Burns v AMP Finance Ltd - [2004] NSWSC 166

No judgment structure available for this case.

CITATION: Burns & Ors v AMP Finance Ltd [2004] NSWSC 166

HEARING DATE(S): 08/03/04, 09/03/04, 10/03/04

JUDGMENT DATE:
18 March 2004

JUDGMENT OF: Gzell J

DECISION: Statement of claim dismissed. Judgment for defendant on cross claim

CATCHWORDS: CONTRACTS - General Contractual Principles - Construction and Interpretation of Contracts - Whether later variations of a finance facility were interim variations within an earlier conditional variation for a regular amount - Whether representations led to estoppel of the defendant arguing otherwise - Whether defendant in breach of contract for failure to release lots from security on request - Whether a variation to hold lots until required was agreed - Whether the defendant was obliged to endorse a linen plan of boundary adjustment which differed significantly from agreed earlier plan - No principles involved

LEGISLATION CITED: Real Property Act 1900
Australian Securities and Investments Commission Act 2001 (Cth)

PARTIES :
John Burns - 1st Plaintiff
Dolroy Pty Ltd - 2nd Plaintiff
O'Malley's Acquariums Pty Ltd - 3rd Plaintiff
AMP Finance Ltd - Defendant

FILE NUMBER(S): SC 4194/03

COUNSEL: Ms Natalie Obrart - For the Plaintiffs
Mr Simon White - For the Defendant

SOLICITORS: Jackson Smith Solicitors
Kemp Strang Solicitors

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

GZELL J

THURSDAY 18 MARCH 2004

4194/03 JOHN BURNS & ORS V AMP FINANCE LTD

JUDGMENT

1 In 1995 the plaintiffs entered into a facility agreement with the defendant then called GIO Finance Ltd. It lent the facility limit of $875,000 to the second plaintiff, Dolroy Pty Ltd. Dolroy and the third defendant, O’Malley’s Aquariums Pty Ltd granted registered first mortgages over land by way of a security. The first plaintiff, John Burns and O’Malley’s Aquariums guaranteed Dolroy’s performance of obligations under the facility agreement.

2 From time to time the facility limit was increased. In its cross claim, AMP alleged that Dolroy fell into arrears of interest in January 2003. In February 2003, a notice pursuant to the Real Property Act 1900, s 57(2)(b) was served on Dolroy. Thereafter, AMP declared the amount outstanding, interest and all other amounts payable under the facility agreement to be immediately due and payable pursuant to the default provision in that agreement.

3 As at 1 March 2004, the total amount outstanding under the facility agreement was $5,044,483.39. AMP claimed this amount together with interest from that date against Dolroy and against Mr Burns and O’Malley’s Aquariums as guarantors. It also claimed possession of the mortgaged properties.

4 The plaintiffs’ primary argument was that the facility was not in arrears when the demands were made or at trial. They claimed that the facility limit had been increased by an amount in excess of their entitlement to capitalise interest.

5 The land provided as security by Dolroy was situated at Dunns Creek in the Port Stephens Shire in New South Wales. Dolroy wished to develop it as a 26 lot residential subdivision. It was a term of the facility agreement that, upon registration of a consolidation and subdivision of the land, AMP on receipt of a written request would release from its security, portion of the land marked with an X on an attached plan. That area became lots 1 and 2 on DP 875533 which was registered in August 1998. The two lots were not released by AMP until November 2001. The plaintiffs claimed damages for breach of contract and, if their primary argument failed, estoppel against AMP alleging that the plaintiffs were in breach of the facility agreement.

6 The consolidated lot 3 on DP 875533 was crossed by a road, title to which Dolroy obtained from the Crown in early 2000. In June 2003, Port Stephens Council raised a concern with respect to the subdivision because some of the lots would be land-locked. Dolroy proposed to AMP that, as a boundary adjustment, the road reserve be consolidated into lot 3 in exchange for AMP releasing from its security, prospective lots 101 and 102 under the subdivision of lot 3. In October 2001, AMP agreed to this boundary adjustment. In June 2003, a different boundary adjustment was presented to AMP in a linen plan which it refused to endorse. The plaintiffs claimed damages for breach of contract and, again, if their primary argument failed, estoppel against AMP alleging that they were in breach of the facility agreement.

