Claremont Australia Pty Ltd v Tomaras - [2009] WADC 88

JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CHAMBERS

LOCATION: PERTH

CITATION: CLAREMONT AUSTRALIA PTY LTD -v- TOMARAS [2009] WADC 88

CORAM: SWEENEY DCJ

HEARD: 21 JANUARY 2009

DELIVERED : 12 JUNE 2009

FILE NO/S: CIV 2136 of 2007

BETWEEN: CLAREMONT AUSTRALIA PTY LTD (ACN 099 430 958)
Plaintiff
AND
JAMES TOMARAS
Defendant

Catchwords:

Summary judgment - Appeal - Issues to be tried - Material dispute as to facts - Delay - Extension of time

Legislation:

Corporations Act 2001 (Cth)
Rules of the Supreme Court 1971

Result:

Appeal allowed

Representation:

Counsel:

Plaintiff: Mr C Ko
Defendant: Mr M Bateman

Solicitors:

Plaintiff: Brickhills
Defendant: Batemans

Case(s) referred to in judgment(s):

Fancourt v Mercantile Credits Ltd (1983) 154 CLR 87
Webster v Lampard (1993) 177 CLR 598; (1993) 116 ALR 545; (1993) 67 ALJR 886
White v Johnston (1886) 8 ALT 53

SWEENEY DCJ:

Introduction

This is the defendant's appeal against the decision of Deputy Registrar Hewitt made 1 April 2008 granting summary judgment to the plaintiff and ordering the defendant to pay the sum of $200,000 with interest. There are five grounds of appeal, a sixth having been abandoned.
Being an appeal from a Registrar exercising the delegated jurisdiction of this Court, this is a hearing de novo and the Court may receive additional material which was not before the learned Deputy Registrar. Each of the parties filed additional material which was received, subject to rulings on numerous objections to material contained within those affidavits.
The appeal was instituted well out of time, not having been filed until 17 November 2008 and so an extension of time within which to appeal is also sought.

Principles in relation to summary judgment applications

The plaintiff's application for summary judgment is made pursuant to O 14 r 1 of the Rules of the Supreme Court 1971. Pursuant to O 14 r 3(1) the Court may give judgment for the plaintiff "unless the Court dismisses the application, or the defendant satisfies the Court with respect to the claim … that there is an issue or question in dispute which ought to be tried, or that there ought for some other reason to be a trial of that claim or part". In that case, pursuant to O 14 r 4(3), the Court may give the defendant leave to defend the action, either unconditionally or on terms.
The power to grant summary judgment must be exercised with great care and judgment in favour of the plaintiff should never be granted unless it is clear there is no real issue to be tried: Fancourt v Mercantile Credits Ltd (1983) 154 CLR 87 at 99. The need for caution is nowhere more important than where the ultimate outcome turns upon the resolution of some disputed issue or issues of fact: Webster v Lampard (1993) 177 CLR 598.
While the Court is not obliged to accept at face value every statement in an affidavit, however lacking in credibility, if the defendant puts forward a version of facts which is not inherently implausible then the Court should not make findings on a conflict of affidavits where there is an absence of an opportunity of cross‑examination. The Court should not embark upon an enquiry as to credibility of the various witnesses. It was never intended that a summary judgment application be used in this manner when the facts are in dispute: White v Johnston (1886) 8 ALT 53 and Webster v Lampard (supra) at 608; (1993) 116 ALR 545 at 552; (1993) 67 ALJR 886 at 891.
There was no suggestion before the Court that the defendant or any of the plaintiff's witnesses should be cross‑examined and it is not the usual practice in this State for that to occur.
The key issue before me, then, is whether the defendant has put sufficient material before the Court to show that there is an issue or question in dispute which ought to be tried, or that there ought for some other reason to be a trial. One ground of appeal asserts that the defendant's affidavit shows an arguable defence and, if made good, that single ground would be sufficient to determine this appeal in his favour. The second issue is whether leave should be granted to appeal out of time.

