| JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA LOCATION : PERTH CITATION : AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED -v- DAVID NEWBOUND AND PAUL ERIC NEWBOUND [2014] WADC 55 CORAM : REGISTRAR KINGSLEY HEARD : 20 MARCH 2014 DELIVERED : 16 MAY 2014 FILE NO/S : CIV 3300 of 2013 BETWEEN : AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED Plaintiff
AND
DAVID NEWBOUND AND PAUL ERIC NEWBOUND
Defendant
Catchwords: Practice - Application for summary judgment pursuant to O 14 by plaintiff and O 16 by second defendant Legislation: Nil Result: Judgment for $285,000
Leave to defend balance of claim
Representation: Counsel:
Plaintiff : Mr J E Scovell
Defendant : Mr N D C Dillon
Solicitors:
Plaintiff : Gadens Lawyers
Defendant : HHG Legal Group
Case(s) referred to in judgment(s):
Agar v Hyde [2000] HCA 41
Alcoa of Australia Ltd v Apache Energy Ltd [2012] WASC 209
Ansearch Ltd v Wavetech Pty Ltd [2006] WASC 184
Fancourt v Mercantile Credits Ltd (1983) 154 CLR 87
General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125
1 REGISTRAR KINGSLEY: By a statement of claim dated 11 October 2013 the plaintiff (ANZ) claims that, on or about 7 April 2011, the plaintiff and a company NGMW Pty Ltd (in liquidation) entered into a written loan agreement whereby the company borrowed the sum of $285,000 (the 2011 Loan Agreement). The monies were paid to NGMW Pty Ltd on or about 7 April 2011.
2 ANZ pleads that by two deeds of guarantee dated 30 October 2007 between each of the defendants and ANZ each of the defendants guaranteed the due and punctual payment by the company of monies owing to ANZ under the 2011 Loan Agreement (the 2007 Guarantees). The guarantees further provided that if the company did not pay on time ANZ could demand from each of the defendants the secured monies. 3 ANZ pleads that the 2011 Loan Agreement incorporated ANZ's Business Banking Finance Conditions (the Business Terms and Conditions). ANZ goes on to plead that on 20 September 2013 ANZ sent a letter to NGMW Pty Ltd cancelling the credit limit and demanding payment of a total amount owing under the 2011 Loan Agreement. By a written notice dated 4 October 2013 (the notice) ANZ gave notice to the defendants that NGMW Pty Ltd had failed to make payments when due and demanded payment of the amounts outstanding pursuant to the 2007 Guarantees. Paul Eric Newbound has filed a defence (Paul's defence) where he says that between 3 August 2007 and 16 April 2012 he was a director of NGMW Pty Ltd. He pleads that his role was non-executive and he was not involved in the operational activities of NGMW Pty Ltd. 4 Paul in his defence pleads that on or about 7 April 2011 ANZ, NGMW Pty Ltd and the Newbounds entered into a new facilities agreement - the 2011 Loan Agreement. Under the heading 'Security' the security for the 2011 Loan Agreement would be, inter alia, as follows: 5 Paul pleads that the proper construction of the terms in bold above are that, prior to the monies under the 2011 Loan Agreement being made available to NGMW Pty Ltd, Paul's 2007 Guarantee would terminate and ANZ would request Paul to enter into a new guarantee and indemnity agreement. 6 Paul admits that he entered into the 2007 Guarantee but this agreement related exclusively to the overdraft facility provided by ANZ to the company pursuant to the agreement dated 30 October 2007. Further the liability specified in the 2007 Guarantee was limited to $285,000. 7 Paul pleads that as a result of the new facilities being made available to the company on 7 April 2011, Paul's 2007 Guarantee terminated and was thereafter of no effect. Further, prior to 7 April 2011 ANZ did not request Paul to enter into a new guarantee and indemnity agreement in respect of the facilities provided under the 2011 Loan Agreement. 8 ANZ has brought an application pursuant to O 14 of the Rules of the Supreme Court 1971. Paul has brought an application for leave to bring an application pursuant to O 16 Rules of the Supreme Court. ANZ's application is supported by the affidavit of Mark Murrell sworn 4 November 2013. References in these reasons to a document are to documents attached to Murrell's affidavit. Three additional affidavits have been filed on behalf of ANZ; by Megan Anne Kosieradzki sworn 1 November 2013, by Sergio Bergado sworn 11 December 2013, and by Cassandra Guy sworn 18 February 2014. 9 Paul has filed an affidavit sworn 12 December 2013 both in opposition to ANZ's application for summary judgment and in support of his application for summary judgment.
