BankWest a Division of Commonwealth Bank of Australia v Humfrey
[2017] WASC 380
•28 DECEMBER 2017
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS
CITATION: BANKWEST A DIVISION OF COMMONWEALTH BANK OF AUSTRALIA -v- HUMFREY [2017] WASC 380
CORAM: ACTING MASTER STRK
HEARD: 24 OCTOBER 2017 & FINAL WRITTEN SUBMISSIONS ON 13 NOVEMBER 2017
DELIVERED : 28 DECEMBER 2017
FILE NO/S: CIV 2940 of 2016
BETWEEN: BANKWEST A DIVISION OF COMMONWEALTH BANK OF AUSTRALIA
Plaintiff
AND
BARRY COLIN HUMFREY
Defendant
Catchwords:
Practice and procedure - Application for summary judgment - Turns on own facts
Legislation:
Nil
Result:
Application dismissed
Category: B
Representation:
Counsel:
Plaintiff: Mr S C M Wong
Defendant: Mr C S Williams
Solicitors:
Plaintiff: Minter Ellison
Defendant: Solomon Brothers
Case(s) referred to in judgment(s):
Jacka Nominees Pty Ltd (in liq) v Edwards Karwacki SMI (Unreported, WASC, Library No 920512, 12 October 1992)
ACTING MASTER STRK: By chamber summons filed 10 March 2017 the plaintiff seeks summary judgment against the defendant. The plaintiff seeks that judgment be entered against the defendant in the sum of $2 million, together with interest and costs.
Background
These proceedings were commenced by a writ of summons with a statement of claim filed on 9 November 2016 and concerned the failure by the defendant to pay to the plaintiff an amount demanded and alleged to be payable under a guarantee.
In summary, the plaintiff says that the defendant executed a guarantee and indemnity in favour of the plaintiff, limited to the sum of $2 million and in consideration for the plaintiff providing a loan facility of about $19 million to companies controlled by the defendant, being Mariner Resort Pty Ltd (Mariner) and Port Asset Pty Ltd (Port Asset) (together the Companies), both now under external administration.[1]
[1] Writ of summons filed 9 November 2016, [2] of the indorsed statement of claim. First Di Gregorio affidavit [5].
An appearance was filed by the defendant in person on 7 December 2016 and a defence was filed by the defendant on 17 January 2017. The plaintiff's reply to defence was filed on 27 January 2017. The chamber summons for summary judgment was filed on 10 March 2017. On 27 April 2017 the defendant filed a notice of change of representation, from that time represented by solicitors, together with an amended defence.
In support of its application for summary judgment, the Bank relied on the affidavit of Callan Leslie Doran affirmed on 10 March 2017 (the Doran affidavit); the affidavit of Gaetano Giorgio Di Gregorio affirmed on 10 March 2017 (the first Di Gregorio affidavit); and a further affidavit of Gaetano Giorgio Di Gregorio affirmed on 5 September 2017 (the second Di Gregorio affidavit).
In opposition to the application for summary judgment, the defendant relied upon one affidavit, being the affidavit of the defendant sworn 24 April 2017 (the Humfrey affidavit).
The plaintiff's claim
The plaintiff's claim may be summarised as follows:[2]
[2] From the first Di Gregorio affidavit [5] ‑ [18].
(a)The defendant was a director of the Companies, and the Companies were customers of the plaintiff.
(b)On or around 14 June 2013, the plaintiff provided financial accommodation to the Companies in the form of a Commercial Advance Loan Facility in the amount of $19,435,000 (Loan Facility). The terms and conditions of the Loan Facility were contained in the letter of offer issued by the plaintiff to the Companies dated 14 June 2013 (Offer Letter); the 'Facility Terms' incorporated into the Offer Letter; and the 'Bankwest Business General Terms and Conditions' dated 1 March 2013. The Companies executed and thereby accepted the Offer Letter in or around June 2013.
(c)On 28 June 2013, in consideration of the plaintiff providing the Loan Facility to the Companies, the defendant executed a Guarantee and Indemnity (Small Business and Consumer) (Guarantee), in favour of the plaintiff, limited to the 'maximum amount', being $2 million plus, among other things, interest, fees, costs and other expenses payable by the defendant under the terms of the Guarantee (Guarantee Amount).
(d)The Offer Letter also contained a section entitled 'Guarantor's acknowledgment' that was executed by the defendant as guarantor.
(e)As at 3 December 2014, the Companies were in default under the Loan Facility.
(f)The plaintiff was entitled to demand payment of the Guarantee Amount from the defendant and on 17 August 2016, the plaintiff caused a demand to be issued to the defendant (Guarantee Demand) which:
(i)stated that the amount payable by the Companies to the plaintiff pursuant to the Loan Facility, as at that date was $16,354,001.00; and
(ii)demanded the payment of $2 million by the defendant to the plaintiff.