The plaintiff's claim

The plaintiff sues on a written guarantee dated 28 April 2006 by which the defendant, in consideration of the plaintiff agreeing to lend $200,000 to MPG (77 MR Mayfield) Pty Ltd ("MPG"), agreed to unconditionally guarantee payment to the plaintiff, upon demand, of every sum payable by MPG.
The loan agreement execution deed and guarantee is annexed to the affidavit of Rodger Meads, the sole director and shareholder of the plaintiff company. The deed provides that the principal amount of $200,000 was repayable on 28 April 2007.
It was a special condition that the monies would be applied to a property at 77‑83 Maitland Road, Mayfield, New South Wales and a mortgage was to be granted over that property as security.
On its face the loan agreement execution deed was executed by Rodger Meads, as director of the plaintiff and by the defendant and one Barry Perry both in their capacity as directors of MPG and as guarantors. One J Meads has purported to witness both their signatures.
Incorporated by reference into the loan agreement execution deed are the loan agreement terms by which MPG gave certain warranties, including that it would only apply the principal amount for the purposes outlined in the loan agreement execution deed.
Pursuant to cl 18.2 of the terms the guarantors unconditionally guaranteed to the plaintiff the payment, upon demand, of every sum of money payable by MPG to the plaintiff in accordance with the agreement. Pursuant to cl 18.4 the guarantee would not be determined, discharged, impaired or released by the granting by the plaintiff at anytime of any forbearance or other concession or indulgence to MPG, or by any arrangement made between the plaintiff and MPG, with or without the consent of the guarantor.
Pursuant to cl 18.7:
"The guarantees and indemnities contained in this part shall be principle obligations and shall not be treated as ancillary or collateral to any other obligation howsoever created or arising to the intent that these guarantees and indemnities shall be fully enforceable without the lender taking any steps whatsoever against the borrower or otherwise …"
The plaintiff claims that it loaned the $200,000 to MPG and, in breach of the loan agreement, MPG failed to apply that sum for the purposes of the property at 77‑83 Maitland Road and failed to repay that sum by the due date. The plaintiff claims that, by letter dated 8 October 2007, it demanded payment from the defendant and, despite demand, the defendant has failed to pay the sum owing pursuant to the guarantee.
Several affidavits have been filed in support of the plaintiff's application. Objection has been taken by the defendant to two of those affidavits, namely those of Barry Perry sworn 19 January 2009 and Jeffery James Meads sworn the same day, on the basis that they were filed too late for a hearing which took place on 21 January 2009. Defence counsel claims directions were made by this Court on 2 December 2008 to the effect that any affidavits in support were to be filed 7 days prior to the hearing. The plaintiff's counsel disputes that any orders were made on 2 December 2008 and the court’s record of the orders made on that date does not include any order as to affidavits. I conclude no formal order was made.
Counsel for the plaintiff informed the court that his own affidavit in support sworn 16 January 2008 and two earlier affidavits of Mr Meads and Mr Perry, identical to the affidavits which are objected to but sworn in such a way that failed to comply with the requirements in this State for swearing an affidavit, were the subject of an attempted service on 16 January 2008. Defence counsel's office being closed over the Christmas break between 24 December and 19 January 2008, the documents were slipped under the door. It was accepted that defence counsel would not personally have received them until 19 January.
When it was appreciated that the affidavits of Messrs Meads and Perry were inadequately sworn, counsel had them re‑sworn on 19 January and they were then sent immediately to defence counsel by facsimile transmission with an explanation that they were identical to the earlier affidavits, but were properly sworn. In substance, then, the affidavits were all served on 16 January 2009 some five clear days prior to the hearing.
If counsel chooses to shut down his practice over the Christmas break, that will have no impact on the appropriate date on which to serve documents. The affidavits themselves contain relevant material and their absence from my consideration would work an injustice against the plaintiff. I decline to strike out those affidavits in support.
In his affidavit of 29 January 2008 Rodger Meads, the sole director of the plaintiff, annexes the loan execution agreement and loan agreement containing the guarantee and states that the plaintiff's books and records indicate that, pursuant to the loan agreement, the plaintiff loaned the sum of $200,000 to MPG. He does not depose to any personal knowledge as to the payment of the money but, in a general paragraph at the commencement of his affidavit, states that he deposes to the matters "from my own knowledge or from information obtained by me from my perusal of the books and records of the plaintiff which records I believe to be true and correct". Section 1305(1) of the Corporations Act2001 (Cth) provides that any book kept by a body corporate under a requirement of that legislation is admissible in evidence in any proceeding and is prima facie evidence of any matter stated or recorded in the book.
Rodger Meads deposes that MPG failed to apply the loan sum for the purposes of the property at 77‑83 Maitland Road, Mayfield and failed to repay the amount by 28 April 2007. He annexes the letter of demand of 8 October 2007 and states that he verily believes the defendant has no defence to the action and has entered an appearance merely for the purpose of delay.
In a further affidavit sworn 27 March 2008 Rodger Meads deposes to and annexes pages from the plaintiff's financial statements dated 31 March 2007 and also a letter from his accountants confirming that the loan of $200,000 was to MPG. He also annexes a letter from MPG to the plaintiff confirming that the sum of $200,000 was loaned by the plaintiff to MPG.
That letter is signed by Jeffery Meads on behalf of MPG and it is plain from the affidavit sworn by the defendant in this case that Jeffery Meads, director of MPG, is brother to Rodger Meads, sole director of the plaintiff. According to the defendant, he is also a director of MPG. That is consistent with him signing a letter "for MPG" confirming that the company was loaned the sum of $200,000. This is the same Jeffrey Meads who has purported to witness the defendant's signature to the loan agreement and guarantee.
By affidavit sworn 19 January 2009 Jeffery Meads deposes that he was present with the defendant and Barry Perry and witnessed them sign the loan agreement and guarantee. By affidavit sworn 19 January 2009 Barry Perry deposes that he was present with the defendant and witnessed him sign the loan agreement and guarantee.
The plaintiff's case, then, rests upon evidence that the loan agreement execution deed and loan agreement were signed by the defendant as director of MPG and as guarantor, the money was advanced to MPG, it was not applied for the purpose of the property as agreed and it has not been repaid on the due date. Despite demand the defendant has not paid that sum to the plaintiff in accordance with the guarantee.

