Clark v Matton Developments Pty Ltd - [2016] QSC 251

SUPREME COURT OF QUEENSLAND

CITATION:

Clark v Matton Developments Pty Ltd & another [2016] QSC 251

PARTIES:

STEPHEN ROSS CLARK

(applicant)

v

MATTON DEVELOPMENTS PTY LTD
ACN 100 028 340
(first respondent)
GALLOP RESERVE PTY LTD
ACN 010 759 421

(second respondent)

FILE NO:

BS No 10079 of 2016

DIVISION:

Trial Division

PROCEEDING:

Application

ORIGINATING COURT:

Supreme Court at Brisbane

DELIVERED EX TEMPORE ON:

24 October 2016

DELIVERED AT:

Brisbane

HEARING DATE:

24 October 2016

JUDGE:

Douglas J

ORDER:

1. The Court declares that the applicant is entitled to be discharged and exonerated from all liability under the guarantee he executed in favour of Westpac Banking Corporation in or about December 2007 (and the judgment entered against him on 23 August 2011) by payment by the first respondent to the second respondent of the amount owing by the first respondent to the second respondent under a loan agreement entered into between the first respondent and Westpac Banking Corporation in or about December 2007.

2. No order as to costs

CATCHWORDS:

GUARANTEE AND INDEMNITY – RIGHTS OF SURETY – AGAINST PRINCIPAL DEBTOR – where the first respondent purchased a mobile crane – where the purchase was financed by Westpac Banking Corporation – where the first respondent was principal debtor – where Westpac Banking Corporation had a registered charge over all the assets and undertaking of the first respondent, including the proceeds of its insurance policies and debts owed to it – where the applicant, among others, executed a guarantee in favour of Westpac Banking Corporation to guarantee the performance of the first respondent’s obligations – where the mobile crane collapsed and was damaged beyond repair – where the first respondent was refused indemnity by its insurer, CGU Insurance Ltd – where Westpac Banking Corporation obtained default judgment against the applicant for the debt payable under the guarantee – where Westpac Banking Corporation assigned to the second respondent, by deed of transfer, its interests in the debt and guarantees – where the first respondent commenced proceedings in the Queensland Supreme Court against CGU Insurance Ltd seeking indemnity under the insurance policy – where the first respondent was unsuccessful at first instance but successful on appeal in the Queensland Court of Appeal – where special leave has been applied for in the High Court to appeal that decision – where CGU Insurance Ltd was ordered by the Queensland Court of Appeal to pay the first respondent the sum owing under the insurance policy – where it seems likely that the first respondent will not be in possession of funds to meet its obligation as a principal debtor – whether the applicant is entitled to a declaration that he is entitled to be discharged and exonerated from all liability under the guarantee he executed in favour of Westpac Banking Corporation by payment by the first respondent to the second respondent of the amount it owes the second respondent

Rankin v Palmer (1912) 16 CLR 285; [1912] HCA 95, cited
Salcedo v Mawarie…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Clark v Matton Developments Pty Ltd

Details

AGLC: Clark v Matton Developments Pty Ltd [2016] QSC 251
Case: [2016] QSC 251
Decision Date: 24 October 2016

CaseChat Overview and Summary

In the case of Clark v Matton Developments Pty Ltd, the applicant, Mr Clark, sought a declaration that he could be discharged from his liability under a guarantee he executed in favour of Westpac Banking Corporation. The first respondent, Matton Developments Pty Ltd, purchased a mobile crane financed by Westpac Banking Corporation, with Mr Clark among others guaranteeing the first respondent's obligations. The crane collapsed and was damaged beyond repair, and the first respondent was denied indemnity by its insurer, CGU Insurance Ltd. Westpac Banking Corporation obtained default judgment against Mr Clark for the debt payable under the guarantee, and later assigned its interests in the debt and guarantees to the second respondent. The first respondent sought indemnity from CGU Insurance Ltd under its insurance policy, initially unsuccessfully in the Queensland Supreme Court, but successfully on appeal in the Queensland Court of Appeal. CGU Insurance Ltd was ordered to pay the first respondent the sum owing under the insurance policy. Special leave has been applied for in the High Court to appeal that decision, and it seems likely that the first respondent will not be in possession of funds to meet its obligation as principal debtor.

