Crows Nest Retail Pty Ltd v Sanchez
[2012] NSWSC 1019
•03 September 2012
Supreme Court
New South Wales
Medium Neutral Citation: Crows Nest Retail Pty Ltd v Sanchez [2012] NSWSC 1019 Hearing dates: 16 August 2012 Decision date: 03 September 2012 Jurisdiction: Equity Division Before: Hallen AsJ Decision: (a) Verdict and judgment for the Plaintiffs against the first Defendant for $2,313,342.86, plus interest from 7 November 2011 pursuant to s100 of the Civil Procedure Act 2005.
(b) Verdict and judgment for the Plaintiffs against the second Defendant for $2,313,342.86, plus interest from 7 November 2011 pursuant to s 100 of the Civil Procedure Act 2005.
(c) Verdict and judgment for the Plaintiffs against the third Defendant for $2,100,000, plus interest from 16 November 2011, pursuant to s 100 of the Civil Procedure Act 2005.
(d) The Defendants to pay the Plaintiffs' costs as agreed or assessed.
(e) Order that the exhibits be returned.
(f) Stand over the balance of the proceedings to the Registrar's list on a date suitable to counsel.
Catchwords: PRACTICE AND PROCEDURE - summary judgment application - r. 13.1 Uniform Civil Procedure Rules 2005 - no triable issue in case against first three Defendants - orders for summary judgment made Legislation Cited: Civil Procedure Act 2005
Uniform Civil Procedures Rules 2005Cases Cited: Agar v Hyde [2000] HCA 41; (2000) 201 CLR 552
Batistatos v Roads and Traffic Authority (NSW) [2006] HCA 27; (2006) 226 CLR 256
Baulderstone Hornibrook Pty Ltd v HBO & DC Pty Ltd [2001] NSWSC 821
General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125
Hawker Noyes Equipment Pty Limited v Dueeasy Pty Limited (NSWCA, 18 July 1996, unreported)
Knight v Wilson [2008] NSWSC 1083
Quality Bakers Australia Pty Ltd v Yassin Modern Bakery Pty Ltd (t/a Yassin Lebanese Bakery) [2007] NSWSC 804
Sidebottom v Cureton (1937) 54 WN (NSW) 88
Spencer v Commonwealth [2010] HCA 28; (2010) 241 CLR 118
Theseus Exploration NL v Foyster (1972) 126 CLR 507
Wallingford v Mutual Society (1880) LR 5 App Cas 685
Wickstead v Browne [1992] NSWCA 272; (1992) 30 NSWLR 1Category: Procedural and other rulings Parties: Crows Nest Retail Pty Ltd (Receivers & Managers Appointed) (In Liquidation) ACN 126 435 881 (first Plaintiff)
Bank of Western Australia Limited ACN 050 494 454 (second Plaintiff)
Christian Michael Sanchez (first Defendant)
Michael Angel Sanchez (second Defendant)
Kate A Sanchez (third Defendant)Representation: Counsel:
Mr P Newton (Plaintiffs)
Mr B A Jacobs (first, second & third Defendants)
Solicitors:
Gadens Lawyers (Plaintiffs)
Landerer & Company Solicitors (first, second & third Defendants)
File Number(s): 2011/385211
Judgment
The Claim
HIS HONOUR: By amended Notice of Motion filed 2 July 2012, the Plaintiffs seek orders, including an order that the "amended Points of Defence", filed 13 June 2012, be struck out and an order that judgment be entered for them against the Defendants, in terms of the final relief claimed in the Amended Summons filed 15 December 2011 and on their Points of Claim filed on 15 February 2012. (I propose to treat the document headed "Points of Claim" as a Statement of Claim and the document headed "Points of Defence" as a Defence.) There has been no Cross-Claim filed by, or on behalf of, any of the Defendants. In the alternative, they seek an order that the Plaintiffs have leave to file and serve a further amended Summons.
At the hearing of the amended Notice of Motion, the Plaintiffs sought leave to file a further amended Summons in substantially the same form as a document annexed to the amended Notice of Motion. Importantly, in the proposed further amended Summons, there are two additional Defendants named and relief is sought against each of them as well.
At the hearing, the three original Defendants appeared by counsel. There was no appearance by, or on behalf of, the additional proposed Defendants and the Plaintiffs were unable to prove service of the amended Summons on them.