Is it clear there is no real issue to be tried?

In his minute of defence the defendant denies having signed the loan execution deed and guarantee. He denies being liable to pay anything under the guarantee and denies the money was loaned to MPG, or to any other entity controlled by him. He also pleads that the loan agreement and guarantee are void for uncertainty and were executed contrary to s 38 Conveyancing Act 1938 (NSW).
The defendant has sworn two affidavits in support of his appeal, neither of which was before the learned Deputy Registrar. I received the affidavits subject to making rulings on admissibility, objection having been taken to many paragraphs in each.
In his affidavit of 11 November 2008, the defendant deposes that the first time he saw the loan agreement and guarantee was when the document was furnished to his solicitor by the plaintiff's solicitor. He states:
"I categorically deny having executed that document in the presence of Jeffrey Meads and the document which purports to have my signature as a director and guarantor is clearly a false document in that it was never remotely signed by me. The signature appearing on the document relied upon by the plaintiff bearing my signature in my own personal capacity as a director of Mayfield is not my signature nor is it even remotely close to my signature …"
The defendant would not be liable under a guarantee he did not sign. If his assertions are true, the loan agreement and guarantee is a false document and he has a complete defence to this claim. His assertions are of course quite contrary to the affidavits of Jeffery Meads and Barry Perry.
No expert handwriting analysis evidence is before the Court, but I am entitled to compare the signatures on the loan agreement and guarantee to those on documents filed in this action and also to a costs agreement between the defendant and Messrs Batemans annexed by the defendant to his affidavit of 11 November 2008.
The signatures on the loan agreement and guarantee are not full signatures, but only initials. That in itself is unusual. The two sets of initials differ from each other in appearance, one being smooth flowing in appearance compared to the other.
The defendant's full signature on the costs agreement bears some resemblance, at least in the initials, to each of the sets of initials on the loan agreement and guarantee, but I am not comparing like with like.
Interestingly, there are noticeable differences between the defendant's signature on the costs agreement and his signatures throughout his affidavit of 11 November 2008, particularly in the final three letters. The "r" in Tomaras is upper case on the costs agreement signature, yet lower case on the affidavit signatures. The "as" is clearly printed in upper case on the costs agreement signature, yet in the affidavit signature the "a" is barely discernible and the "s" a single stroke. The signatures on the defendant's second affidavit of 16 December 2008, however, are very similar to those on the first affidavit. The costs agreement was signed 4 February 2008, after these proceedings had commenced.
I conclude that the defendant does not always sign his signature in identical fashion, whether unconsciously or by design, and that the signature on the loan and guarantee is not his usual full signature. There is also clear variation between the two sets of initials on the same page. I am not of course in a position to determine, from a mere comparison of signatures, whether or not the defendant did initial the loan agreement and guarantee.
The defendant is making a serious allegation against the parties and the witness to the loan and guarantee. That allegation is denied.
An allegation of fraud and forgery is not inherently implausible by its nature. The courts are full of cases, both civil and criminal, in which allegations of fraud are tried. There are issues here which cause me some concern as to the defendant's credibility, in that there is evidence which suggests he is actively delaying the resolution of these proceedings by avoiding service of documents.