(g)The defendant failed to comply with the Guarantee Demand, by failing to pay the plaintiff the sum of $2 million by the time specified in the Guarantee Demand, or at all.
In the first Di Gregorio affidavit, Mr Di Gregorio deposes at [4] to his belief that the defendant has no defence, or arguable defence to the plaintiff's claim, or any part thereof.
In the second Di Gregorio affidavit, Mr Di Gregorio annexes what he deposes to be true copies of the account statements of the Loan Facility for the period 22 May 2015 to 19 February 2016. He also deposes that on 4 September 2017, he signed and caused to be issued on behalf of the plaintiff:
(a)a Certificate of Debt pursuant to cl 18.2 of the Terms and Conditions addressed to the Companies certifying that the amount owing and payable to the plaintiff as at 19 February 2016 and that remains owing and payable to the plaintiff as at 4 September 2017 by the Companies pursuant to the Loan Facility was $16,428,949.25, inclusive of principal liability, interest, fees, costs, charges, expenses and taxes; and
(b)a Certificate of Debt pursuant to cl 16 of the Guarantee addressed to the defendant certifying that as at 4 September 2017 the amount owing and payable to the plaintiff by the defendant pursuant to the Guarantee was $2 million, exclusive of interest, fees, costs, charges, expenses and taxes,
and annexes true copies of the certificates to his second affidavit.
By the chamber summons, the plaintiff sought an order for payment of interest on $2 million from 18 August 2016 at 14.56% per annum. At the hearing of the application for summary judgment, the plaintiff only pressed for interest on $2 million at 6% per annum as prescribed by s 32 of the Supreme Court Act 1935 (WA).
Leave to apply out time
The plaintiff seeks leave to bring the application for summary judgment out of time. It is well established that there are no set guidelines as to when leave to apply for summary judgment out of time will be granted and the burden is on the applicant to show the delay is justifiable in all of the circumstances.[3]
[3] Jacka Nominees Pty Ltd (in liq) v Edwards Karwacki SMI (Unreported, WASC, Library No 920512, 12 October 1992) (Adams M).
At [11] of the Doran affidavit, Mr Doran deposes as to his belief that the delay in the plaintiff applying for summary judgment was largely caused by:
(a)the negotiations between the parties between 17 November 2016 and 21 February 2017 in an attempt to resolve the matter; and
(b)the implementation of an internal memorandum on debt recovery and enforcement activities by the plaintiff during the Christmas and New Year period.
At the hearing of the application for summary judgment, counsel for the defendant did not oppose leave being granted, nor was any prejudice to the defendant identified because of the delay.
In all of the circumstances, I find that the plaintiff has satisfactorily explained the delay and established that it is justifiable in all of the circumstances.
Prima facie case established
From the affidavits filed on behalf of the plaintiff, I am satisfied that the plaintiff's claim is a good one and that the affidavits do verify the essential elements of the cause of action on which the application for summary judgment is based.
Once the plaintiff has established a prima facie case, the evidentiary onus shifts to the defendant to demonstrate that there is an arguable defence or other reason for trial.
The defendant's position
In short, the defendant's defence is that by letter dated 18 July 2014 (July 2014 Letter), the plaintiff promised to release the defendant from the Guarantee.[4] The defendant's position is further explained as follows.[5]
[4] Amended defence dated 27 April 2017 [21].
[5] From the defendant's written outline of submissions [19] ‑ [26]; the Humfrey affidavit [3] ‑ [22].
(a)On or about 30 March 2007, several parties including Mariner and Caversham Property Pty Ltd (Caversham), entered into a joint venture agreement for the purposes of developing and operating a resort in Geraldton.
(b)The defendant was a director of Mariner until 16 August 2013, and was at all material times a director of Port Asset.
(c)On or about 22 November 2012, Caversham sold its 50% interest in the joint venture to Port Asset (the agreement for which was varied on or about 28 June 2013).
(d) On or around 14 June 2013, the plaintiff provided the Companies with the Loan Facility for a joint venture arrangement (the Joint Venture) between:
(i)on the one hand, Port Asset; and
(ii)on the other hand, Mariner, in its capacity as trustee of the Mariner Resort Unit Trust,
which operated a hotel complex known as the Mariner Resort on a site which comprised a number of subdivided lots.
(e)A dispute regarding the Joint Venture arose in July 2013. Specifically, the dispute related to the acquisition by Port Asset of an interest in the Joint Venture, which interest had been held by Caversham. The dispute led to the commencement of proceedings by Mariner against Port Asset and others, including the defendant, in the Federal Court of Australia.
(f)In July 2014, an agreement was struck to settle the dispute. That agreement was constituted by a deed of settlement and release.