The legal issues the court had to address involved the rights of a surety, specifically whether Mr Clark could be discharged from his liability under the guarantee by payment by the first respondent to the second respondent of the amount owing by the first respondent to the second respondent under the loan agreement. The court had to consider the terms of the guarantee, the effect of the assignment of the debt and guarantees by Westpac Banking Corporation to the second respondent, and the interplay between the obligations of the principal debtor, the surety, and the lender.

The court found that the guarantee was absolute and unconditional, and the assignment of the debt and guarantees by Westpac Banking Corporation to the second respondent did not affect the surety's right to be discharged by payment by the principal debtor. The court held that Mr Clark was entitled to be discharged and exonerated from all liability under the guarantee by payment by the first respondent to the second respondent of the amount owing by the first respondent to the second respondent under the loan agreement. The court emphasised that the surety's right to be discharged by payment by the principal debtor was not dependent on the principal debtor's ability to pay, but rather on the principal debtor's obligation to pay. The court held that the first respondent's obligation to pay the second respondent was not affected by its inability to obtain indemnity from its insurer or by any other circumstance. The court made a declaration that Mr Clark was entitled to be discharged and exonerated from all liability under the guarantee by payment by the first respondent to the second respondent of the amount owing by the first respondent to the second respondent under the loan agreement. The court did not make any order as to costs.

Orders

Orders of the court

1. The Court declares that the applicant is entitled to be discharged and exonerated from all liability under the guarantee he executed in favour of Westpac Banking Corporation in or about December 2007 (and the judgment entered against him on 23 August 2011) by payment by the first respondent to the second respondent of the amount owing by the first respondent to the second respondent under a loan agreement entered into between the first respondent and Westpac Banking Corporation in or about December 2007.

2. No order as to costs

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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CITATION:	Clark v Matton Developments Pty Ltd & another [2016] QSC 251
PARTIES:	STEPHEN ROSS CLARK (applicant) v MATTON DEVELOPMENTS PTY LTD ACN 100 028 340 (first respondent) GALLOP RESERVE PTY LTD ACN 010 759 421 (second respondent)
FILE NO:	BS No 10079 of 2016
DIVISION:	Trial Division
PROCEEDING:	Application
ORIGINATING COURT:	Supreme Court at Brisbane
DELIVERED EX TEMPORE ON:	24 October 2016
DELIVERED AT:	Brisbane
HEARING DATE:	24 October 2016
JUDGE:	Douglas J
ORDER:	1. The Court declares that the applicant is entitled to be discharged and exonerated from all liability under the guarantee he executed in favour of Westpac Banking Corporation in or about December 2007 (and the judgment entered against him on 23 August 2011) by payment by the first respondent to the second respondent of the amount owing by the first respondent to the second respondent under a loan agreement entered into between the first respondent and Westpac Banking Corporation in or about December 2007. 2. No order as to costs
CATCHWORDS:	GUARANTEE AND INDEMNITY – RIGHTS OF SURETY – AGAINST PRINCIPAL DEBTOR – where the first respondent purchased a mobile crane – where the purchase was financed by Westpac Banking Corporation – where the first respondent was principal debtor – where Westpac Banking Corporation had a registered charge over all the assets and undertaking of the first respondent, including the proceeds of its insurance policies and debts owed to it – where the applicant, among others, executed a guarantee in favour of Westpac Banking Corporation to guarantee the performance of the first respondent’s obligations – where the mobile crane collapsed and was damaged beyond repair – where the first respondent was refused indemnity by its insurer, CGU Insurance Ltd – where Westpac Banking Corporation obtained default judgment against the applicant for the debt payable under the guarantee – where Westpac Banking Corporation assigned to the second respondent, by deed of transfer, its interests in the debt and guarantees – where the first respondent commenced proceedings in the Queensland Supreme Court against CGU Insurance Ltd seeking indemnity under the insurance policy – where the first respondent was unsuccessful at first instance but successful on appeal in the Queensland Court of Appeal – where special leave has been applied for in the High Court to appeal that decision – where CGU Insurance Ltd was ordered by the Queensland Court of Appeal to pay the first respondent the sum owing under the insurance policy – where it seems likely that the first respondent will not be in possession of funds to meet its obligation as a principal debtor – whether the applicant is entitled to a declaration that he is entitled to be discharged and exonerated from all liability under the guarantee he executed in favour of Westpac Banking Corporation by payment by the first respondent to the second respondent of the amount it owes the second respondent Rankin v Palmer (1912) 16 CLR 285; [1912] HCA 95, cited Salcedo v Mawarie…