7 On each occasion the facility limit was increased, AMP forwarded a letter to Dolroy indicating conditional approval of a new facility limit on specified terms. By the letter of December 1999, AMP notified conditional approval of a new facility limit of $3,065,000 for a variable loan and a fixed rate loan. The facility agreement was to be stamped for the increase in the facility limit and a cheque for $260 was required. All other terms of the facility agreement were to continue to apply and the consents of all parties were required by endorsement of a duplicate of the letter. Upon satisfaction of these conditions and subject to completion of various searches and enquiries, the increased facility was available for draw-down.

8 The principal issue between the parties centres upon the next letter of 19 April 2000. It notified conditional approval of a new facility limit of $5,307,000. It required the facility agreement to be stamped for the increase in the facility limit and additional security in the form of a registered charge by another company controlled by Mr Burns specific to a fixed price building contract between that company and the building contractor.

9 Unlike its predecessor, this letter stated a purpose as follows:

$
(a)	Working Capital to Dolroy Pty Ltd	15,000
(b)	Assist with construction costs to complete subdivision at Dunns Creek security properties	435,000
(c)	Part reimbursement of costs expanded on roadworks and subdivision	165,000
(d)	Provision of capitalised interest for both the current variable loan and the current fixed rate loan	120,000

The above funding will apply for the period of time involved in completing the roadworks and subdivision works.

$
(a)	Assist with construction costs of 3 residential dwellings	1,200,000
(b)	Continued provision of capitalised interest for the variable and fixed rate loans	307,000
Total increase	$2,242,000
Facility Limit Total	$5,307,000”

10 The difference between the new facility limit of $5,307,000 and the increase of $2,242,000 was the previous facility limit of $3,065,000. The increase of $2,242,000 fell into two categories, $735,000 initially and a further $1,507,000 following completion of road works and subdivision works. The letter went on to set out “Conditions Construction Finance” as follows:

“(1) The contracted builder for the residential dwellings is to be appropriately licensed and acceptable to us.

(2) Contribution from the customer to this transaction is to be utilised prior to the commencement of progress payments from this facility in respect of the residential dwellings.

(3) The facility is to be drawn progressively with construction/development payments allowed against our Valuers and/or Quantity Surveyor’s reports on a “cost to complete” basis. Sufficient undrawn funds under the facility are to be available at all times to complete works. Draw down of progress payments is to be by way of cheque payable to the builder.

(b) In respect of each of the three (3) residential dwellings an amount, to be advised by our Valuer/Quantity Surveyor, will be retained until we have been provided with a satisfactory final survey and final Council Building Certificate(s)

(8) Instalments due on the facility/fixed rate loan may be transferred by us at any time without notice from the funds held on deposit.”

11 The letter went on to require $13,588 for stamping the facility agreement for the increase in the facility limit, valuation and establishment fees. In other respects the terms and conditions of the facility agreement continued to apply. $13,588 was subsequently charged to Dolroy’s account. Not all the construction finance conditions were met.

12 On 24 November 2000, AMP wrote to Dolroy seeking, amongst other things, information about the stage reached in obtaining fixed price quotations for the three houses for which conditional approval of funds had been granted. The letter referred to an interim facility limit of $3,800,000. This was a reference to the December 1999 facility limit of $3,065,000 plus the initial $735,000 referred to in the 19 April 2000 letter. Of the $3,800,000, the letter pointed out that $340,000 was the un-drawn balance.

13 On 6 December 2000, AMP wrote again to Dolroy. In part the letter stated:

“Whilst conditional approval of funds has been advised in our Conditional Letter of Approval dated 19 April 2000 there is still many aspects of funding that need to be assessed (refer ‘valuation’ and ‘conditions-construction finance’ as set forth in the correspondence) before any of the parties embark on further expenditure. A need to be prudent on this issue is of great importance and it is in the interests of all concerned that you do not unnecessarily commit the Company until all preliminary requirements connected with construction funding policies are completed satisfactorily (please contact us if you need clarification on these issues).”

