Cohen . v Tranquille

[2001] VSC 491

IN THE SUPREME COURT OF VICTORIA Not Restricted

AT MELBOURNE

PRACTICE COURT

No. 8240 of 2001

Yossi Cohen & Anor.	Plaintiffs
v
Ivan Donald Tranquille & Anor.	Defendants

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JUDGE:	Beach J
WHERE HELD:	Melbourne
DATE OF HEARING:	5 December 2001
DATE OF JUDGMENT:	7 December 2001
CASE MAY BE CITED AS:	Cohen & Anor. v Tranquille & Anor.
MEDIUM NEUTRAL CITATION:	[2001] VSC 491

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Guarantee – claim for contribution by one guarantor from another – no present contractual entitlement to contribution – no present right of subrogation – application for injunctive relief refused.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiffs	Mr. G. Lucas	Pryles & Defteros
For the Defendants	Mr. A. Panna	Oakley Thompson & Co.

HIS HONOUR:

1. The plaintiff's case in relation to this proceeding is that the first defendant and he were at all times material directors and shareholders in a company called Yossi Cabinets and Joinery Pty Ltd ("the company"), which was a company established by them to operate a business of manufacturing cabinets.

1. The business commenced in 1999.  On or about 22  November 1999, the National Australia Bank Ltd ("NAB") granted to the company the following financial accommodation; two loans of $70,000 and $50,000 respectively, and a business overdraft with a limit of $100,000.

1. There were terms and conditions of the NAB facilities that they be secured by, firstly, a registered mortgage debenture over the whole of the assets of the company, including goodwill, and uncalled and called, but unpaid capital; secondly, a guarantee and indemnity for $220,000 given by each of the first and second plaintiffs and the first and second defendants, such guarantee and indemnity to be supported by a term deposit letter of set off for $150,000 given to the bank by Yossi and Florence Cohen, and a registered mortgage given by Ivan Donald Tranquille and Marie Federica Tranquille over the property owned by them at 11 Dalgan Street, South Oakleigh, being the land more particularly described in Certificate of Title Volume 6662 Folio 307.

1. On or about 22 November 1999, each of the first and second plaintiffs and the first and second defendants signed guarantees to NAB giving security in the sum of $220,000 by way of guarantee and indemnity for the obligations of the company to NAB.

1. On or about 8 November 1999, the first and second defendants executed a mortgage over the Dalgan Street property to secure the obligations of the company to NAB under the NAB facilities.

1. Pursuant to the terms of the NAB facilities, NAB advanced to the company the sums of $70,000 and $50,000 respectively, and provided a business overdraft to the company with a limit of $100,000.

1. The company made default in respect of the various advances made to it by NAB.  Default notices were served on the plaintiffs and the defendants on 19 April 2001.

1. On 9 March 2001, the company went into liquidation.  Since then the defendants have been negotiating with NAB to come to an arrangement with it concerning their share of the outstanding debt.  As part of that arrangement, it would seem that the first defendant may arrive at a figure the bank is prepared to accept from him and then transfer his half interest in the Dalgan Street property to his wife, the second defendant.  The plaintiffs contend that that could well result in financial loss being suffered by them.

1. That aspect of the matter is dealt with in paragraph  27 of the affidavit of the first plaintiff sworn 31 October 2001, which reads: 

"27. If the half interest as joint tenant of Ivan (Ivan of course being Ivan Donald Tranquille) in the Dalgan Street property is transferred to his wife, Marie (of course who is the second defendant, Marie Federica Tranquille), in circumstances where Marie is asserting that she is not liable to the NAB under or in respect of the Guarantee and Indemnity, then my wife and I will face severe financial loss in terms of the loss of value of our equitable right of contribution, and will face similarly a loss of value of our right to seek statutory contribution from Ivan and Marie Tranquille under Section 52 of the Supreme Court Act."

1. The case for the defendants, on the other hand, is that, by reason of the terms of the guarantee, the plaintiffs have no enforceable right to contribution from the defendants and, again by reason of the terms of the guarantee, have no present right of subrogation.

1. In that regard, the defendants rely upon the provisions of cl 13, 14, 16 and 25 of the Deed of Guarantee and Indemnity.

1. The provisions in question are somewhat lengthy.  I do not propose to set them out in my reasons for judgment.  I have considered them overnight and, having done so, believe that there is much force in the defendants' contentions.

1. But perhaps of more significance is the fact that to make the orders sought may seriously inhibit the bank so far as its rights against the guarantee are concerned, in particular, those spelt out in cl 25 of the guarantee.  cl 25.1 of that clause provides that the bank may exercise its rights, remedies and powers under the guarantee and indemnity in any way the bank considers appropriate and without giving reasons.

1. In my opinion, the court should not make any order in the proceeding which may inhibit the bank in that regard, all the more so when the bank is not a party to the proceeding and has not been heard in relation to the matter.

1. My conclusion, therefore, is that in this case it is not appropriate to grant the injunctive relief sought by the plaintiffs and their application in that regard is refused.

1. I order that the plaintiffs' summons filed in the court on 8 November be dismissed with costs to be taxed, including any reserved costs, and paid by the plaintiffs.

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