Carter-Lannstrom v Gray

Case [2019] QSC 169

SUPREME COURT OF QUEENSLAND

CITATION:

Carter-Lannstrom & Anor v Gray & Anor [2019] QSC 169

PARTIES:

MARGARET CARTER-LANNSTROM AND ADAM JAMES CARTER-LANNSTROM as trustees for the MARGARET CARTER-LANNSTROM SELF MANAGED SUPERANNUATION FUND

(plaintiffs)

v
ANTHONY DAVID GRAY
(first defendant)
JUDITH MARGARET STEVENSON

(second defendant)

FILE NO/S:

SC No 4300 of 2016

DIVISION:

Trial Division

PROCEEDING:

Application

ORIGINATING COURT:

Supreme Court at Brisbane

DELIVERED ON:

16 July 2019

DELIVERED AT:

Brisbane

HEARING DATE:

31 May 2019; supplementary submissions on behalf of the plaintiffs dated 31 May 2019; supplementary submissions on behalf of the first defendant dated 3 and 5 June 2019 and received on 11 June 2019

JUDGE:

Burns J

ORDER:

THE ORDER OF THE COURT IS THAT:

1.     Judgment be entered for the plaintiffs against each of the defendants in the sum of $874,030.25 together with interest in the sum of $113,623.93;

2.     The defendants pay the plaintiffs’ costs of the proceeding, including this application, to be assessed on the standard basis.

CATCHWORDS:

PROCEDURE – SUPREME COURT PROCEDURE – QUEENSLAND – PROCEDURE UNDER UNIFORM CIVIL PROCEDURE RULES AND PREDECESSORS – SUMMARY JUDGMENT – where the plaintiffs applied for summary judgment against the defendants – whether the defendants have no real prospect of successfully defending the plaintiffs’ claim – whether there is no need for a trial of the plaintiffs’ claim

Uniform Civil Procedure Rules 1999 (Qld), r 17, r 112, r 140, r 292, r 374

Deputy Commissioner of Taxation v Salcedo [2005] 2 Qd R 232, followed
Weatherup v Krayem [2018] QCA 247, cited

COUNSEL:

PD Tucker for the plaintiffs

The first defendant appeared in person
No appearance for the second defendant

SOLICITORS:

Behlau Murakami Grant for the plaintiffs

The first defendant appeared in person
No appearance for the second defendant

  1. The plaintiffs apply for summary judgment pursuant to r 292 of the Uniform Civil Procedure Rules 1999 (Qld). That relief is also sought in the alternative pursuant to r 374(5) UCPR because, it is contended, the defendants failed to comply with orders of the court made on 13 June 2018, 6 December 2018 and 14 March 2019.

    Background

  2. The plaintiffs are the trustees of a self-managed superannuation fund and, in that capacity, carried on business as money lenders. On 18 May 2015, they loaned $500,000 to a corporation known as Lismore South Developments Pty Ltd. The purpose of the loan was to assist the borrower to purchase a property in New South Wales. The transaction was documented in a loan agreement that was executed by the parties when the principal was advanced. At the same time, the defendants (and another corporation[1]) entered into a deed of guarantee and indemnity with the plaintiffs under which they jointly and severally[2] guaranteed the performance by the borrower of its repayment obligations under the loan agreement.

    [1]         Tailor Made Developments Pty Ltd.

    [2]See Deed of Guarantee and Indemnity, cl 1.3 (exhibit MCL-2 to the affidavit of Ms Carter-Lannstrom filed on 14 November 2016).