14 On 12 December 2000, Peter Saunders, the AMP manager of the Hunter Region, sent an email to Bryan Boyd the general manager of AMP in which he said he had met with Mr Burns and explained the meaning of the conditional approvals and explained that AMP could not keep committing funds to the project, that is building the houses, without the correct analysis of future sales and reduction in peak debt.

15 By May 2001, Dolroy had drawn down approximately $3.6 million. It had been advised that it would cost $451,000 to secure the release of the approved plan of survey from the Port Stephens Council. By its letter dated 21 May 2001, AMP agreed to a new facility limit of $4,148,000 comprised of an existing facility of $3,603,000, the costs to secure the release of the plan of survey of $451,000 and a capped interest reserve of $94,000 for the months of May to August 2001. The letter stated that the facility limit was to be reduced from the sale of lots prior to the expiry of the capitalised interest on 1 August 2001.

16 On 22 November 2001 the capped interest reserve was increased by $135,000 for the months of November 2001 to February 2002 and the facility limit was accordingly increased from $4,148,000 to $4,283,000.

17 Mr Burns maintained that he had been led to believe that under the letter of 19 April 2000 he had a facility limit of $5,307,000 and the ability to capitalise interest to that limit and that the subsequent letters of 21 May 2001 and 22 November 2001 were interim facility limits on their way to the $5,307,000. The plaintiffs maintained that this limit had not been exceeded and Dolroy was entitled to capitalise the $61,381.04 specified in the notice under the Real Property Act 1900, s 57(2)(b) as then due on 28 February 2003 and likewise when the proceedings were commenced and at the trial and AMP was not entitled to call in the balance of the loan.

18 Mr Saunders said that on 18 April 2000 he met with Mr Burns and informed him that he had prepared a conditional letter of approval in respect of the houses. He said he read through to Mr Burns the terms and conditions as to construction finance. He said Mr Burns asked: “Why do we have to have all these clauses in there, can’t we just take them out”, to which Mr Saunders responded that they were normal construction finance clauses.

19 Mr Burns denied that any clauses were shown to him at the meeting which he said took place in about March 2000. His version of the conversation was as follows. Mr Saunders said: “Your new facility will be $5,307,000, for the building of three houses to start with and includes interest capitalisation. If we are going to build these houses we will have to get things done quickly so that we can sell them.” Mr Burns said that as soon as he got registration of the subdivision and building approval he would be in a position to start. Mr Saunders said AMP wanted security in relation to the house construction in the form of a charge. Mr Burns said he did not want a floating charge over Dolroy and Mr Saunders said he could set up a construction company and AMP would take a charge over it.

20 When he received the letter of 19 April 2000, Mr Burns asserted that he understood he had finance for the construction of the three houses whether or not he completed the road works and subdivision. He also said that, notwithstanding the specified limits of $120,000 and $307,000 for capitalisation of interest, he understood they were interim provisions only and that he would be entitled to further provisions for capitalisation of interest and he had a facility of $5,307,000 to work with.

21 Mr Burns said his understanding stemmed from a conversation with Mr Saunders at the end of March 2000 or in early April 2000. Mr Saunders was not cross examined as to such a conversation.

22 I do not accept Mr Burns’ evidence in this regard. He set out in detail in one of his affidavits, the conversation he had with Mr Saunders in March 2000. Nowhere in his affidavits is there any suggestion of the above conversation. If it took place it was vital to the plaintiffs’ case and one would have expected a reference to it in one of Mr Burns’ affidavits. In my view it is highly improbable that Mr Saunders told Mr Burns that AMP was prepared to grant a new facility limit of $5,307,000 without conditions.

23 In any event, the letter of 19 April 2000 was inconsistent with the alleged conversation. Its plain terms restricted access to the $1,200,000 for construction of the three houses until the completion of road works and subdivision works. Its plain terms limited capitalisation of interest during road works and subdivision construction to $120,000, its plain terms limited capitalisation of interest thereafter to $307,000 and its plain terms required compliance with the conditions for construction finance. Had Mr Burns had the conversation he alleges, one would have expected him, upon receipt of the letter of 19 April 2000, to have complained that it was inconsistent with his agreement with Mr Saunders. No such complaint was made.