The original Defendants did not object to the Court granting leave to the Plaintiffs to file the further amended Summons in Court and upon the basis, which was acknowledged, that the Plaintiffs were not to proceed on the application against the added Defendants, I granted leave to file the amended Summons. In the circumstances, hereafter, I shall refer to the three original Defendants as "the Defendants".
In the further amended Summons, as filed, the Plaintiffs relevantly seek the following final relief:
"The plaintiffs claim:
1.A declaration that the payment in the sum of $2,313,342.86 made by Sunbac Pty Limited trading as Silver & Co Real Estate Agents (Silver & Co) on 7 December 2011 to the first defendant was made in breach of trust (Payment).
2.Further, or in the alternative, the Payment was subject to a charge in favour of the second plaintiff.
3.Further, or in the alternative, a declaration that the second defendant was acting in breach of the fiduciary duties that he owed to the first plaintiff when he directed Silver & Co to make the Payment to the first defendant.
4.A declaration that the first defendant holds the funds the subject of the Payment on trust for the plaintiffs.
5.A declaration that the third defendant holds funds totalling $1,900,000.00 $2,100,000.00 on trust for the plaintiffs.
5.6.An order that the first defendant account to the plaintiffs for the Payment.
7.An order that the third defendant account to the plaintiffs for the amount of $1,900,000.00 $2,100,000.00.
6.8.Equitable compensation.
7.9.Damages as against the first defendant in the sum of $2,313,342.86.
8.10.Damages as against the second defendant in the sum of $1,900,000.00.
9.11.A declaration that the fourth defendant holds funds totalling $100,000.00 on trust for the plaintiffs.
10.12.An order that the fourth defendant account to the plaintiffs for the amount of $100,000.00.
11.13.A declaration that the fifth defendant holds funds totalling $100,000.00 on trust for the plaintiffs.
12.14.An order that the fifth defendant account to the plaintiffs for the amount of $100,000.00.
8.15.Such further or other orders as the nature of the case may require.
9.16.Costs."
The Plaintiffs, in support of the application, read and relied upon:
(a) the affidavit sworn 30 November 2011 of Christopher Hill. They tendered the exhibit marked "CH 1" to that affidavit (Ex A);
(b) the affidavit sworn 2 December 2011 of Karina Elizabeth Carter.
(c) the affidavit sworn 11 December 2011 of Nicole Tartaglia. They tendered the exhibit marked "NT1" to that affidavit (Ex B);
(d) the affidavit sworn 21 May 2012 of Charles James Fletcher Perry. They tendered the exhibit marked "CP1" to that affidavit (Ex C); and
(e) the affidavit sworn 21 May 2012 of Karina Elizabeth Carter. They tendered the exhibit marked "KEC1" to that affidavit (Ex. D).
The Defendants took no objection to any part of the affidavits or the Exhibits. None of the deponents of the affidavits was cross-examined.
The Defendants read no evidence in opposition to the Plaintiffs' claims.
In submissions provided by counsel for the Defendants on the morning of the hearing, there was reference to the Defendants wishing to make an amendment to their "Points of Claim". This was clearly a typographical error and should have referred to the Points of Defence. In addition, reference was made in the submissions to withdrawing certain admissions made by the first Defendant in the Points of Defence.
However, counsel made no application for an adjournment and did not rely upon any notice of motion, any affidavit in support, and did not provide any proposed amended Points of Defence. Nor was there any specific reference, otherwise, to the admissions sought to be withdrawn and the reasons why such withdrawal should be permitted. (I do not say this critically of counsel for the Defendants since he informed me that he had very recently been instructed in the matter.)
The Background
The following facts are, in my view, established by admissions, or on the unchallenged, and undisputed, evidence read on the application.
The first Plaintiff, Crows Nest Retail Pty Limited (Receivers and Managers Appointed) (Administrators Appointed) ("the Company"), was, at all material times until about 4 November 2011, the registered proprietor of a property situated at Willoughby Road, Crows Nest, in the State of New South Wales ("the Property").
The second Plaintiff, Bank of Western Australia Ltd ("Bankwest") is, and was at all relevant times, licensed to carry on the business of a bank. It was also the registered mortgagee of the Property.
The first Defendant is the son of the second Defendant and the husband of the third Defendant.
The second Defendant is, and was at all material times, the sole director, secretary, and shareholder, of the Company.
The third Defendant is the wife of the first Defendant and the daughter-in-law of the second Defendant.
Each of the proposed fourth and fifth Defendants is a child of the first and third Defendants.