Order 14 principles 10 The principles upon which an application for summary judgment pursuant to O 14 RSC are well known. The power to order summary judgment should be exercised with great care, and should not be exercised unless it is clear there is no real question to be decided. A party should not be deprived of their opportunity to be heard in the appointed manner under the guise of expeditious finality of the action. In all cases where there remains uncertainty as to a plaintiff's right to judgment, then summary judgment must be refused (see Fancourt v Mercantile Credits Ltd (1983) 154 CLR 87; General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125; Ansearch Ltd v Wavetech Pty Ltd [2006] WASC 184).
Order 16 principles 11 A defendant, as applicant for summary judgment bears a heavy onus. 'An application for summary judgment for a defendant … should be approached with great caution' (Alcoa of Australia Ltd v Apache Energy Ltd [2012] WASC 209, 113). Despite the various formulations of the appropriate test for summary judgment for a defendant, in the end there needs to be a high degree of certainty about the ultimate outcome of the proceedings if it were allowed to go to trial in the ordinary way (Agar v Hyde [2000] HCA 41). A court will only dismiss a claim if the defendant can establish that the case of the plaintiff is so clearly untenable that it cannot possibly succeed (General Steel Industries Inc v Commissioner for Railways (NSW)(1964) 112 CLR 125, 129).
Discussion 12 There is no real issue on the facts recited above. In 2007, NGMW Pty Ltd obtained a loan from ANZ, and that loan was the subject of the 2007 Guarantees. By a Letter of Offer dated 25 March 2011 ANZ offered to the defendant’s fresh facilities. By way of security Paul's 2007 Guarantee was to be lapsed, and a further guarantee was to be taken from Paul. Paul signed the Letter of Offer on 7 April 2011. The further guarantee was not taken. 13 Attached to the 25 March 2011 Letter of Offer were ANZ's Business Terms and Conditions. Clause 32 under the heading 'Existing Facilities' provides that cl 32 only applies if ANZ is already making facilities available to the lender at the date of the new letter of offer. Clause 32 then goes on to provide: The arrangements for the facilities that ANZ is making available to you at the date of the letter of offer, including the Conditions on which those facilities have been made available, (the existing arrangements) continue until both of the following things happen: (i) you accept ANZ's new offer; and (ii) everything that must be done before ANZ will make the new facilities available in accordance with the letter of offer has been done to ANZ's satisfaction. In particular, until both of the above things happen, ANZ is still able to exercise the rights that ANZ has under the existing arrangements, including the right to terminate, or vary the Conditions of, the existing facilities. 14 The 25 March 2011 Letter of Offer also provided under the heading 'Conditions Continued' that: Until you accept this offer (and have complied with all conditions precedent) the arrangements for the facilities that ANZ is making available to you, including the conditions on which those facilities have been made available, continue. 15 Counsel for ANZ submits that the 2011 Loan Agreement provided that Paul's 2007 Guarantee was to be lapsed, and a further guarantee was to be taken. As the 2011 guarantees were never executed, the terms of the Paul's 2007 Guarantees remains in effect, unless Paul discharges his obligation to ANZ by paying the guaranteed monies. 16 Paul's counsel submits that the express terms of the 25 March 2011 Letter of Offer are that Paul's 2007 Guarantee was to lapse and a new guarantee taken. As no new guarantee was taken ANZ has no contractual basis to make any claim against Paul and the action should be dismissed summarily. 17 In my opinion Paul's obligation in relation to the guaranteed amount under his 2007 Guarantee continues. The conditions of the 25 March 2011 Letter of Offer are that Paul's 2007 Guarantee was to be lapsed. The term to be lapsed imports the future event; in this case the future event being the requirement that under the 25 March 2011 Letter of Offer a new guarantee was to be taken. In this context lapsed refers to the termination of Paul's 2007 Guarantee. Thus at some point in the future Paul's 2007 Guarantee was to terminate. But this was conditional on a second future event occurring; a fresh guarantee for the 2011 Loan Agreement was to be taken. 18 In my opinion as no fresh guarantee was taken, Paul's 2007 Guarantee did not lapse. 19 This accords with cl 32 of the Business Terms and Conditions where Paul's 2007 Guarantee continues notwithstanding any variation to the 'existing arrangement'. 20 In my opinion the 2007 guarantee continues to the extent that Paul is liable under that guarantee. That guarantee is limited to $285,000. 21 As to the balance of the monies sought by ANZ there is an arguable issue. 22 Whilst ANZ can vary the guaranteed arrangements, the explicit consent of Paul is required if ANZ changes the guaranteed arrangements in a way that increases his liability (see cl 8 of the document entitled 'Individual Guarantee and Indemnity'). The 25 March 2011 Letter of Offer does not explicitly seek Paul's consent to increase his liability. That may well be because the 2011 guarantee was to replace the 2007 guarantee.
Conclusion 23 For these reasons I am of the opinion that Paul's application pursuant to O 16 must fail. 24 There be judgment for ANZ against Paul in the sum of $285,000 with leave to defend the balance of that claim. 25 I will hear counsel on the terms of the orders and on costs.
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