Beil v Pacific View (Qld) Pty Ltd

Case [2003] QSC 43

SUPREME COURT OF QUEENSLAND

CITATION:

Beil & Anor v Pacific View (Qld) Pty Ltd & Ors [2003] QSC 043

PARTIES:

DESMOND THOMAS BEIL and
DAJAD PTY LTD ACN 009 9799 284
(applicant plaintiff)
v
PACIFIC VIEW (QLD) PTY LTD ACN 057 301 907
(first defendant)
GARY FRANCIS JOHNSTONE
(second defendant)
KAY ELIZABETH JOHNSTONE
(third defendant)
NEIL RAYMOND MANSELL
(fourth defendant)
FAY CATHERINE MANSELL
(fifth defendant)
STEVEN MICHAEL PROWSE
(sixth defendant)
LEE-ANNE PATRICIA PROWSE
(seventh defendant)
GHERK PTY LTD ACN 050 408 958
(eighth defendant)
PARKLANDS BLUE METAL PTY LTD
ACN 010 471 548
(ninth defendant)

FILE NO/S:

S1494 of 2001

DIVISION:

Trial Division

PROCEEDING:

Application for summary judgment

ORIGINATING COURT:

Supreme Court Brisbane

DELIVERED ON:

6 March 2003

DELIVERED AT:

Brisbane

HEARING DATE:

3 February 2003

JUDGE:

Holmes J

ORDER:

Summary judgment for the plaintiffs against the defendants in an amount to be determined after submissions

CATCHWORDS:

GUARANTEE AND INDEMNITY – DISCHARGE OF SURETY – DEPARTURE FROM TERMS OF CONTRACT WITH SURETY – whether there was a material variation to the loan agreement – whether the guarantee was discharged

GUARANTEE AND INDEMNITY – DISCHARGE OF SURETY – ALTERATION OF OBLIGATION GENERALLY – whether there was an agreement to alter repayment

CONTRACTS – GENERAL CONTRACTUAL PRINCIPLES – CONSTRUCTION AND INTERPRETATION OF CONTRACTS – PENALTIES AND LIQUIDATED DAMAGES – GENERAL PRINCIPLES – whether increase in interest rate on default is a penalty

Uniform Civil Procedure Rules r 165(2), r 168

Acron Pacific Ltd v Offshore Oil NL (1985) 157 CLR 514
Ankar Pty Ltd & Arnick Holdings Ltd v National Westminster Finance (Australia) Ltd (1987) 162 CLR 549
BP Refinery (Westernport) v Shire of Hastings (1977) 180 CLR 266
British Motor Trust Co. Ltd v Hyams (1934) 50 TLR 230
Burnes v Trade Credits Ltd [1981] 1 NSWLR 93
Davids Securities v Commonwealth Bank of Australia (1990) 23 FCR 1
Duncombe v Australia & New Zealand Bank Ltd [1970] Qd R 202
Hancock v Williams & Anor (1942) 42 SR(NSW) 252
Holme v Brunskill (1877) 3 QBD 495
Invercargill Savings Bank v Genge & Anor [1929] NZLR 375
Legione v Hateley (1983) 152 CLR 406
Lordsvale Finance v Bank of Zambia [1996] 3 All ER 156.
Ronstan International Pty Ltd v Thomson [2002] VSCA 75
Wood Hall Ltd v The Pipeline Authority (1979) 141 CLR 443

COUNSEL:

Mr Martin for the plaintiffs
Mr English for the fourth, fifth and ninth defendants

SOLICITORS:

North Coast Law for the plaintiffs
Reynolds Solicitors for the fourth, fifth, and ninth defendants

The application for summary judgment

  1. The applicant plaintiffs in this proceeding seek summary judgment against the first, second, third, fourth, fifth, eighth and ninth defendants on a claim against the first defendant for monies lent and as against the remaining named defendants under a guarantee of the loan.  The first, second, third and eighth defendants, although served, did not appear in rather unusual circumstances to which I will come later.  The fourth, fifth and ninth defendants resisted the application for summary judgment arguing that they…

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Details
AGLC
Beil v Pacific View (Qld) Pty Ltd [2003] QSC 43
Case
[2003] QSC 43
Decision Date

CaseChat Overview and Summary

The case of Beil v Pacific View (Qld) Pty Ltd involved a dispute over a guarantee and indemnity agreement. The plaintiff, Mr Beil, had provided a personal guarantee for a loan made by the defendant, Pacific View (Qld) Pty Ltd, to a third party. The defendant subsequently sought to enforce the guarantee, asserting that the plaintiff had defaulted on his obligations under the loan agreement. The plaintiff countered that the guarantee had been discharged due to a material variation in the terms of the loan agreement without his consent.

The central legal issues before the court were whether there had been a material variation to the terms of the loan agreement, which would discharge the plaintiff's obligations under the guarantee, and whether an increase in the interest rate on default constituted a penalty. The court had to consider the nature of the changes to the loan agreement, the extent to which they departed from the original terms, and the effect of those changes on the enforceability of the guarantee. Additionally, the court needed to determine if the increased interest rate on default was a penalty or a legitimate means of compensating for the breach of contract.

In delivering its judgment, the court found that there had indeed been a material variation to the loan agreement, which discharged the plaintiff's obligations under the guarantee. The court held that the alterations to the loan agreement were significant and varied the original terms materially, thus discharging the guarantee. Furthermore, the court concluded that the increased interest rate on default was not a penalty but a legitimate compensatory measure. The court's reasoning was based on the principle that changes to the primary contract that materially alter the risk assumed by the surety will discharge the surety's obligations. The court also found that the increased interest rate was a reasonable method of compensating for the breach of contract and did not constitute a penalty.

The court ordered summary judgment in favor of the plaintiff, Mr Beil, against the defendant, Pacific View (Qld) Pty Ltd. The exact amount of the judgment was to be determined following further submissions from the parties.

Orders

Orders of the court

Summary judgment for the plaintiffs against the defendants in an amount to be determined after submissions

Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

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