  3. The first defendant is legally qualified.…

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Details
AGLC
Carter-Lannstrom v Gray [2019] QSC 169
Case
[2019] QSC 169
Decision Date

CaseChat Overview and Summary

The plaintiffs, the trustees of a self-managed superannuation fund, applied for summary judgment against the defendants under r 292 of the Uniform Civil Procedure Rules 1999 (Qld). The plaintiffs loaned $500,000 to Lismore South Developments Pty Ltd on 18 May 2015, which was documented in a loan agreement. At the same time, the defendants entered into a deed of guarantee and indemnity with the plaintiffs, jointly and severally guaranteeing the borrower's repayment obligations. The loan was due on 22 October 2015, but the borrower failed to repay the principal and subsequent demands were unsatisfied. The plaintiffs sought summary judgment, arguing that the defendants had no real prospect of successfully defending the claim and there was no need for a trial. The court was required to determine whether the defendants had any viable defence to the claim and whether there were any triable issues.

The court found that the defendants had not articulated a viable defence to the claim over the three years since the proceeding was commenced. The defendants had failed to avail themselves of the opportunity to re-plead and the only submissions made by the first defendant were confined to the question of interest. The court accepted that no viable defence had been articulated by either defendant and that there had been repeated failures to comply with orders of the court. The first defendant submitted that there were "several triable issues" before the court, but only one of the points advanced touched on the principal claim. The court found that there was no real prospect of the defendants successfully defending the claim and that there was no need for a trial.

The court ordered that judgment be entered for the plaintiffs against each of the defendants in the sum of $874,030.25 together with interest in the sum of $113,623.93. The defendants were also ordered to pay the plaintiffs' costs of the proceeding, including the application, to be assessed on the standard basis. The court found that the plaintiffs had made out a clear case for summary judgment and that there was no real prospect of the defendants successfully defending the claim. The court accepted that the defendants had failed to articulate a viable defence and had repeatedly failed to comply with orders of the court.

Orders

Orders of the court

THE ORDER OF THE COURT IS THAT:

1. Judgment be entered for the plaintiffs against each of the defendants in the sum of $874,030.25 together with interest in the sum of $113,623.93;

2. The defendants pay the plaintiffs’ costs of the proceeding, including this application, to be assessed on the standard basis.

Background

Background to the litigation

The plaintiffs apply for summary judgment pursuant to r 292 of the Uniform Civil Procedure Rules 1999 (Qld). That relief is also sought in the alternative pursuant to r 374(5) UCPR because, it is contended, the defendants failed to comply with orders of the court made on 13 June 2018, 6 December 2018 and 14 March 2019. Background The plaintiffs are the trustees of a self-managed superannuation fund and, in that capacity, carried on business as money lenders. On 18 May 2015, they loaned $500,000 to a corporation known as Lismore South Developments Pty Ltd. The purpose of the loan was to assist the borrower to purchase a property in New South Wales. The transaction was documented in a loan agreement that was executed by the parties when the principal was advanced. At the same time, the defendants (and another corporation[1]) entered into a deed of guarantee and indemnity with the plaintiffs under which they jointly and severally[2] guaranteed the performance by the borrower of its repayment obligations under the loan agreement.[1] Tailor Made Developments Pty Ltd.[2]See Deed of Guarantee and Indemnity, cl 1.3 (exhibit MCL-2 to the affidavit of Ms Carter-Lannstrom filed on 14 November 2016). The first defendant is legally qualified. Relevantly, he was a barrister in private practice until, it seems, 2016.[3] The second defendant is his mother.[3] Affidavit of Ms Carter-Lannstrom, exhibit MCL-11. And see: Transcript, 1-6. Interest was payable under the loan agreement at the rate of 6% per month with a higher rate of 10% per month applying if the borrower fell into default.[4] It was also agreed that interest would be calculated on a daily basis and capitalised monthly in arrears.[5][4] See Loan Agreement, cl 5.1(a) (exhibit MCL-1 to the affidavit of Ms Carter-Lannstrom).[5] Ibid, cl 5.1(b). The principal was required to be repaid on 17 August 2015 but the due date was subsequently extended at the request of the borrower on three occasions – to 17 September 2015, 16 October 2015 and, finally, 22 October. No further extensions were granted. On 26 August 2015, the borrower paid $113,373.24, being the interest then owing under the loan agreement. On 23 and 26 October 2015, further interest payments of $70,000.00 and $30,000.00 respectively were made by the borrower. No further payment has since been made and, almost needless to say, the borrower failed to repay the principal on 22 October 2015. A demand to do so (together with payment of accrued interest in the sum of $374,030.25 calculated to 15 April 2016) was made on the borrower on 8 April 2016 but went unsatisfied. On the same day (8 April 2016), a demand was made on the defendants to repay the debt ($874,030.25) in accordance with their obligations under the deed. On 12 May 2016, the first defendant telephoned the plaintiffs’ solicitors and then forwarded a confirmatory email. In it, he recorded that an “associate” had agreed to assist with the borrower’s financial requirements “including repayment of this loan” and that he would “make [himself] available to accept service personally and for [the second defendant] regarding recovery proceedings”.[6] [6] Affidavit of Ms Carter-Lannstrom, exhibit MCL-11.