By Fixed and Floating Charge dated 31 October 2007, the Company charged to Bankwest all of its rights, property and undertaking of whatever kind and wherever situated on the terms set out in the Fixed and Floating Charge ("the Charge").
The Charge included the following terms:
(a) For the purpose of securing to Bankwest payment of the amount owing (defined to mean all moneys which the Company owes, or may owe, to Bankwest), the Company charges the charged property (defined to mean all of the Company's rights, property and undertaking of whatever kind and wherever situated and whether present or future) to Bankwest [Clause 2].
(b) The Charge was fixed over all present and future:
(i) capital;
(ii) goodwill;
(iii) estates and interest in land, including each fixture, structure or improvement on land or fixed to it;
(iv) plant and machinery;
(v) securities, documents of title;
(vi) books of account, invoices, statements, ledger cards, computer software and records and other media relating to the Company's business transactions;
(vii) interests in personal property; and
(viii) any other property if Clause 3.3 of the Charge said the Charge was to be fixed over that property [Clause 3.1].
(c) The Charge was floating over all the other charged property [Clause 3.2].
(d) Where the Charge was floating (whether under the terms of the Charge or at law), it immediately and automatically became fixed:
(i) over any charged property affected if the Company breached an obligation under Clause 9;
(ii) over any charged property over which the Charge was floating that the Company dealt with except in the ordinary course of its business; and
(iii) if the law provided that the Charge became fixed [Clauses 3.3 (b)(i), 3.3(f) and 3.3(g)].
(e) Without Bankwest's consent, the Company could not, and could not agree to, do any of the following in respect of charged property over which the Charge was fixed:
(i) sell or dispose of it;
(ii) part with possession of it; and
(iii) deal in any other way with it, or any interest in it, or allow any interest in it to arise or be varied [Clause 9.2(a), 9.2(c) and 9.2(g)].
(f) Without Bankwest's consent, the Company could not, and could not agree to, do anything in Clause 9.2 in respect of the charged property over which the Charge was floating except in the ordinary course of business [Clause 9.3].
(g)Money received under the Charge was to be used towards paying the amount owing unless Bankwest was obliged to pay the money to anyone with a prior claim [Clause 21.1].
(h)The Company was to pay Bankwest the amount owing in full without set off, counterclaim or deduction [Clause 24.1].
(i)The maximum of the Charge was $54,000,000.
On 2 November 2007, a notice in respect of the Charge on the property of the Company was lodged with the Australian Securities and Investments Commission. A Certificate of Entry of the Charge in the Australian Register of Company Charges, in favour of Bankwest, is dated 17 November 2007.
On 31 October 2007, the Company granted the Mortgage over the Property to Bankwest, which Mortgage was lodged for registration on the title to the Property on 27 November 2007.
From about October 2007, Bankwest advanced money and provided financial accommodation to the Company.
By contract for the sale of land dated 1 July 2011, the Company agreed to sell the Property for $18,225,000 to Coles Group Property Developments Limited. The contract was entered into without the specific consent of Bankwest but it is clear that Bankwest was subsequently informed that the contract had been entered into. It did not, thereafter, oppose the sale of the Property.
Under cover of letter dated 2 November 2011, Bankwest's solicitors sent a Demand for $28,773,582.74 to the Company. There is a dispute whether the Company and/or the second Defendant received the letter and Demand. However, I do not think that anything turns on this, since there is no dispute that, as at the date of settlement of the contract for sale of the Property, Bankwest was owed more than the total of the amount it ultimately received ($14,579,539.59) and the amount that is the subject of the present dispute ($2,313,342.86).
The day before the completion of the contract for the sale of the Property, Bankwest was sent a draft settlement statement, by the Company's solicitors, that identified the proceeds of sale, that a cheque for $462,000 was to be drawn to pay the real estate agent's commission on sale, and that a cheque for $1,693,842.86 was to be drawn to pay the Australian Taxation Office for GST said to be incurred by the Company on the sale. (I infer these facts from the draft settlement statement that identified the two cheques, each to be drawn in favour of the Company, to enable it to pay those expenses.)
Prior to settlement, but on 4 November 2011, the second Plaintiff's solicitor received "the latest version of the settlement sheet" which showed the cheques to be drawn on settlement. Relevantly, two cheques were to be drawn in favour of the Company, one for $462,000 and the other for $1,676,342.86. (No reference in this document was made to the real estate agent or to the ATO as the entities to which the Company would pay these amounts.)