24 The plaintiffs asserted that they were misled into believing that AMP was making $5,307,000 available unconditionally to Dolroy because of the further stamping of the facility agreement and AMP was estopped from denying that Dolroy had available to it $5,307,000. I reject those contentions. The payment of $13,588 including the additional stamp duty was one condition of the increase in the facility limit. The construction finance conditions were other such conditions and not all of them were met. For example, there was no building contract for the three houses.

25 The plaintiffs could have been in little doubt as to the conditional nature of the letter of 19 April 2000 upon receipt of the letter of 24 November 2000. The statement that the interim facility limit was $3,800,000 was totally inconsistent with the notion that AMP had approved, unconditionally, the $5,307,000 limit. Dolroy was asked to provide information as to the stage reached in obtaining fixed price quotations for the three houses for which conditional approval of funds had been granted. Mr Burns could have been under no misapprehension that AMP regarded the construction finance conditions as not having being met and that the facility limit was the earlier $3,065,000 and the $735,000.

26 Again, if Mr Burns believed that Dolroy had an unconditional facility at $5,307,000 and that Dolroy could continue to capitalise interest one would have expected him, on receipt of the 24 November 2000 letter to have complained to Mr Saunders. That did not happen.

27 Again, on receipt of the letter of 6 December 2000, Mr Burns could have been under no misapprehension that AMP regarded the construction finance conditions as not having been met. Again, there was no complaint by the plaintiffs upon receipt of the letter. Mr Burns maintained in cross examination that he did not understand the letter to mean that the construction finance was conditional. I do not accept that evidence. The letter makes it clear that the construction finance conditions in the letter of 19 April 2000 had to be performed before the construction finance would be made available.

28 I prefer the evidence of Mr Saunders that he met with Mr Burns on 12 December 2000 when the conditional approval was explained to him. At that stage, according to Mr Saunders email, $318,000 was available under the interim limit of $3,800,000 and Mr Burns requested further finance to enable the plan of subdivision to be released by the local authority which he estimated would cost $250,000.

29 Mr Burns denied that he made a request for additional finance to seek release of the plan of subdivision. He said that the boundary alignment had to be carried out first. But it was only in June 2001 that the local authority raised the problem of land-locked lots. Furthermore, Mr Saunder’s email accords with the subsequent request by Dolroy for $451,000 to enable the plan of survey to be released.

30 That request was granted in the letter of 21 May 2001 which increased the facility limit to $4,148,000 with capped interest reserve of $94,000 above the amount which had then been drawn of $3,603,000. Again the document on its face is inconsistent with the notion that Dolroy had available to it $5,307,000. It is consistent with the letter of 19 April 2000 which required the performance of the construction finance conditions before the $1,200,000 would be released for the construction of the three houses.

31 Mr Burns regarded Dolroy as requesting $451,000 out of the facility of $5,307,000. If Dolroy had an entitlement to draw down sums to this limit, there was no purpose in its request for an additional $451,000. Nor did the letter of 21 May 2001 indicate that the additional funds were part of an approved facility of $5,307,000. To the contrary, the letter indicated an increase in the existing facility, then drawn to $3,603,000, to a new facility limit of $4,148,000.

32 The plaintiffs submitted that the letter of 21 May 2001 granted an increase of capitalised interest pursuant to the terms of the letter of 19 April 2000. I reject that submission. The letter of 19 April 2000 offered two increases in the facility limit. The first from the $3,065,000 to $3,800,000, the second from $3,800,000 to $5,307,000 should the construction finance conditions be met. The letter of 21 May 2001 increased the former figure to $4,148,000 with, again, a specified limit on the capitalisation of interest.

33 In the alternative, the plaintiffs submitted that the letter of 21 May 2001 was executed by them as a result of AMP’s misleading and deceptive conduct and should be set aside and specific performance granted of the approval in the letter of 19 April 2000.

34 It was submitted that AMP represented to Mr Burns that the letter of 21 May 2001 fell within the scope of the letter of 19 April 2000, that representation being constituted by the plaintiffs’ signing of the letter of 19 April 2000, the draw down of the $13,588, the additional stamping of the facility agreement and AMP’s silence and failure to state that it was withdrawing or resiling from the letter of 19 April 2000.

