Equity Plus Home Loans (Aust) Pty Ltd v PFG Wealth Pty Ltd
[2011] WASC 241
•13 SEPTEMBER 2011
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS
CITATION: EQUITY PLUS HOME LOANS (AUST) PTY LTD -v- PFG WEALTH PTY LTD [2011] WASC 241
CORAM: MASTER SANDERSON
HEARD: 31 AUGUST 2011
DELIVERED : 13 SEPTEMBER 2011
FILE NO/S: COR 103 of 2011
BETWEEN: EQUITY PLUS HOME LOANS (AUST) PTY LTD
Plaintiff
AND
PFG WEALTH PTY LTD
Defendant
Catchwords:
Corporations Act - Application to set aside statutory demand - Turns on own facts
Legislation:
Nil
Result:
Amount of demand reduced
Application otherwise dismissed
Category: B
Representation:
Counsel:
Plaintiff: Mr S C England
Defendant: Mr P Mendelow
Solicitors:
Plaintiff: Lawton Gillon
Defendant: Wantrup and Associates
Case(s) referred to in judgment(s):
Nil
MASTER SANDERSON: This is the plaintiff's application to set aside a statutory demand. The plaintiff says there is a genuine dispute as to the whole of the debt and the demand ought be set aside.
A copy of the statutory demand appears as attachment JB1 to an affidavit of Justin Brown sworn 8 June 2011 and filed in support of the application to set aside the demand. In the schedule reference is made to three amounts making up the alleged debt. They are described as follows:
SCHEDULE
Description of the debt
Amount of the debt
(a)
Amount owing by the company to the creditor pursuant to Secured Loan Agreement between the company and the creditor dated 6 October 2009.
$50,000.00
(fifty thousand dollars)
(b)
Amount owing by the company to the creditor pursuant to Secured Loan Agreement between the company and the creditor dated 27 November 2009.
$50,000.00
(fifty thousand dollars)
(c)
Amount owing by the company to the creditor pursuant to Agreement to purchase Challenger Mortgage Management Non‑Conforming loan book dated 5 November 2008.
$47,600.00
(forty seven thousand, six hundred dollars)
TOTAL AMOUNT
$147,600.00
(one hundred and forty seven thousand, six hundred dollars)
It is not in dispute between the parties there were two loan agreements entered into between the plaintiff and the defendant both referred to as 'secure loan agreement', one of which is dated 6 October 2009, the other is dated 27 November 2009. Each refers to a loan by the defendant to the plaintiff of $50,000. The first agreement (which I will refer to as 'the October agreement') appears as part of annexure JB1. It anticipates a repayment date of 6 October 2010. The second agreement (which I will refer to as 'the November agreement') refers to a repayment date of 27 November 2011.
It is the defendant's position the date for repayment of the October agreement has passed and the amount of $50,000 is due and owing. As to the November agreement it is said there has been an event of default under the terms of that loan and it too is due for repayment.
The plaintiff alleges prior to entering into the November agreement, Mr Brown, on behalf of the plaintiff, and one Pierre Lutgens, on behalf of the defendant, entered into an agreement both loans would be repayable in November 2011. The defendant, through Mr Lutgens, denies any such agreement was reached. The plaintiff says further there has been no event of default and therefore the total loan of $100,000 was not due and payable at the date the statutory demand was issued.
For present purposes it is unnecessary to resolve the dispute as to whether or not the agreement varying the repayment date as alleged by the plaintiff was indeed concluded. Even if it was, it is clear the plaintiff has breached the terms of both loan agreements. I should say both parties proceeded on the basis any variation to the date of repayment of the October agreement did not affect the terms and conditions of the loan. In other words, the written agreement still governed the relationship between the parties.
Clause 9 of both loan agreements is headed 'Default and Termination'. Under cl 9(b) there are set out 'Events of Default'. Clause 9(b)(a)(ii) specifies it is an event of default if the borrower fails to:
Pay any instalment of interest on the relevant interest payment date or fails to pay any other money payable under this Deed on the date due for payment of that money and that failure to pay continues for more than 14 days after the due date.
It was not in dispute from time to time the plaintiff had breached this clause. Interest had not been paid on the due date and had remained unpaid for a period thereafter.