(In each of the emails, there was also a reference to a cheque to be drawn for $450,000 in favour of the Company's solicitors. This aspect is not relevant to any issues the Court needs to decide on this application, although a reference to this is necessary in light of what is stated in the next paragraph.)
In a letter dated 4 November 2011, Bankwest's solicitors wrote to the Company's solicitors in the following terms:
"...
We refer to your emails of yesterday (2:39pm and 4:22pm).
Despite your emails we remain of the view that a $450,000 deduction from the sale proceeds for acting on the sale of the shopping centre is an excessive charge.
We further note that unless this amount is deducted you will do no further work and will claim a lien over your files.
A lien will clearly jeopardise the sale.
In these circumstances we have been instructed that our client will, under protest, provide a discharge of mortgage at settlement scheduled for 2:30pm today. Our client's decision to provide a discharge is in no way to be construed as its consent to or approval of your firm's fees. Rather our client is reserving its rights.
The settlement sheet
As you are aware, the settlement sheet was provided at 4:22pm yesterday.
We received another email from your office this morning, allowing us until 10am to "confirm" the figures otherwise we are told that settlement will not be proceeding.
Our client has not had sufficient opportunity to consider its position in relation to the draft settlement sheet. For example it has not had the opportunity to verify that the proposed deductions from the sale proceeds are reasonable.
Accordingly, we are instructed to attend settlement and provide a discharge under protest. The discharge is not to be construed in any way as our client's consent to the settlement sheet or the transactions set out in the settlement sheet. Rather our client is reserving its rights."
There is no suggestion that the Company's solicitors did not receive the letter.
Later, on 4 November 2011, completion of the contract for the sale of the Property occurred, and after the payment of council rates, water rates, land tax, allowances for fees, rental adjustments, stamp duty and the payment of $450,000 to the Company's solicitors, bank cheques were drawn from the settlement proceeds and made payable as shown:
(a)
to Crows Nest Retail Pty Limited
$ 462,000.00
(b)
to Crows Nest Retail Limited
$ 1,676,342.86
(c)
to Crows Nest Retail Limited
$ 175,000.00
(d)
to Bankwest
$14,579,539.59
There is no evidence about the reasons why the cheque for $175,000 was drawn in favour of the Company. It had not been referred to previously in either of the settlement sheets that had been sent.
The amount received by Bankwest was insufficient to satisfy the whole of the debt then due by the Company. As at 18 November 2011, the "shortfall" was alleged to be $17,138,142.36.
At about 5:00 p.m. on 4 November 2011, that is to say following completion of the sale, Bankwest, pursuant to the Charge, appointed Brett Lord and Christopher Hill as receivers and managers of the Company.
Following completion of the sale, the second Defendant, on behalf of the Company, forwarded the three cheques drawn in favour of the Company to Richard Perry of Silver & Co, Property Consultants, who was instructed "to deposit these into your trust account". Once the cheques had cleared, Mr Perry was instructed to "draw one cheque as directed by me".
On 7 November 2011, the three cheques were deposited into the trust account of "Sunbac Pty Limited, trading as Silver & Co". On the same day, a bank cheque for $2,313,342.86 was drawn from that trust account and made payable to the first Defendant.
The three Defendants admitted that:
(a) The amount of $2,313,342.86 held in the trust account of Silver & Co, was property of the Company;
(b) The amount held by Silver & Co was charged by the Company to Bankwest.
(c) The second Defendant was, or ought reasonably to have been, aware, that the amount held by Silver & Co was property of the Company that was charged by the Company to Bankwest; and
(d) The total amount of the balance then owed by the Company to Bankwest exceeded the amount held by Silver & Co and that the second Defendant was, or ought reasonably to have been, aware, of that fact.
The bank records of the first Defendant reveal that on 7 November 2011, the amount of $2,313,342.86 was deposited into his account with St George Bank ("the first St George account"). Clearly, the amount deposited into the first St George account was derived from the proceeds of sale of the Property (albeit that the cheque deposited was one drawn on the account of Sunbac Pty Limited trading as Silver & Company.
On 8 November 2011, the first Defendant:
(a) withdrew $1,000,000 from the first St George account and deposited it into another account held in his name ("the second St George account"); and
(b) transferred $1,300,000 from the first St George account into the second St George account.
On 9 November 2011, from the deposit of $1,300,000 in the second St George account:
(a) the first Defendant transferred $400,000 into another account in the name of the first Defendant ("the third St George account"); from which it was then paid into an account in the name of the third Defendant ("the fourth St George account"); and then from that account into an account in the name of the proposed fourth Defendant ("the fifth St George account").