35 I reject those submissions. There was no representation by AMP that the letter of 21 May 2001 fell within the scope of the letter of 19 April 2000 nor could such a representation be constituted by the signing of the earlier letter, the payment of the stamp duty and other fees and the additional stamping of the facility agreement. The letter of 21 May 2001 stood on its own feet and constituted a fresh increase in the facility limit in the manner described above. There was no misleading or deceptive conduct within the meaning of the Australian Securities and Investments Commission Act 2001 (Cth), s 12DA.

36 Capitalisation of interest under the letter of 21 May 2001 expired according to its terms in August 2001. Mr Burns met with representatives of AMP on 11 October 2001 when he presented a cheque for $62,489 to extinguish arrears of interest under the facility. The payment was not made under protest. It evinced an understanding that there was a limit upon the right to capitalise interest and it stood in stark contrast to a professed understanding that Dolroy had a facility of $5,307,000 with unlimited ability to capitalise interest.

37 On 24 October 2001, Mr Burns wrote a long letter to AMP recording his request at the meeting that AMP consider reinstating capitalisation of interest to at least 30 June 2001, a request which, again, was inconsistent with an understanding of entitlement to capitalise interest to a limit of $5,307,000. At no stage in his letter did Mr Burns complain that the arrangements were inconsistent with his understanding based upon his discussion with Mr Saunders.

38 AMP reacted to Mr Burns’ request that capitalisation of interest be reinstated. In its letter of 22 November 2001, the facility limit was increased from $4,148,000 to $4,283,000 by an increase in the capped interest reserve of $135,000.

39 This letter stands in the same category as the letter of 21 May 2001 in respect of which the plaintiffs made the same submissions. I reject them. Like its predecessor, the letter of 22 November 2001 stood as a fresh increase in the facility limit and is not to be construed as having been made pursuant to the letter of 19 April 2000. Nor is it to be set aside as having been brought into existence by a false representation on the part of AMP. There was no misleading or deceptive conduct within the meaning of the Australian Securities and Investments Commission Act 2001 (Cth), s 12DA.

40 In my view, the plaintiffs had not complied with the construction finance conditions in the letter of 19 April 2000. Dolroy was not entitled to draw down any amounts thereunder in excess of $3,800,000 including a provision for capitalised interest not exceeding $120,000. That amount was increased from time to time, the last increase being $135,000 in the letter of 22 November 2001 covering the months of November 2001 to February 2002.

41 The plaintiffs submitted that AMP had caused Dolroy and Mr Burns to assume that the letter of 19 April 2000 had taken effect unconditionally by the additional stamping of the facility agreement, the charging of stamp duty and other fees to Dolroy and AMP’s failure to communicate that the offer in the letter of 19 April 2000 had not come into effect. The plaintiffs claimed that AMP was estopped from resiling from that assumed state of affairs. I reject that submission for reasons earlier expressed. The letter 19 April 2000 made it perfectly plain that the second increase in the facility limit was conditional upon finance conditions being performed.

42 In my judgment, the plaintiffs have failed in their primary contention and are not entitled to any of the relief claimed with respect thereto. As I understand it, there is no dispute that in these circumstances AMP has made out its entitlement to the relief claimed in its amended cross claim, subject to any question of set-off with respect to the remaining issues.

43 The plan of subdivision creating lots 1, 2 and 3 was registered in August 1998. On 9 September 1998 the solicitors for Dolroy requested the release from mortgage of lots 1 and 2 and sought advice as to when this might be effected.

44 Mr Saunders discussed this matter with Mr Burns on a number of occasions. He said he recalled approximately three or four conversations over the period from 1996 to 1998 in which Mr Burns inquired when the two blocks were to be released and Mr Saunders responded that the blocks would be released when the subdivision came through and Mr Burns said: “Really I don’t really need them right now, I guess you can hold onto them for now though”. Mr Burns denied the conversations. He said at no time did he inform AMP that it could “hold onto” the two lots.

