Craig Mostyn and Co Pty Ltd v Atherton - [2004] WADC 227

JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CHAMBERS

LOCATION: PERTH

CITATION: CRAIG MOSTYN & CO PTY LTD -v- ATHERTON & ORS [2004] WADC 227

CORAM: DEPUTY REGISTRAR HARMAN

HEARD: 26 OCTOBER 2004

DELIVERED : 15 NOVEMBER 2004

FILE NO/S: CIV 1563 of 2004

BETWEEN: CRAIG MOSTYN & CO PTY LTD (ACN 000 047 745)
Plaintiff
AND
FRANCIS JOHN ATHERTON
JOSEPH ANTHONY MARTELLA
TERRY MICHAEL FOGLIANI
PETER NORMAN WOOD
JOHN ALAN MORRIS
ALAN ROY HANCOCK
Defendants

Catchwords:

Practice - Western Australia - Practice under the Rules of the Supreme Court of Western Australia (1971) - Application for summary judgment O 14- Case turn on its facts - Issue of leave to defend

Legislation:

Nil

Result:

Application unsuccessful

Representation:

Counsel:

Plaintiff: Mr J R Atkinson
Defendants: Mr M F Rynne

Solicitors:

Plaintiff: Minter Ellison
Defendants: Tottle Partners

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

Moschi v Lep Air Services & Anor [1972] 2 All ER 393

Case(s) also cited:

Whitehall Holdings Pty Ltd v Ravi Nominees Pty Ltd, unreported; SCt of WA; Library No 9189; 13 December 1991
National Australia Bank Ltd v Firewood Processors Pty Ltd [2003] WASC 88

DEPUTY REGISTRAR HARMAN: The plaintiff's claim is founded on the terms of a guarantee and indemnity whereby each of the defendants secured the performance of the terms of a deed by Old Valley Pty Ltd. On the plaintiff's application for summary judgment it carries the onus in satisfying the court that it is appropriate to enter judgment.
The plaintiff pleads that under the deed it agreed to lend $1,000,000 to Old Valley, further that on 28 May 2004 Old Valley's creditors resolved to wind it up. Each of those allegations is deemed to be admitted. At the hearing the defendants submitted that there was uncertainty as to the identity of the lender. I accept that the submission has some resonance, although to be fair the plaintiff probably approached the application on the ground established by the defence. In order to withdraw the admission the defendants would require leave.
The plaintiff goes on to plead that as at 10 June 2004 Old Valley had not repaid the loan and was indebted to the plaintiff for the amount claimed in the action. The defendants respond by raising allegations inconsistent with the allegation of indebtedness. They plead that the loan was repayable on 17 November 2004. I understood that for the purposes of the application at least it was common ground that the term of the loan expressed in the deed was such that repayment was due on 17 November 2004.
The plaintiff's allegation of indebtedness is expressed to be founded on no basis other than that the loan had not been repaid prior to 10 June 2004. I do not know anything about the significance of that date other than that it is the date of the demand sent to the defendants.
The plaintiff then presents allegations against the defendants under the guarantee and indemnity. It pleads that the guarantee provided that upon demand the defendants would pay the amount guaranteed and that on 10 June 2004 it issued demands against each defendant. It contends that it was entitled to do so by reason of the failure of Old Valley to pay the debt.
On the pleading the only mechanism for establishing the obligation of Old Valley as a debt payable to the plaintiff is the resolution. My understanding that the reference to the resolution having been made pursuant to s 439C(c) of the Corporations Law is that it is deemed to be the resolution of Old Valley made in the absence of a declaration of solvency that it be voluntarily wound up. That resolution and its effect may have some significance. I was not informed by the pleading of the mechanism by which the resolution constituted the loan as a debt due and payable. There is no evidence that supports the case for the resolution having the effect of constituting the loan as a debt. During the course of the hearing the plaintiff referred to both the liquidation of Old Valley and its insolvency. There is no evidence to justify either contention.
The plaintiff submitted that the plaintiff's entitlement to future repayment had been replaced by a right to prove a debt. I understand that in the context provided by the process of liquidation there may not necessarily any reason to distinguish the prospect of future indebtedness from present debts. The fact that claimants lodge proofs of debt does not convert a future obligation into a debt presently owed. As to the term insolvency, it is pleaded as being defined by the terms of the guarantee to include winding up. I know nothing more than that the resolution was passed.
The fact that I know nothing about any liquidation of Old Valley to one side, the plaintiff relied on that fact of liquidation of Old Valley as repudiation by Old Valley of the deed and relied on the authority of Moschi v Lep Air Services & Anor [1972] 2 All ER 393. In that case consideration was given to the impact on future payments of the creditor's acceptance of the debtor's repudiation of its contractual obligations. The repudiation was found in the breach of the obligation to make past payments. The case has nothing to say as to whether a resolution to wind up is constituted as repudiation of a future obligation. In the event that a claim was lodged by the plaintiff in the context of winding up it is my understanding that if a determination was made to make payment in respect of a future obligation, that would be in the discretion of the party determining the claim rather than by the establishment of any right to present payment.
The plaintiff also contended that the effect of the resolution was to crystallise the debt. In its usual context the term refers to the identification of assets the subject of a floating charge. In this case the plaintiff contends that the resolution conveyed an immediate right to prove in liquidation. I simply observe that if it is correct and the plaintiff had availed itself of that right, the result would rest in the discretion of the liquidator.
The case put by the plaintiff is that the default of Old Valley founded the demand. I am not persuaded that the plaintiff has satisfied the condition that it pleads for the issue of the demand. It appears to me that on the case put by the plaintiff I ought not be satisfied that it is entitled to judgment.
The defendants provide an evidentiary basis to resist the application for other reasons. The plaintiff at that point sought to rely on contractual provisions precluding set off. It is unnecessary for me to deal with the issue.
Order 14 of the Rules of the Supreme Court of Western Australia (1971) provides an opportunity for a plaintiff to seek judgement at an early stage in an appropriate case. As I indicated at the commencement, the onus is on the applicant. Rule 4 refers to leave being granted to defend. It may account for the body of opinion to the effect that a burden falls on the respondent to establish grounds for the provision of leave. Fundamentally summary judgment is no different to any other interlocutory application; it is for the applicant to satisfy the court that it is appropriate to grant the relief sought. The only onus on the respondent - if one might call it that - is to sufficiently found any submission that it makes in opposition to the application. In my opinion because an applicant seeks an order and fails does not logically bring the result that the court should then focus on the case of the respondent. I was not satisfied that the plaintiff had made out its case for interlocutory judgment accordingly there was no reason to consider the merits of the defendants' case. Be that as it may, having read the affidavit of Alan Roy Hancock of 25 October 2004 I would add by way of a general observation that applicants for summary judgement appear often to overlook the fact that the remedy they seek ultimately is discretionary. The fact that at the point of determining an application for judgment a case that may be described as good, strong or even clear is no more than a consideration to be taken into account in the exercise of that discretion.