(b)the first Defendant transferred $200,000, into the third St George account; from which it was then paid, as to $100,000 into an account in the name of the proposed fifth Defendant ("the sixth St George account") and as to $100,000 into the name of the proposed fifth Defendant ("the seventh St George account").
On 10 November 2011, the first Defendant transferred from the deposit of $1,000,000 in the second St George account, two amounts, each of $500,000, into the third St George account, from which account both amounts were then paid into the fourth St George account.
On 11 November 2011:
(a) the first Defendant transferred $700,000 from the second St George account (the balance of $1,300,000) into the third St George account;
(b) $100,000 was transferred from the sixth St George account into an account held by the fifth Defendant with St George Bank ("the eighth St George account").
(c)$100,000 was transferred from the seventh St George account into an account held by the fourth Defendant with St George Bank ("the ninth St George account").
On 12 November 2011, the first Defendant transferred $950,000 from the fourth St George account into the fifth St George account. (There is a dispute whether the third Defendant participated in this transaction.)
On 12 November 2011, the first Defendant also transferred $700,000 from the third St George account into the fourth St George account. (There is a dispute whether the third Defendant participated in this transaction.)
On 16 November 2011, $650,000 was transferred from the fourth St George account into the fifth St George account.
The third Defendant gave no value for the transfer to her of $2,100,000 ($400,000, $500,000, $500,000, $700,000) that was transferred from the third St George account into the fourth St George account.
The bank records that were tendered reveal that, as at 16 November 2011, the amount held in the fourth St George account was $100,000; the amount held in the fifth St George account was $2,000,000; the amount held in the eighth St George account was $100,000; and that the amount held in the ninth St George account was $100,000.
On 22 November 2011, the Company was placed into voluntary administration.
On 27 February 2012, the Company was placed into liquidation.
By letter dated 25 November 2011 from the Plaintiffs' solicitors to Levitt Robinson, Solicitors, the Plaintiffs demanded payment of $2,313,342.86 from the first Defendant.
The first Defendant has failed to repay the amount demanded or any part of it.
Ms Carter, who is a solicitor with the conduct of the proceedings on behalf of the Plaintiffs, in her Affidavit of 21 May 2012, stated:
"...
The Defendants have no defence to the plaintiffs' claim
16. Having regard to:
(a) the banking records and other documents produced by St George Bank/Westpac Banking Corporation under the Subpoenas to Produce, and my understanding of what those records disclose;
(b) the admissions made by the defendants in their Points of Defence.
...
I believe that none of the defendants have any defence to plaintiffs' claim and, as a result, their Points of Defence cannot be sustained."
Generally, the Defendants did not dispute that there was evidence of the facts on which the Plaintiffs' claim against each of the first, second and third Defendants was based. Nor did they dispute that Ms Carter was a "responsible person" who had stated her belief that the Defendants had no defence to the Plaintiffs' claims.
Allegations in the amended Defence
The positive allegations pleaded in the Amended Defence by the Defendants are:
(a) The advances made and the financial accommodation provided were subject to terms and conditions, one of which was the obtaining of development consent for the Property, which development consent would benefit the Company and the second Defendant, because the value of the Property would, thereby, be increased.
(b) The first Defendant, with the knowledge of Bankwest, provided services to the Company and gained for the benefit of the Company, the second Defendant, and Bankwest, a development approval of the Property [Paragraph 11].
(c) The first Defendant was entitled, in equity, to be reimbursed for the benefit as provided, either as provided in contract, or by way of quantum meruit against unjust enrichment [Paragraph 12].
(d) The sale of the Property was with the benefit of the development approval obtained through the services of the first Defendant [Paragraph 14].
(e) Prior to the Company and the first and second Defendants obtaining vacant possession of the Property, Bankwest demanded that a sale of the Property be effected by exchange on the best terms available, failing which Bankwest, would enter into possession and/or appoint a Receiver and Manager to the Company and sell the Property [Paragraph 16].
(f) The conduct of Bankwest in making the demands and conduct associated therewith was in breach of alleged terms of the Charge to act in good faith and to act reasonably [Paragraphs 8 and 18].
(g) By reason of the conduct of Bankwest, the Company and the second Defendant suffered loss and damage that may be set off against the sum alleged to be owing [Paragraph 19].
(h) Upon settlement of the sale of the Property, the Australian Taxation Office was entitled to a sum for GST upon the next Business Activity Statement return being lodged, which sum was to be held until then and not be paid to Bankwest [Paragraph 38].