45 In cross examination, Mr Saunders said that he recalled conversations to like effect between 1998 and 2001. He said that he made an administrative decision not to release the two lots as the facility was increasing and further security might be required and if that was so, the lots were already there. Mr Saunders said that no pressure was being exerted for their release at that time.

46 That conversations had taken place over an extended period of time is clear from the only other written request for the release of the lots on 30 April 2001. In it Mr Burns referred to the discussions he had had with Mr Saunders over the previous two to three years and requested the release of the two lots as they were required immediately.

47 While cavilling with Mr Saunders’ recollection of the conversations, Mr Burns did not assert that he had made any request for the release of the lots between the solicitor’s letter of September 1998 and Dolroy’s letter of April 2001. In my view, the likelihood is that Dolroy, through Mr Burns, allowed the lots to remain under security until they were needed.

48 The approach taken by Mr Saunders had merit in a climate of increasing facility limits and while Dolroy was drawing its funds under those facilities there was little likelihood that it required the lots to raise finance elsewhere.

49 That the need for the lots was not urgent is apparent from the later history. On 27 June 2001, Dolroy wrote to AMP suggesting a land swap of lots G and Q for lots 1 and 2. To this suggestion AMP agreed. But Mr Burns changed his mind. At the meeting of 11 October 2001, Dolroy reverted to its request for the release of lots 1 and 2 to which AMP agreed at the meeting and on 22 November 2001 the discharges of mortgage in respect of lots 1 and 2 were forwarded to Dolroy. The lots were not used to raise finance until late 2003.

50 The plaintiffs asserted that AMP knew or should have known that the release of the lots was required by Dolroy to further finance the subdivision. That allegation has not been made out on the evidence.

51 It was further alleged that the plaintiffs suffered damage as a result of the failure of AMP to release the lots before 22 November 2001. That allegation has not been made out.

52 The plaintiffs argued that an order had been made that the question of damages, if any, were to be determined separately and after hearing the balance of the proceedings and that the question whether the plaintiffs sustained damage was an issue for later determination. I reject that submission. As the plaintiffs have failed to establish that any damage was sustained as a result of the alleged failure of release before November 2001, an inquiry by a Master as to damages is pointless.

53 In my judgment, the plaintiffs have failed to establish that the release of the two lots on 22 November 2001 constituted a breach of the facility agreement. I am satisfied that in discussions between Mr Burns and Mr Saunders there was agreement that the lots should remain under security until they were required. I am satisfied that following the request for their release on 30 April 2001, there was a change of plan and it was not until the meeting 11 October 2001 that an effective request for release of the lots was made. Performance of that request on 22 November 2001 was not in breach of contract. The plaintiffs are not entitled to damages and there is no matter to be referred to a Master for inquiry and determination.

54 In June 2001, Port Stephens Council advised Dolroy that it had reservations concerning the plan of subdivision which had the potential to create land-locked parcels and Dolroy proposed and AMP subsequently accepted a boundary adjustment.

55 The plan to which AMP agreed gave prospective lot 101 an area of 7 hectares and prospective lot 102 an area of 9 hectares. On 20 November 2001, AMP wrote to Port Stephens Council consenting to an application for approval for a boundary adjustment in accordance with that plan a copy of which it attached to the letter.

56 From his experience in dealing with the subdivisions, Peter Kearns, the national lending and administration manager for AMP, was aware that inevitably a formal survey plan would be prepared. AMP gave its consent without awaiting such a plan.

57 In October 2002, Dolroy appointed Maxwell Graham Burlington, a consultant, to act on its behalf. On 11 December 2002, Mr Burlington forwarded to Mr Kearns a reduced copy of a boundary adjustment plan requesting AMP’s endorsement. That plan differed significantly from the plan the subject of AMP’s consent. AMP did not consent to the amended plan.

58 In about June 2003, AMP received a linen plan similar to the amended plan forwarded by Mr Burlington. Not only did the proposed lot 101 on that plan differ from the configuration of lots 101 and 102 on the original plan but also its area of 21.37 hectares was significantly greater than the boundary alignment to which AMP had given its consent.