As against that, however, the sole director of the plaintiff company is James Meads. The witness to all signatures to the loan and guarantees is Jeffrey Meads, his brother. It is apparent that Jeffrey Meads is also a director of MPG, yet he did not sign the loan agreement as a director and nor did he provide a personal guarantee, unlike the other two directors. The loan agreement enables the plaintiff to pursue the defendant alone for this debt, taking no action against MPG, nor the other guarantor, Mr Perry, who has sworn an affidavit in support of the plaintiff's application for summary judgment against the defendant.
The defendant, in his affidavit of 11 November 2008, asserts that Jeffrey Meads has previously instigated proceedings to wind up one of the defendant's companies, based upon what the defendant asserts was a fictitious agreement to assign a debt from one company to another. He asserts that he disputed the existence of the assignment agreement and that, subsequently, the proceedings to wind up the company were discontinued. This material is objected to on the grounds of relevance, however similar fact evidence is admissible if it tends to prove some fact in issue in the current proceedings and if the defendant asserts a consistent course of conduct on the part of Jeffrey Meads to commence proceedings against him, or one of his companies, based on a fictitious document, the evidence is relevant.
The defendant also asserts that this action by the plaintiff is motivated by a desire to put pressure on him to resolve another ongoing dispute between the defendant and Jeffrey Meads over a valuable property in New South Wales, to which the defendant claims a half-share. Again, this is objected to as irrelevant, but in a matter where forgery and fraud is alleged, any evidence going to prove bad faith on the part of the material witness to the defendant's signature on the critical document is relevant.
Whether any of these assertions will bear close scrutiny is another matter, but the defendant has raised a material dispute as to the facts and the relationship between the sole director of the plaintiff and the witness to the defendant's signature is such that this is a matter which ought to be tried before a court where the evidence can be properly tested in cross‑examination.
It is unnecessary to consider the merits of the other grounds of appeal.

Application for extension of time

The notice of appeal was filed some seven months out of time. The defendant's affidavit of 11 November 2008 purports to address this issue at pars 3 to 12, almost every one of which is the subject of objection. The defendant states that, after being served with the writ on 10 January 2008, he consulted his solicitor in New South Wales who immediately sent a letter to the plaintiff's solicitors. This is objected to on the ground that the defendant does not state the source of his belief that a letter was sent. The letter is annexed. The clear inference is that the source of belief is the solicitor or the file and I overrule that objection. In that letter, the solicitor, Mr Marsh, indicates that he will be absent from his office until 29 January 2008 due to leave.
The defendant states that the solicitors appointed by him in Perth received a letter from Mr Marsh. Objection is taken because the letter is not annexed. I overrule that objection. No reference is made to the content of the letter and accordingly there is no need for the letter to be annexed. The apparent reply from Messrs Batemans, dated 22 January 2008, is annexed. Objection is taken to that letter on the grounds of relevance, but its relevance is to prove that contact had been established with a Perth firm to deal with the proceedings and that the Perth firm had then contacted Mr Marsh. A memorandum of appearance was duly filed.
The defendant deposes that, while he is unaware whether Mr Marsh was absent from his office until 29 January 2008 on leave, he "certainly was advised that he became grievously ill and all matters were then held in abeyance". Objection is taken to this paragraph on the basis that the source of the belief is not stated. Annexed however is a letter from Messrs O'Hara & Company, another New South Wales firm, to Messrs Batemans dated 4 February 2008 stating: "Paul, who is currently ill, has asked us to look at this matter on his behalf". The source of the information should be stated by the defendant, however in the circumstances I am prepared to infer that the source was either Mr Marsh himself, or a representative or staff member of his firm or a member of Messrs O'Hara and that the information was genuine. I overrule that objection.