(i) Upon settlement of the sale of the Property, the first Defendant was entitled to a sum of $1,374,005.57 for prior services rendered, either by agreement or by quantum meruit [Paragraph 39].
Finally, in paragraph 66 of the Points of Defence, it is alleged that Bankwest has claimed more than the amount due pursuant to guarantees, and in particular has claimed for all sums said to be outstanding from guaranteed debts without reducing the sum claimed to be limited in equity to the proportionate amount due from that party alone. No particulars have been provided. It is then said that "further particulars ... will be provided".
Submissions
In relation to the positive allegations made in (a) to (h) above, the Plaintiffs submit that these matters do not constitute a reasonably arguable defence to the claim made by the Plaintiffs. They submit that, even if the first Defendant did provide the alleged services to the Company pursuant to an unspecified contract, even if he did render invoices to the Company in respect of those services, and thereby became a creditor of the Company, he is an unsecured creditor, with the effect that the first Defendant's claim does not take priority over the amounts secured by the Charge.
They also submitted that each of the invoices relied upon for the work said to have been done, was an invoice which was later in time than the date of the Charge and/or the Mortgage. It followed that the claim of the first Defendant did not take priority and that he was not entitled to be paid out of the property of the Company before the debt owed to Bankwest had been satisfied.
The Plaintiffs also submit that by making demands and exercising its rights under the Charge, the second Plaintiff could not be in breach of any alleged implied duty to act in good faith and to act reasonably.
It is also clear that:
(a) the amount to which the ATO might have been entitled was never paid to it by the Company, but was retained by persons who had no claim against the Company;
(b) the amount that the first Defendant received was far greater than the amount that he claimed.
(c) none of the other Defendants has asserted any claim that entitles her, or him, to the amount which was paid to her, or him, and there is no other consideration asserted entitling her or him to retain the moneys paid.
In relation to Paragraph 66 of the Defence, the Plaintiffs submit that the allegation does not address the Plaintiffs' claim and does not constitute an arguable defence having regard to the facts that the claim in the Amended Summons is confined to orders relating to the disbursement of the sum of $2,313,342.86, it being admitted by the Defendants that, as at 7 November 2011, the total amount owing by the Company to Bankwest exceeded that sum and no evidence of any payments made to Bankwest after 7 November 2011, thereby reducing the admitted liability of the Company that has been established.
Finally, it was submitted that all of the Defendants have admitted the amount the subject of the Plaintiffs' claim, as at 7 November 2011, when paid into the trust account of Silver & Company, was subject to the Charge. Where earlier in the Points of Defence there was a non-admission by the Defendants, that non-admission was said to relate to the cheques that were made payable to the Company (despite the fact that the three cheques together added up to the amount admitted to be the Company's funds).
The Statutory Framework and Authorities
UCPR rule 13.1, authorises the Court, on an application by Plaintiffs in relation to their claim for relief, if there is evidence of the facts on which the claim is based, and there is evidence given by the Plaintiffs, or some responsible person, that in the belief of the person giving the evidence, the Defendants have no defence to the claim, to give such judgment for the Plaintiffs, or make such order on the claim, as the case requires.
Thus, the Plaintiff must establish that there is evidence of the facts on which the claim is based, that is to say, the essential material facts in the cause of action pleaded in the Statement of Claim. In addition, the Plaintiff, or responsible person, must state a belief that the Defendant has no defence. This requires real attention to be given to the question of the absence of a defence, because the Plaintiff, or responsible person, must be prepared to depose, and, if necessary, be cross-examined, as to the belief that there is no defence. If those two requirements are established, then the court has a discretion whether to exercise the power conferred by the rule.
Interestingly, unlike other rules that deal with summary determination (e.g. UCPR r 13.4 and r 14.28), other than requiring the evidence of the facts on which the claim is based, and evidence of a belief that the Defendant has no defence, there is no reference to the Court having power to receive other evidence on the hearing of an application for an order under UCPR rule 13.1. It follows that the Defendants are not obliged to rely upon evidence if they choose not to do so.
In applications under UCPR r 13.1, the Plaintiffs carry the onus of proof and the Defendants do not affirmatively have to establish the defence relied upon: Knight v Wilson [2008] NSWSC 1083 per Malpass AsJ at [28].