The consequences of such a default are set out in cl 9(a). It is in the following terms:
If an event of default occurs, the loan and all other amounts payable under this Deed and not paid will at the option of the lender and not withstanding any delay or previous waiver or right to exercise that option immediately become due and payable without the necessity of any demand or notice to the borrower.
As I understand these submissions put on behalf of the plaintiff, it was said the defendant could not rely on cl 9(a) because there was no clear election that it would do so. Furthermore, there had been no evidence produced of any demand for repayment of the loans. It was submitted without some evidence of the defendant making a decision it would seek repayment of the loans it could not issue a statutory demand. On that basis it was said there was a genuine dispute.
In my view the meaning and intent of cl 9(a) is clear. If an event of default occurred the defendant could call for repayment of the loans. It did not have to do so; and if it did not do so for a period after a breach occurred it was not in any way prejudiced by the delay. In effect, when a breach occurred the gun was loaded; it was up to the defendant whether or not it pulled the trigger. The fact it chose to pull the trigger long after the gun was loaded was of no consequence.
For these reasons I am not satisfied there is a genuine dispute as to the plaintiff's liability to repay the defendant $100,000. That part of the statutory demand should stand.
The second claim relates to an agreement which is referred to as 'Agreement to purchase Challenger Mortgage Management non‑conforming loan book'. That agreement was in writing and was dated 5 November 2008. Pursuant to the agreement, the defendant agreed to purchase a loan book trail from the plaintiff for a specified sum. The reference to 'trail' means trailing commissions which are paid to finance brokers for a period of time after loan agreements are entered into. So the effect of this sale agreement was the plaintiff received an upfront fee. The defendant would receive the trailing commissions. These commissions would continue to be collected by the plaintiff and would be paid to the defendant.
The agreement contained the following condition:
If [the plaintiff] will maintain a payment monthly by way of EFT to the purchaser's nominated bank account, of no less than $6,800 for all trail involved and will pay to the purchaser within two days of receipt, subject to terms and conditions below …
The agreement entered into by the parties appears not to have been drawn by solicitors. It is confusing. But what appears to be anticipated is trailing commissions on the loan book will be paid to the defendant. The defendant is guaranteed a minimum payment of $6,800 per month for two years. If the trailing commissions do not reach that amount then the plaintiff had to make up any shortfall. As I understand it, both counsel agreed that was what was intended by the agreement.
The defendant alleges the plaintiff has not made payment of $6,800 for seven months. That is how the third amount in the statutory demand is calculated. Appearing as annexure JB4 to Mr Brown's affidavit there is a document headed 'Statement of All Transactions'. This document purports to show all payments made by the plaintiff to the defendant pursuant to the agreement. It appears to show all trailing commissions paid to the defendant and accounts for the $6,800 per month the plaintiff was required to pay to the defendant. While the affidavit material does not fully explain how the statement was generated and why it appears in the form it does, I am satisfied it establishes that there is a genuine dispute as to whether the third sum of $47,600 is due and payable by the plaintiff to the defendant.
In these circumstances I am satisfied the amount of the statutory demand ought be adjusted to $100,000. I will make orders accordingly. I will hear the parties as to the precise form of these orders and as to costs.
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS
CITATION: EQUITY PLUS HOME LOANS (AUST) PTY LTD -v- PFG WEALTH PTY LTD [2011] WASC 241 (S)
CORAM: MASTER SANDERSON
HEARD: 31 AUGUST 2011 & 3 NOVEMBER 2011
DELIVERED : 13 SEPTEMBER 2011
SUPPLEMENTARY
DECISION :8 DECEMBER 2011
FILE NO/S: COR 103 of 2011
BETWEEN: EQUITY PLUS HOME LOANS (AUST) PTY LTD
Plaintiff
AND
PFG WEALTH PTY LTD
Defendant
Catchwords:
Cost - Proper cost order value party not given opportunity to make submission - Turns on own facts
Legislation:
Nil
Result:
Cost order adjusted
Category: B
Representation:
Counsel:
Plaintiff: Mr S C England
Defendant: Mr P Mendelow
Solicitors:
Plaintiff: Lawton Gillon
Defendant: Wantrup and Associates
Case(s) referred to in judgment(s):
Equity Plus Home Loans (Aust) Pty Ltd v PFG Wealth Pty Ltd [2011] WASC 241
Minister for Education v Klein [2005] WASCA 185 (S)
MASTER SANDERSON: The plaintiff's application to set aside the defendant's statutory demand was heard on 31 August 2011. The application related to two claims made by the defendant against the plaintiff. The defendant's first claim was for the repayment of a total principal amount of $100,000 pursuant to the terms of two secured loan agreements. The defendant's second claim related to the monthly payments payable by the plaintiff to the defendant under an agreement to purchase Challenger mortgage management non‑conforming loan book. After hearing argument I reserved by decision.
