Commonwealth Bank of Australia v Usalj

[2010] NSWSC 1105

CITATION:	Commonwealth Bank of Australia v Usalj [2010] NSWSC 1105 This decision has been amended. Please see the end of the judgment for a list of the amendments.
HEARING DATE(S):	23 September 2010
JURISDICTION:	Equity Division Commercial List
JUDGMENT OF:	McDougall J at 1
EX TEMPORE JUDGMENT DATE:	23 September 2010
DECISION:	I dismiss with costs the notice of motion filed on 22 September 2010 for the first second, third, fifth and seventh defendants.
CATCHWORDS:	CONTRACTS – guarantees – enforcement – where plaintiff bank sues remaining defendants pursuant to guarantees given by them for liabilities of a company – where remaining defendants led no evidence to prove substantive defences – where remaining defendants withdrew and took no further part in proceedings – whether guarantees executed – whether relevant mortgages executed – whether bank made demand on defendants – whether each of defendants honoured obligation pursuant to any demand – plaintiff entitled to judgment against each defendant – no question of principle.
LEGISLATION CITED:	Australian Securities and Investments Commission Act 2001 (Cth) Contracts Review Act 1980 (NSW) Real Property Act 1900 (NSW) Trade Practices Act 1974 (Cth)
CATEGORY:	Procedural and other rulings
PARTIES:	Commonwealth Bank of Australia (Plaintiff) Joseph Usalj (First Defendant) Filomena Usalj (Second Defendant) Domenic Jason Usalj (Third Defendant) Craig Michael Frankland (Fourth Defendant) Antoinette Frankland (Fifth Defendant) Simon Robert Usalj (Sixth Defendant) Janine Ann Usalj (Seventh Defendant)
FILE NUMBER(S):	SC 2009/298731
COUNSEL:	S W Aspinall (Plaintiff) L M Wilson (First, Second, Third, Fifth and Seventh Defendants)
SOLICITORS:	Henry Davis York (Plaintiff) Clamenz Corporate Lawyers (First, Second, Third, Fifth and Seventh Defendants)

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
COMMERCIAL LIST

McDOUGALL J

23 September 2010 (ex tempore – revised 23 September 2010)

2009/298731 COMMONWEALTH BANK OF AUSTRALIA v JOSEPH USALJ

JUDGMENT

1 HIS HONOUR: The first plaintiff (the bank) sues the first, second, third, fifth and seventh defendants (the remaining defendants) pursuant to guarantees that the bank says were given by them for the liabilities to the bank of a company known as Carlton Sheet Metal Pty Ltd (the company). The essential defences to the bank's claim rely on the Contracts Review Act 1980 (NSW) and unconscionable conduct, either pursuant to the general law, or the Trade Practices Act 1974 (Cth), or Australian Securities and Investments Commission Act 2001 (Cth). In the case of the second defendant, there is an additional defence of non est factum.

2 In respect of the substantive defences that I have outlined, it is the remaining defendants who bear the onus of proof. They have led no evidence. The reason for that is that they applied for an adjournment of today's hearing and, upon that adjournment being refused, withdrew and took no further part in the proceedings.

3 It is however, necessary that I be satisfied of the elements of the bank's claim, to the extent that it is not admitted.

4 The evidence is contained in two affidavits sworn by Mr Robert Charles Ralston, a manager in the employ of the bank, and in an exhibit referred to in the first of those affidavits.

5 On the basis of the admissions and, to the extent that there are no admissions, the evidence, I am satisfied that the bank entered into the relevant facility agreements with the company, and that the company has made default and that the current indebtedness of the company to the bank exceeds $6.4 million.

6 I am also satisfied that each of the remaining defendants executed a guarantee of the company's indebtedness to the bank, and that, when the amount of the facility was renegotiated, each of them executed an acknowledgment that his or her liability as guarantor extended to the facility as so varied.

7 The remaining defendants gave security to the bank by mortgage over real estate in support of their guarantees. There are three properties involved. I am satisfied that, to the extent that any of the remaining defendants was a proprietor of any of the properties, each executed the relevant mortgages. Each mortgage has been registered.

8 I am satisfied that the bank made demand on each of the defendants, both pursuant to the guarantee (as varied) given by him or her and pursuant to section 57(2)(b) of the Real Property Act 1900 (NSW). In each case, the demand was for the maximum amount guaranteed, $5,360,000. It follows, from what I have said earlier as to the present state of the company's indebtedness to the bank, that the full amount of the guarantees is liable to be called upon.

9 I am satisfied that none of the remaining defendants has honoured his or her obligation pursuant to any demand made upon him or her. To the extent that it matters, it is probably the case that the guarantees will be performed only to the extent that the real property securities enable that to happen.

10 For those reasons, I am satisfied that the bank is entitled to judgment against each guarantor in the amount claimed, $5,360,000, together with interest from the date of demand until the present date. On the basis of Mr Ralston's second affidavit, I am satisfied that interest amounts to $334,706.30, so that the total amount for which judgment is to be entered, as at today's date, is $5,694,706.30.

11 The bank seeks costs on the indemnity basis. It relies on clause 5 of each of the guarantees, which requires the guarantor to pay on demand, "our reasonable expenses of enforcing this guarantee". Mr Aspinall of counsel, for the bank, submits that because indemnity costs are all costs that are not unreasonably incurred, that implicitly extends to indemnity costs.

12 In the absence of a contradictor, I do not feel sufficiently confident about that claim to accept it. It is often said that costs on the ordinary basis are the reasonable costs, as between the parties, of the steps taken by the litigant who is entitled to costs. It could be thought that the reference to "reasonable expenses" was intended to comprehend costs on that basis. To my mind, if the bank wished to draw to the attention of guarantors that it was looking to be fully indemnified for all expenses incurred by it in taking enforcement action, it could have done so by express and clearer words.

13 Whilst I do not decide that clause 5 is limited to costs on the ordinary basis, I am not, as present advised, satisfied that it goes beyond that.

14 I direct entry of judgment for the first plaintiff against each of the first, second, third, fifth and seventh defendants in the sum of $5,694.706.30, inclusive of interest until today's date.

15 I make orders in accordance with paragraphs 4, 5 and 6 of the form of

order initialled by me and dated today's date.

16 I grant leave in terms of paragraph 7.

17 I make an order in accordance with paragraph 8, as amended.

18 The exhibit should remain with the file.

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