In Hawker Noyes Equipment Pty Limited v Dueeasy Pty Limited (NSWCA, 18 July 1996, unreported), Sheller JA (with whom Meagher JA agreed and with whom, in regard to the following principles, Cole JA, although dissenting, was also in agreement) said:
"In Clarke v The Union Bank of Australia Limited (1917) 23 CLR 5 Barton ACJ, speaking for the High Court of Australia, quoted Lord Halsbury in Jones v Stone [1894] AC 122 at 124 who said that an analogous proceeding for summary judgment was peculiar, "intended only to apply to cases where there can be no reasonable doubt that a plaintiff is entitled to judgment, and where, therefore, it is inexpedient to allow a defendant to defend for mere purposes of delay". In Fancourt v Mercantile Credits Limited (1983) 154 CLR 87 at 99 the High Court of Australia said that the power to order summary or final judgment was one that should be exercised with great care and should never be exercised unless it was clear that there was no real question to be tried. In that case their Honours said it was not possible to say "without doubt, on the whole of the material, that there is no question to be tried". In Singh v Varinder Kaur (1985) 61 ALR 720 at 722 Samuels JA, with whom Kirby P and Glass JA agreed, after referring to Fancourt, said:
That language suggests to me that the burden lies on the plaintiff seeking summary judgment of persuading the tribunal that there is no real question to be tried. It is not consistent with the reverse proposition - that the defendant resisting judgment must show that there is a real question to be tried."
The Court of Appeal also pointed out that before deposing to a belief that there is no defence, the deponent should take care to consider the precise claim pleaded and ensure that the evidence that is adduced in support of the application supports that precise claim. (Also see, Quality Bakers Australia Pty Ltd v Yassin Modern Bakery Pty Ltd (t/a Yassin Lebanese Bakery) [2007] NSWSC 804).
The principles otherwise applicable to summary judgment are well understood. There should be summary judgment granted if the facts are undisputed and the law is clear. In general, however, an application for summary judgment is not the occasion to dispose of difficult, or substantial, questions of law which cannot be determined without full argument: Theseus Exploration NL v Foyster (1972) 126 CLR 507 at 514, 515. Yet, the court, in appropriate cases, may reach a conclusion on a question of law, even one involving considerable argument, if at the conclusion of the argument, the answer is thought to be clear: General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 at 129-130; Wickstead v Browne [1992] NSWCA 272; (1992) 30 NSWLR 1.
A similar approach has recently been confirmed in Spencer v Commonwealth [2010] HCA 28; (2010) 241 CLR 118. There, French CJ and Gummow J said at [24]:
"The exercise of powers to summarily terminate proceedings must always be attended with caution. That is so whether such disposition is sought on the basis that the pleadings fail to disclose a reasonable cause of action General Steel Industries Inc v Commissioner for Railways (NSW) [1964] HCA 69; (1964) 112 CLR 125 at 128 - 130 per Barwick CJ; or on the basis that the action is frivolous or vexatious or an abuse of process Dey v Victorian Railways Commissioners [1949] HCA 1; (1949) 78 CLR 62 at 91 per Dixon J. The same applies where such a disposition is sought in a summary judgment application supported by evidence. As to the latter, this Court in Fancourt v Mercantile Credits Ltd said [1983] HCA 25; (1983) 154 CLR 87 at 99:
'The power to order summary or final judgment is one that should be exercised with great care and should never be exercised unless it is clear that there is no real question to be tried.'"
In Batistatos v Roads and Traffic Authority (NSW) [2006] HCA 27; (2006) 226 CLR 256 at 275, Gleeson CJ, Gummow, Hayne and Crennan JJ repeated a statement by Gaudron, McHugh, Gummow and Hayne JJ in Agar v Hyde [2000] HCA 41; (2000) 201 CLR 552 at 575-576 [57]; which included the following:
"'Ordinarily, a party is not to be denied the opportunity to place his or her case before the court in the ordinary way, and after taking advantage of the usual interlocutory processes. The test to be applied has been expressed in various ways (Dey v Victorian Railways Commissioners [1949] HCA 1; (1949) 78 CLR 62 at 91 per Dixon J; General Steel Industries Inc v Commissioner for Railways (NSW) [1964] HCA 69; (1964) 112 CLR 125 at 130 per Barwick CJ), but all of the verbal formulae which have been used are intended to describe a high degree of certainty about the ultimate outcome of the proceeding if it were allowed to go to trial in the ordinary way.'"