59 In cross examination, Mr Burns said that AMP, when it gave its consent to the original plan, was told that the plan was indicative only and that by giving its consent it was, in effect, consenting to a larger portion of land being removed from the security. That was a critical conversation and if it had taken place one would have expected Mr Burns to have sworn to it in one of his affidavits. He did not do so. One would have expected Mr Kearns to have qualified AMP’s consent if such a conversation had taken place. He did not do so. He was not cross examined with respect to such a conversation. I reject Mr Burns’ evidence in this regard.

60 It was argued on behalf of the plaintiffs that Mr Kearns understood that the original plan would be followed by a formal survey plan which might differ from it and AMP’s consent to the original plan bound it to endorse the linen plan when presented to it. It was argued that the endorsement of the linen plan was necessary to effect a boundary adjustment before registration of the subdivision, registration of the subdivison would greatly enhance the value of AMP’s security and, in consequence, AMP would have suffered no detriment by endorsing the linen plan.

61 I reject that argument. No doubt the substitution of residential lots for open space would have increased the value of AMP’s security. But the appropriate question is whether AMP was disadvantaged by excising from its security lot 101 on the linen plan as compared with lots 101 and 102 on the original plan.

62 In my view the plaintiffs have failed to establish a breach by AMP of an implied term that they would not cause any unreasonable delay in obtaining registration of the plan of subdivision by its refusal to endorse the linen plan and plaintiffs have failed to establish that AMP is estopped from denying that it consented to the boundary adjustment shown in the linen plan.

63 Furthermore, when the linen plan was presented for endorsement in June 2003, Dolroy was in default under the finance facility and AMP was entitled to call up the amount owing and take steps to possess and sell the land and was no longer obliged to endorse any linen plan.

64 The plaintiffs are not entitled to any relief. There is no question of a set-off against the amounts due under the cross claim and there is no matter to be referred to a Master for inquiry and determination.

65 As at 1 March 2004, $5,044,483.39 was due to AMP under the facility agreement. It is not in dispute that AMP in these circumstances has made out its entitlement to the relief claimed in its cross claim. I will dismiss the further amended statement of claim and give judgment on the cross claim against each of the plaintiffs in that amount together with interest from that date. I will make an order that Dolroy give AMP possession of the properties the subject of the securities and an order that it have leave to issue a writ of possession forthwith. I will hear the parties on costs and on the appropriate terms of the judgment. I direct the parties to bring in short minutes of orders reflecting these reasons.

**********

Last Modified: 03/23/2004

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Citations

Burns v AMP Finance Ltd [2004] NSWSC 166

Most Recent Citation

AMP Finance Limited v Burns (No.2) [2005] FMCA 647

Cases Citing This Decision

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AMP Finance Limited v Burns (No.2) [2005] FMCA 647

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CITATION:	Burns & Ors v AMP Finance Ltd [2004] NSWSC 166
HEARING DATE(S):	08/03/04, 09/03/04, 10/03/04
JUDGMENT DATE:	18 March 2004
JUDGMENT OF:	Gzell J
DECISION:	Statement of claim dismissed. Judgment for defendant on cross claim
CATCHWORDS:	CONTRACTS - General Contractual Principles - Construction and Interpretation of Contracts - Whether later variations of a finance facility were interim variations within an earlier conditional variation for a regular amount - Whether representations led to estoppel of the defendant arguing otherwise - Whether defendant in breach of contract for failure to release lots from security on request - Whether a variation to hold lots until required was agreed - Whether the defendant was obliged to endorse a linen plan of boundary adjustment which differed significantly from agreed earlier plan - No principles involved
LEGISLATION CITED:	Real Property Act 1900 Australian Securities and Investments Commission Act 2001 (Cth)
PARTIES :	John Burns - 1st Plaintiff Dolroy Pty Ltd - 2nd Plaintiff O'Malley's Acquariums Pty Ltd - 3rd Plaintiff AMP Finance Ltd - Defendant
FILE NUMBER(S):	SC 4194/03
COUNSEL:	Ms Natalie Obrart - For the Plaintiffs Mr Simon White - For the Defendant
SOLICITORS:	Jackson Smith Solicitors Kemp Strang Solicitors