The paragraphs following however are utterly unsatisfactory. The defendant asserts that:
"While O'Hara and Co were a type of conduit, in reality it was Paul Marsh who had all the facts and figures in order to defeat an application for summary judgment showing that there was an arguable defence. Because of his illness and absence my Western Australian solicitors were unable to file any meaningful affidavit touching and concerning the facts alleged in the statement of claim …"
Objection is taken on the grounds that the source of the belief is not stated. This objection is made good. There is no information as to whether or not Messrs O'Hara were given the defendant's file by Mr Marsh, or not. There is no information given as to whether Mr Marsh provided his client's contact details. There is no material before me as to whether or not Messrs O'Hara ever sought to take instructions from the defendant or whether he ever sought to look to his interest by seeking a progress report or even establishing basic contact with Messrs O'Hara. There is no explanation as to why, if he was capable of providing Mr Marsh with instructions, he was not equally capable of providing Messrs O'Hara with instructions.
These are matters of real concern when the writ in this matter was served by way of substituted service, numerous failed attempts having been made to serve the defendant at the address which he yet continues to cite as his home address. Objection is also taken to the affidavit in support of Mr Calvin Chung Kee Ko, solicitor for the plaintiff, on the grounds that it contains material which is both irrelevant and which has more prejudicial than probative value. The subject matter of the affidavit concerns the bankruptcy proceedings brought by the plaintiff against the defendant on the strength of the judgement obtained in this case and sets out the background behind the plaintiff seeking and obtaining an order for substituted service of the bankruptcy notice, following numerous failed attempts to serve the defendant at that same home address.
I overrule the objection to its admissibility. When the defendant's explanation for a seven month delay raises more questions than it answers, material going to his conduct generally which might tend to prove he has avoided the proceedings is relevant to the Court in determining what weight and credibility to accord his explanation.
The defendant annexes a letter from Mr Marsh to Messrs Batemans dated 7 July 2008. Mr Marsh acknowledges having received Mr Bateman's letter to the defendant of 3 July 2008 (not annexed) and an affidavit. He states: "The difficulties with my health have returned and against that background (the defendant) has instructed new solicitors, details of which are as follows", providing contact details for a Mr Hall.
The defendant states in his affidavit:
"I am advised by my Western Australian solicitors that the only affidavit which could be filed was that of Malcolm James Bateman sworn the 28^th February 2008 …"
Objection is taken on the grounds that the defendant does not state when he was advised of this, nor that he believed it. His affidavit does contain, however, a general paragraph stating that he believes all information referred to from other sources and I do not consider anything turns on when he was informed of this by Messrs Batemans. The implication is that it was in the letter referred to.
But the difficulty with the defendant's assertion is more fundamental. There is no information as to whether Mr Marsh made any attempts to take instructions or have an affidavit sworn prior to his illness returning. No information is given as to whether any attempt was made by anyone to place Mr Bateman in contact with the defendant, directly or indirectly. No information is given as to what, if anything, the defendant was doing during this period and whether he was making any basic attempts to ensure his matter was in hand or whether he was even contactable.
Mr Bateman's affidavit of 28 February 2008, sworn in opposition to the summary judgment application, was the only affidavit material in opposition which was before the learned Deputy Registrar. It is silent on any of these issues. The affidavit simply deposes that Mr Bateman received a letter from Mr Marsh which is annexed and which enclosed the writ, a file note taken by Mr Marsh following a 15 minute conference with the defendant taking instructions and a letter Mr Marsh had written to the plaintiff's solicitors requesting a copy of the loan and guarantee.
Mr Bateman annexed these documents, including the file note, to his affidavit. The truth of the contents of Mr Marsh's file note could not be attested to by Mr Bateman, nor Mr Marsh for that matter. It was hearsay upon hearsay. Mr Bateman appears to have done what he could with the material he then had, none of it attested to by the obvious person who could attest to it, namely the defendant.
Mr Bateman's affidavit is silent as to why no affidavit was filed by the defendant and the defendant's assertion that Mr Bateman informed him that his was the only affidavit that could be filed begs the question.