Evidence

Evidence Before The Court

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Decision

Reasons for decision

As for the second defendant, her non-appearance cannot stand in the way of judgment. By rr 17 and 140 UCPR, the defendants were required to provide an address for service for the purposes of the proceeding, and they did so. After the subject application was filed, it was served at the address provided by the defendants in their most recent notices of address for service. That was valid service under the rules: rr 112(1)(d) and 112(3)(a) UCPR. Although the second defendant does not appear to have been served with the amended application, she chose not to appear on the first return of the original application (24 May 2019) and, according to the first defendant, was aware that the application would come back before the court on 31 May.[16] As previously observed, the amendments to the application were not substantial. Like the first defendant, the second defendant did nothing to comply with the terms on which leave to re-plead her defence was given by Flanagan J.[16]The first defendant submitted that his mother “was aware that there was to be a review today” but was “not aware that judgment is going to be entered … today”: Transcript 1-10,11.Summary judgment? By r 292 UCPR, the court may give judgment for a plaintiff against the defendant for all or part of the plaintiff’s claim if satisfied that: (1) the defendant has no real prospect of successfully defending all or a part of the claim; and (2) there is no need for a trial of the claim or the part of the claim. It is necessary of course that a clear case be made out before a proceeding such as this is summarily terminated. Here, it was never disputed by the defendants that the deed was executed by them or that the borrower defaulted in repayment of the loan. The only matters of defence appeared in pleadings that were struck out by Flanagan J, the defendants failed to avail themselves of the opportunity to re-plead and the only submissions the first defendant made in response to the application at the hearing were confined to the question of interest. I accept the submission made by counsel for the plaintiffs that, in the period of over three years since this proceeding was commenced, no viable defence has been articulated by either defendant. There have in addition been repeated failures to properly comply with orders of the court including attendance at a court-ordered mediation. In supplementary written submissions, the first defendant submitted that there were “several triable issues” before attempting to advance five points in support of that submission.[17] Leaving aside the feature that the supplementary submissions sought by the court from the plaintiffs were to be concerned only with an alternative interest calculation with the first defendant having leave to respond regarding that calculation, only one of the points advanced by the first defendant touched on the principal claim and, even then, all that was submitted was this:“IT IS NOT JUST THAT THE INTEREST RATE ON THE $500,000 IS UNCONSCIONABLE TO MAKE IT SO; BUT NOBODY WOULD WILLINGLY ENTER INTO SUCH ARRANGEMENTS WITHOUT SOME REASON. THESE ARE THE REPRESENTATIONS RELIED UPON AND THE JOINT VENTURE ARRANGEMENTS WHICH THE PLAINTIFFS COULD CONTEST AT TRIAL.”[18] [Capitalisation in original][17]See paragraphs 7(A) to (E) of the supplementary submissions made by the first defendant by letter dated 3 June 2019.[18] Ibid, paragraph 7(b).

Ratio Decidendi

Legal Principle Established

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