The evidence before the court on the motion for summary judgment is read, not for the purpose of making findings of fact where the evidence conflicts, but to determine whether a triable issue is disclosed: Wickstead v Browne at 9. Thus, if the pleadings, affidavits, and other evidence produced on the summary judgment application reveal that there is a real issue of fact or law that has to be resolved for the defence to succeed, summary judgment on the plaintiff's claim should not be granted.
Further, summary disposal is inappropriate where there is any serious conflict as to any matter of fact: Sidebottom v Cureton (1937) 54 WN (NSW) 88.
The Court has a general discretion as to the circumstances in which an order for summary judgment will be appropriate and always retains a discretion to refuse to make such an order: Wallingford v Mutual Society (1880) LR 5 App Cas 685.
I must also give consideration to the provisions of ss 56, 57, 58 and 59 of the Civil Procedure Act 2005, which require that the discretion in question be exercised by the Court 'in accordance with the dictates of justice' and that the overriding purpose of the Act and of the Rules, namely, 'the just, quick and cheap resolution of the real issues in the proceedings' is facilitated. This consideration, too, requires the Court to be satisfied that there is a real dispute between the parties on the issue the subject of the claim for summary judgment.
Determination
There is no merit in the assertions of the Defendants. It is clear from all of the evidence I have read, that the amount that was paid to the Company out of the proceeds of sale of the Property following the completion of the contract for the sale was subject to the Charge. This was admitted by the Defendants.
Even though, as to two cheques, Bankwest's solicitors were aware that each would be drawn in favour of the Company, the proceeds of each remained the property of the Company and subject to the Charge. Had the cheques been paid to the entity which had been identified (the real estate agent and the ATO) different considerations might have arisen. But that was not done.
The letter dated 4 November 2011, which I have set out verbatim, made it perfectly clear that Bankwest was reserving its position and was not releasing the Charge. There was simply no basis for any amount to be paid from the Company's property, particularly to the first Defendant, without the consent of Bankwest, before the debt due to Bankwest was satisfied.
Importantly, also the only Defendant who was making a claim against the Company was the first Defendant. His claim, even if it were a valid one, was for an amount far less than the amount that he received. Neither the second, nor the third, Defendants made any claim against the Company for any part of the proceeds of sale of the Property. Neither suggested any consideration, otherwise, for the receipt of the Company's funds. Yet, moneys belonging to the Company were paid to him and her out of the proceeds of sale of the Property.
I am satisfied that there is no triable issue raised by the Points of Defence.
To the extent that the first Defendant wishes to proceed against the Company, it may do so by taking steps to obtain leave, bearing in mind that the Company is in liquidation.
To the extent that the first Defendant wishes to make a claim against Bankwest, he may do so.
I am of the view that the Plaintiffs are entitled to judgment against each of the first, second and third Defendant.
UCPR rule 13.2 empowers the Court to stay enforcement of such a judgment if there is a cross-claim pending. There is no cross-claim pending in the present proceedings.
In relation to the amendment of the amended Points of Defence, no application at the hearing proceeded. No draft pleading was provided and no affidavit explaining the circumstances surrounding the creation of the amended Points of Defence was filed. The Court is required to follow the dictates of justice and must have regard to the just, quick and cheap resolution of the real issues in the proceedings (s 56) and the efficient disposal of Court business and the efficient use of judicial resources (s 57). Compliance with these requirements is mandatory: Hans Pet Constructions Pty Ltd v Cassar [2009] NSWCA 230; s 58(2)(a) Civil Procedure Act.
I make the following orders, which are in accordance with the relevant orders agreed to by the parties in the event that I came to this conclusion. No doubt, they appreciate, that the amount that can be recovered, by enforcement, is no more than $2,313,342.86 and interest.
I have added the last two orders in order to enable the balance of the proceedings to be determined:
(a) Verdict and judgment for the Plaintiffs against the first Defendant for $2,313,342.86, plus interest from 7 November 2011 pursuant to s100 of the Civil Procedure Act 2005.
(b) Verdict and judgment for the Plaintiffs against the second Defendant for $2,313,342.86, plus interest from 7 November 2011 pursuant to s 100 of the Civil Procedure Act 2005.
(c) Verdict and judgment for the Plaintiffs against the third Defendant for $2,100,000, plus interest from 16 November 2011, pursuant to s 100 of the Civil Procedure Act 2005.
(d) The Defendants to pay the Plaintiffs' costs as agreed or assessed.
(e) Order that the exhibits be returned.
(f) Stand over the balance of the proceedings to the Registrar's list on a date suitable to counsel.
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Decision last updated: 03 September 2012
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