costs in the appeal.

CATCHWORDS:

CONTRACTS – GENERAL CONTRACTUAL PRINCIPLES – CONSTRUCTION AND INTERPRETATION OF CONTRACTS – INTERPRETATION OF MISCELLANEOUS CONTRACTS AND OTHER MATTERS – where the appellant loaned $1 million to the respondent pursuant to a loan deed to enable the respondent to complete the purchase and development of land – where the loan deed embodied a transaction between commercial parties – where the loan deed contained an express covenant in clause 4(a) by the borrower to pay interest of 25 per cent per annum payable on the expiration of the minimum period, which was the earlier of one year after the date of drawdown or project completion date – where the loan deed allowed for the variation of the rate of interest after the expiration of the minimum period – where the principal was repayable on or before the first anniversary of the drawdown of the loan – where the appellant asserted that clause 4(a) should be construed as providing for interest to continue to accrue if default were made in repayment of the principal – where the respondent asserted that clause 4(a) provided for the maximum interest payable under the loan to be $250,000, irrespective of when the principal was repaid – where the loan deed must be construed as a whole and to avoid commercial nonsense – where clause 4(a) should be construed as incorporating an express obligation to pay interest after the first year of the loan when default was made in repayment of the principal

Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640; [2014] HCA 7, cited
Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104; [2015] HCA 37, considered

COUNSEL:

S J Lee with J J T Dudley for the appellant
M…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2019] QCA 287
Decision Date: 6 December 2019

CaseChat Overview and Summary

The appeal before the court involved a dispute between the appellant, who loaned $1 million to the respondent, and the respondent, who failed to repay the loan as agreed. The loan was intended to assist the respondent in completing the purchase and development of land, with the terms outlined in a loan deed. The central issue before the court was the interpretation of clause 4(a) of the loan deed, which stipulated the interest rate of 25 per cent per annum payable on the expiration of the minimum period, either one year after drawdown or the project completion date. The appellant contended that interest should continue to accrue if the principal was not repaid, while the respondent argued that the maximum interest payable was $250,000, regardless of the repayment date. The court had to determine the proper interpretation of the clause, ensuring it did not lead to commercial nonsense and was consistent with the overall terms of the loan deed.

The court addressed the issue by examining the plain meaning of the language used in clause 4(a) and the surrounding context of the loan deed. It held that the clause should be construed as imposing an obligation to pay interest beyond the initial year if the principal was not repaid, as this interpretation aligned with the commercial purpose of the agreement and avoided any unreasonable outcomes. The court found that the respondent's interpretation would result in a significant reduction in the appellant's return on the loan, which was not consistent with the parties' intentions as commercial entities. The court also noted that the loan deed permitted the variation of the interest rate after the minimum period, reinforcing the view that interest would continue to accrue if the principal was not repaid on time.

As a result of its findings, the court allowed the appeal, setting aside certain orders made by Bradley J. The first and second respondents were ordered to pay the appellant the sum of $1,972,220.52, along with the appellant's costs of the proceeding below and the appeal. The respondents were also required to pay the costs of the application for security for costs. This decision underscored the importance of interpreting contractual terms in a manner that reflects the commercial realities and intentions of the parties involved.

Orders

Orders of the court

1. Appeal allowed.

2. Paragraphs 2 and 6 of the orders made by Bradley J on 24 May 2019 are set aside.

3. The first and second respondents must pay the appellant the sum of $1,972,220.52.

4. The first and second respondents must pay the appellant’s costs of the proceeding below on and from 18 August 2018.

5. The first and second respondents must pay the appellant’s costs of the appeal.

6. The costs of the application for security for costs filed on 26 July 2019 are the respondents’ costs in the appeal.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

Full text does not contain this section.

Ratio Decidendi

Legal Principle Established

Full text does not contain this section.

CITATION:	Allen v G Developments Pty Ltd & Anor [2019] QCA 287
PARTIES:	JOHN ALLEN (AS TRUSTEE FOR THE BUNDAMBA TRUST) (appellant) v G DEVELOPMENTS PTY LTD ACN 116 332 220 (first respondent) GARRICK GRAHAME BULL (second respondent) RICHARD JAMES GARNER (third respondent) ALEXANDER SCOTT HAGAN (fourth respondent) DALIBOR STEVANOVIC (fifth respondent)
FILE NO/S:	Appeal No 6416 of 2019 SC No 11245 of 2016
DIVISION:	Court of Appeal
PROCEEDING:	General Civil Appeal
ORIGINATING COURT:	Supreme Court at Brisbane – [2019] QSC 107 (Bradley J)
DELIVERED ON:	6 December 2019
DELIVERED AT:	Brisbane
HEARING DATE:	29 October 2019
JUDGES:	Morrison and Philippides JJA and Mullins AJA
ORDERS:	1. Appeal allowed. 2. Paragraphs 2 and 6 of the orders made by Bradley J on 24 May 2019 are set aside. 3. The first and second respondents must pay the appellant the sum of $1,972,220.52. 4. The first and second respondents must pay the appellant’s costs of the proceeding below on and from 18 August 2018. 5. The first and second respondents must pay the appellant’s costs of the appeal. 6. The costs of the application for security for costs filed on 26 July 2019 are the respondents’ costs in the appeal.
CATCHWORDS:	CONTRACTS – GENERAL CONTRACTUAL PRINCIPLES – CONSTRUCTION AND INTERPRETATION OF CONTRACTS – INTERPRETATION OF MISCELLANEOUS CONTRACTS AND OTHER MATTERS – where the appellant loaned $1 million to the respondent pursuant to a loan deed to enable the respondent to complete the purchase and development of land – where the loan deed embodied a transaction between commercial parties – where the loan deed contained an express covenant in clause 4(a) by the borrower to pay interest of 25 per cent per annum payable on the expiration of the minimum period, which was the earlier of one year after the date of drawdown or project completion date – where the loan deed allowed for the variation of the rate of interest after the expiration of the minimum period – where the principal was repayable on or before the first anniversary of the drawdown of the loan – where the appellant asserted that clause 4(a) should be construed as providing for interest to continue to accrue if default were made in repayment of the principal – where the respondent asserted that clause 4(a) provided for the maximum interest payable under the loan to be $250,000, irrespective of when the principal was repaid – where the loan deed must be construed as a whole and to avoid commercial nonsense – where clause 4(a) should be construed as incorporating an express obligation to pay interest after the first year of the loan when default was made in repayment of the principal Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640; [2014] HCA 7, cited Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104; [2015] HCA 37, considered
COUNSEL:	S J Lee with J J T Dudley for the appellant M…