(g)Under the deed of settlement and release, among other things, it was agreed that:[6]
[6] Defendant's written outline of submissions [22.1] ‑ [22.7].
22.1.Caversham was to be joined as a party to the Federal Court proceedings, and the statement of claim in those proceedings was to be amended to seek rescission of the sale of Caversham's interest in the Joint Venture to Port Asset;
22.2.the parties would all consent to the Federal Court making orders granting relief rescinding Caversham's sale of its interest in the Joint Venture to Port Asset;
22.3.Port Asset would convey to Caversham its interest in the various lots comprising the Mariner Resort property;
22.4.Caversham would then sell that interest in those lots to Mariner Resort;
22.5.the plaintiff would refinance the Loan Facility and provide a new finance facility to Mariner Resort;
22.6.the plaintiff would release the defendant from his liability under the Guarantee; and
22.7.the defendant, and all parties related to him, would relinquish all interests that they had in the Trust and the Joint Venture (as unitholder in the Trust, as manager, as creditor or otherwise) in exchange for a monetary payment.
(h)The settlement agreement was conditional upon the plaintiff agreeing to provide the refinance and release the defendant from his Guarantee.
(i)The plaintiff communicated its agreement to providing the refinance and releasing the defendant from his liability under the Guarantee. That agreement was communicated by the July 2014 Letter, sent by the plaintiff to the Companies and to Caversham.
(j)The settlement deed, and the July 2014 Letter, contemplated a composite settlement, at which all of the steps described at pars 22.3 ‑ 22.7 above would occur simultaneously.
(k)Following the provision of the July 2014 Letter by the plaintiff, the parties consented to the Federal Court making orders in the terms required by the settlement deed, and the Federal Court proceeded to make orders in those terms. The defendant says that the plaintiff however failed to proceed in the manner indicated in the July 2014 Letter.
The July 2014 Letter relevantly stated as follows:
3.Bankwest hereby agrees that, subject to paragraph 2.1.2 of the Deed, Caversham will be released from all obligations under the Deed of Priority referred to in paragraph 11.3.11 of the Deed effective upon orders being made in the Proceedings in terms of, or substantially to the effect of, the Minute (a copy of which is attached) and satisfaction of all matters specified in the orders as required to effect restitution as a condition to such orders and in exchange for receipt by Bankwest of a registrable discharge of the Port Asset and Caversham Mortgage and, subject to paragraph 2.1.2 of the Deed, Bankwest agrees to do the following upon the making of such orders and satisfaction of all matters specified in the orders as required to effect restitution as a condition to such orders, as set out in paragraph 2.1.4 of the Deed:
3.1release Mr Humfrey from Mr Humfrey's Personal Guarantee; and
3.2refinance in relation to the Joint venture and Mariner Resort on terms agreeable to Mariner Resort and Bankwest, which will necessarily involve Port Asset and Caversham not being a party to any mortgage or other loan arrangement or security interest relating to the Joint Venture (or any asset owned by, or interest in, the Joint Venture);
3.3provide a registrable discharge of mortgage M326153 to Caversham to enable Caversham to comply with its obligations under the Sale Agreement (a copy of which is attached).
4.Bankwest's agreement set out in paragraph 3 above is given on the basis that the parties to the Deed acknowledge and agree that:
4.1Bankwest is not bound by the Deed; and
4.2If the orders referred to in paragraph 3 are made, then there will be a settlement involving Bankwest at which (subject to paragraph 3.2 above) the following is to occur:
4.2.1all things required to effectuate and satisfy the matters set out in paragraph 4 of the orders;
4.2.2.all things required to effectuate the completion under the Sale Agreement and the completion of the refinance referred to in paragraph 3.2 above; and
4.2.3the payment being made as referred to in paragraph 10.1 of the Deed.
Paragraph 4 of the July 2014 Letter is in substantially the same terms as cl 2.1.2 of the deed of settlement and release.
The dispute as between the plaintiff and the defendant is substantially a dispute as to the proper construction and effect of the July 2014 Letter. The defendant does however also raise waiver and estoppel, which are grounded upon the plaintiff's alleged failure to perform the obligations contained in the July 2014 letter.[7] The defendant also says that the plaintiff breached an implied term of mutual cooperation by failing to release the defendant from liability under the Guarantee.[8]
[7] Amended defence [24] ‑ [25].
[8] Amended defence [26.3]; defendant's outline of submissions dated 24 April 2017 [34].
Determination
In all of the circumstances and having given careful consideration to the various documents before me, including the July 2014 Letter, the various affidavits filed and the submissions made, I am satisfied that there is a serious question to be tried.
Having reached that conclusion, it is not appropriate that I enter judgment in favour of the plaintiff. Further, given that there will be a trial of these issues, it is also not appropriate that I express concluded views as to the defences raised.
The summary judgment application should be dismissed and the costs of the application should be costs in the cause.
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