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Balanced Securities Ltd v Dumayne Property Group Pty Ltd

Balanced Securities Ltd v Dumayne Property Group Pty Ltd

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SUPREME COURT OF VICTORIA

COURT OF APPEAL

S APCI 2016 0082

BALANCED SECURITIES LIMITED (ABN 54 083 514 685)	First Appellant
BALANCED APPLICATION PTY LTD (ACN 116 175 047)	Second Appellant
v
DUMAYNE PROPERTY GROUP PTY LTD (ACN 122 056 535)	First Respondent
GEOFFREY ERNEST DUMAYNE	Second Respondent
JENNIFER ANNE DUMAYNE	Third Respondent
JUSTIN WILLIAM PAUL DUMAYNE	Fourth Respondent

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JUDGES:	WHELAN, FERGUSON JJA and CAMERON AJA
WHERE HELD:	MELBOURNE
DATE OF HEARING:	16 February 2017
DATE OF JUDGMENT:	23 March 2017
MEDIUM NEUTRAL CITATION:	[2017] VSCA 61
JUDGMENT APPEALED FROM:	[2016] VCC 546 (Judge Kennedy) [2016] VCC 1387 (Judge Anderson) [2016] VCC 1439 (Judge Anderson)

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CONTRACT – Successive facility agreements in respect of same loan facility – Whether second facility agreement replaced or merely amended first facility agreement – Manifest intention of parties, objectively ascertained, that second facility agreement constitute entire agreement – Second facility agreement replaced first facility agreement.

CONTRACT – Construction – Whether facility agreement came within meaning of ‘mortgage documents’ – ‘Interest Commencement Date’ and ‘Repayment Date’ governed by ‘despatch’ of mortgage documents – ‘Mortgage documents’ not ‘despatched’ until facility agreement sent to borrower.

CONTRACT – Whether first facility agreement had contractual ‘life’ until it was terminated by second facility agreement – Second facility agreement replaced first facility agreement – No continuing operation of first facility agreement.

CONTRACT – Borrowers’ contractual obligation to pay costs – No entitlement to costs where nothing in fact owed.

PRACTICE AND PROCEDURE – Statutory interest – What constitutes a ‘demand’ – Assertion of right and intention to sue sufficient – Supreme Court Act1986 s 58.

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APPEARANCES:	Counsel	Solicitors
For the Appellants	Dr O Bigos	Thomson Geer
For the Respondents	Mr J Tsalanidis with Mr R J Boadle	Kalus Kenny Intelex

WHELAN JA
FERGUSON JA
CAMERON AJA:

In 2011 Balanced Securities Limited (‘Balanced’) offered to lend $7,500,000 to Dumayne Property Group Pty Ltd (‘Dumayne’) to finance a development in Toorak. The terms were agreed and loan and security documentation was couriered to Dumayne. The documents were delivered on 13 January 2012 under cover of a letter dated 12 January 2012.[1] The documents were executed by Dumayne and other relevant parties and were returned to Balanced in February 2012. One of the documents executed by Dumayne was a Facility Agreement (‘the first Facility Agreement’). That agreement provided for a loan term of 18 months commencing on the ‘Interest Commencement Date’, which was defined as the earlier of seven days after ‘the despatch of mortgage documents’ or upon any advance by Balanced. The expression ‘mortgage documents’ was undefined.
[1]It was common ground at trial and before us that the letter was couriered on 13 January 2012.

Dumayne then requested Balanced to alter the terms of the loan. Balanced agreed. Balanced sent to Dumayne a second Facility Agreement (‘the second Facility Agreement’) on 20 March 2012 which made the alterations Dumayne had requested. The term of the loan under the second Facility Agreement was 15 months. The provisions governing the commencement…

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: [2017] VSCA 61
Decision Date: 23 March 2017

CaseChat Overview and Summary

The matter before the court involved a dispute between Balanced Securities Ltd and Dumayne Property Group Pty Ltd concerning successive facility agreements in relation to the same loan facility. The court was tasked with determining the nature of the second facility agreement in relation to the first, whether it replaced or merely amended it, and the implications of these agreements on the parties' obligations and entitlements. The dispute also extended to the interpretation of certain terms within the agreements, such as the meaning of 'mortgage documents' and the borrowers' obligation to pay costs. Additionally, the case touched upon statutory interest under the Supreme Court Act 1986, specifically what constitutes a 'demand' for the purposes of accruing interest.

The central legal issues revolved around the interpretation of the agreements and the contractual relationship between the parties. The court had to determine whether the second facility agreement effectively replaced the first or if it merely amended it, considering the manifest intention of the parties. Furthermore, the court needed to ascertain the moment at which the 'mortgage documents' were deemed 'despatched', as this affected the dates for interest commencement and repayment. Additionally, the court examined the borrowers' obligation to pay costs in light of whether there were any outstanding debts, and the conditions under which statutory interest could be claimed.

In resolving these issues, the court found that the second facility agreement did indeed replace the first, based on the objective manifestation of the parties' intention that the second agreement constitute the entire agreement. This finding meant that the first facility agreement ceased to have any effect once the second was executed. The court further held that the term'mortgage documents' was not satisfied until the facility agreement was sent to the borrower, thereby affecting the relevant dates for interest. Regarding the borrowers' obligation to pay costs, the court determined that there was no entitlement to such costs where there was nothing actually owed. Lastly, the court clarified that a 'demand' for the purposes of accruing statutory interest could be established by simply asserting the right and the intention to sue.

The court's final orders reflected its findings, ensuring that the parties understood the implications of the second facility agreement and its effect on their contractual obligations and entitlements. The court's decision provided clarity on the interpretation of the agreements, the timing of interest accrual, and the conditions for claiming costs.

Orders