No explanation is provided in that affidavit by the defendant as to what, if anything, occurred between Mr Marsh's letter of 7 July 2008 providing Mr Bateman with the details of the defendant's new lawyer and 17 November 2008 when the notice of appeal was filed. On the strength of that affidavit alone certainly no or no adequate explanation is offered to account for the seven month delay.
The defendant filed a later affidavit of 16 December 2008. He deposes that:
"In April 2008 I note from the file that Mr Paul Marsh my solicitor at the time was requested on a number of times for further information to be provided in the form of an affidavit from Bateman's Barristers & Solicitors. It was at this time that I was having difficulty communicating with my solicitor Mr Paul Marsh. I was later informed by Mr Marsh that he had been receiving treatment regarding a number of medical issues."
I understand the defendant to be saying that the file reveals that Messrs Batemans were requesting Mr Marsh to obtain an affidavit from the defendant. Objection is taken to this paragraph on the ground that the source is not deposed to but the source is clearly the defendant's own file, whether that be the file held by Mr Marsh or the file held by Mr Bateman. I overrule that objection. Objection is also taken on the ground that the defendant does not state that he believed the information he was given. Again, as is common in affidavits, the affidavit contains a general paragraph asserting that any facts within the defendant's personal knowledge are true and any information provided to him from other sources is believed by him to be true, so I overrule all objections made on that ground.
April 2008 is the critical period during which the appeal should have been lodged. The defendant states that, in May 2008, he decided to change solicitors and consequently requested his file from Mr Marsh but was "told by both Mr Marsh and his secretary that there was some difficulty locating my original files from his office at Strathfield. Subsequently I referred my business to Mr Bruce Hall …". Objection is taken to this paragraph, which is overruled consistent with my previous rulings. This is broadly consistent with the letter from Mr Marsh to Messrs Batemans dated 7 July 2008, annexed to the defendant's prior affidavit, in which Mr Marsh refers to the difficulties with his health having returned and the defendant having now instructed Mr Hall.
The defendant states that his new solicitor informed him that he was having difficulty communicating with Mr Marsh and that Mr Marsh could not locate the file. This is objected to as hearsay, but it is admissible to explain what steps the defendant was taking to look to his own interests in the matter. In any event, the defendant goes on to state that on 4 July 2008 he attended a conference with Mr Marsh and Mr Hall and another during which Mr Marsh confirmed that the file could not be located. There is no explanation as to why it was not until July 2008 that Mr Marsh informed Mr Bateman on the change of representation, but it is apparent that Mr Marsh was suffering an ongoing difficulty with his health that was compromising his ability to attend to his practice and I am prepared to infer that delays in attending to correspondence are likely to have resulted.
There is no satisfactory explanation as to why the defendant's new solicitors did not file a notice of appeal until November 2008. The period July to November is not addressed. No doubt the loss of the file caused inconvenience and delay and duplication of work, but no adequate explanation is before me.
The plaintiff submits that it will be prejudiced by an extension of time being granted to the defendant because it has, since obtaining summary judgment, commenced bankruptcy proceedings against the defendant. An order for substituted service of the bankruptcy notice was obtained in the Federal Magistrates Court on 1 October 2008. As at 16 January 2009, the ensuing creditor's petition had not been served.
Those proceedings will be stalled should the judgment be overturned. Inability to execute the judgment debt, however, is the natural consequence of any successful appeal against the granting of summary judgment. The plaintiff does not point to any further prejudice and there is no reason to think that the delay will cause any material unfairness to the plaintiff at trial.
The discretion to extend time is a broad one. I am satisfied there is an explanation for the notice of appeal being filed late, even substantially late. I consider the explanation as to its being filed so late is lacking. Even in those circumstances, however, there being no prejudice over and above the effect upon the bankruptcy proceedings, where the appeal has merit, failure to grant an extension of time in which to appeal may result in a miscarriage of justice. The merits of the appeal then will determine the issue of time.
Having already found that there is a real issue to be tried, I am prepared to extend the time within which to appeal to 17 November 2008 inclusive and I allow the appeal.