On 5 September 2011 the plaintiff, without leave and without notice to the defendant, filed a further affidavit in support of its application. There was correspondence between the solicitors for the plaintiff and the defendant in which the defendant made it clear they did not consent to the plaintiff relying on the further affidavit.
On 13 September 2011 I handed down my reasons for decision: Equity Plus Home Loans (Aust) Pty Ltd v PFG Wealth Pty Ltd [2011] WASC 241. I made no mention of the additional affidavit. There was one good reason why I did not mention that affidavit. I did not take it into account as in my view there was no warrant for considering it part of the court record. No solicitor should unilaterally decide to file an affidavit purporting to adduce further evidence in relation to a matter which has been heard and waiting determination. If consent from the defendant's solicitors had been forthcoming the position may have been different, but there was no consent and I gave the affidavit no consideration.
On 13 September 2011 the defendant's solicitors wrote to my associate enclosing a copy of the defendant's minute of proposed order and costs submissions. I made an order in terms of the defendant's minute. Regrettably notice of the orders made was not given to the plaintiff's solicitor until 23 September 2011. By then the plaintiff had only until 27 September 2011 to comply with the statutory demand. On 25 October 2011 the plaintiff paid to the defendant the amount of the statutory demand.
The plaintiff then sought to have the orders made recalled as it had not had the opportunity to make submissions as to the form of orders and as to costs. It should be noted the orders I made were not extracted by either party.
It is clear there is power to recall orders without appeal. In Minister for Education v Klein [2005] WASCA 185 (S) [7] Steytler P summarised the relevant authorities relating to the recalling of unperfected judgments or orders. In particular his Honour referred to cases where 'there is some matter calling for review' and where 'the interests of justice so require'.
His Honour went on to say:
[I]t seems to me that, when a party has not been given an adequate opportunity to present submissions in relation to a finding of critical importance to the court's ultimate decision ... this Court, too, should be willing to reopen an unperfected judgment or order [8].
Given the concerns raised by the plaintiff I relisted the matter in chambers on 3 November 2011. I directed the parties to file written submissions as to whether it was appropriate to recall the orders made and further to file submissions in relation to costs. Both parties availed themselves of the opportunity to file submissions. So what falls for determination is whether the orders made ought be recalled and if they are recalled what orders should now be made.
Before dealing with these two issues I should comment on the plaintiff's submissions. Between pars 25 ‑ 31 of those submissions counsel for the plaintiff refers to the further affidavit material and maintains it should have been taken into account in reaching a decision. I have already commented on this issue. However, lest there be any doubt, I repeat, there was no warrant for my considering this evidence which was submitted without leave after the hearing had been concluded.
I am satisfied the order made in this matter ought be recalled. The plaintiff did not have the opportunity to put submissions in relation to costs, and in the interests of justice the plaintiff should have been permitted to make those submissions. In my view there is no warrant for altering the order adjusting down the amount of the statutory demand. The plaintiff seeks an order which would set aside the statutory demand. That presumably relies upon the further affidavit evidence. There is no basis upon which an order in those terms could be made. The order adjusting down the amount of the statutory demand and extending the time for compliance with the demand should stand. In relation to costs the plaintiff makes the perfectly valid point it was successful as the amount of the demand was reduced. That fact should be reflected in the costs order.
Accordingly I am satisfied the appropriate costs order is the plaintiff pay 50% of the defendant's costs including reserved costs such costs to be taxed if not agreed.
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