Fearnall v Fearnall - [2021] WADC 94

JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CHAMBERS

LOCATION:   PERTH
CITATION:   FEARNALL -v- FEARNALL [2021] WADC 94
CORAM:   PRINCIPAL REGISTRAR MELVILLE
HEARD:   17 SEPTEMBER 2021
DELIVERED          :   8 OCTOBER 2021
FILE NO/S:   CIV 4000 of 2020
BETWEEN:   ROY FEARNALL
Plaintiff
AND
LEIGH MAY EMMA FEARNALL
First Defendant
AND
BRADLEY SHANDLEY
Second Defendant

Catchwords:

Summary judgment - Actual authority of agent to enter a contract - Turns on its own facts

Legislation:

Nil

Result:

Judgment for the plaintiff

Representation:

Counsel:

Plaintiff	:	Mr L A Warnick
First Defendant	:	Not applicable
Second Defendant	:	Ms C Andrews

Solicitors:

Plaintiff	:	Havilah Legal
First Defendant	:	Not applicable
Second Defendant	:	Hickman Family Lawyers

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

Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52
Zaghloul v Bayly [2021] WASCA 125

PRINCIPAL REGISTRAR MELVILLE:

The plaintiff commenced this action against the defendants by writ of summons filed 4 November 2020. The indorsement claimed the sum of $189,000 (the Principal) lent by the plaintiff to the first and second defendants together with interest at 4% per annum pursuant to an oral agreement on or around 20 August 2015.
In his statement of claim, the plaintiff pleads the money was lent to the first and second defendants 'in order to satisfy the requirements of a lender to approve a loan to the defendants for the purchase of a property'.
The agreement was alleged to have express oral terms and implied terms. The express oral terms were that the money would be lent as a short-term loan to be repayable when the defendants secured their loan and that there would be interest payable at a fixed amount of $650 per month until the Principal was repaid.
The implied terms were alleged to be:
(a)the repayment of the Principal would not be prolonged after the loan was obtained in the immediate short term;
(b)the failure to make ongoing interest repayments would trigger the obligation of the defendants to repay the Principal; and
(c)the Principal was not to be used by the defendants to reduce any of their loan obligations.
Default judgment was subsequently obtained against the first defendant.
The second defendant filed a defence denying any agreement 'in relation to the repayment of those funds', alleging the provision of the funds was from the plaintiff to the first defendant, who was his daughter, and as such the presumption of advancement applied, and if there was an agreement that the money was to be repaid, it was an agreement as between the plaintiff and the first defendant and not as between the plaintiff and the second defendant.
On 21 June 2021 the plaintiff applied by chamber summons for summary judgment against the second defendant pursuant to the Rules of the Supreme Court 1971 (WA) (RSC) O 14.
Order 14 permits a plaintiff to apply for judgment on the basis there is no defence to the claim included in the writ or to a particular part of such claim. The application is to be supported by an affidavit verifying the facts and stating that in the deponent's belief there is no defence to the claim or part thereof, or no defence except as to the amount of any damages claimed. On hearing the application judgment may be given unless the claim is dismissed or the defendants satisfy the court that there is a triable issue in respect of the claim or part thereof, or that there or for some other reason be a trial.
In Zaghloul v Bayly[2021] WASCA 125 the Court of Appeal said:
116The principles to be applied on an application for summary judgment are well established. The critical issue is whether it is clear that there is no real question to be tried. The issue is framed in this manner as it is only in the clearest of cases, where there is a high degree of certainty about the outcome if the proceedings were allowed to go trial, that summary judgment ought properly to be granted. The exercise of powers to summarily terminate proceedings must always be attended with caution.
117There are cases where the court has considered it appropriate to determine questions of law on a summary judgment application. There should be summary judgment 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. It will usually be appropriate to leave the determination of such questions for trial.
(footnotes omitted)
It has been said that where there is a dispute as to the facts, then there is a triable issue. However, that is only where the facts in dispute are material to the outcome of the application. In this case, for reasons that will become apparent, although the second defendant gives evidence contradicting a number of assertions made in the plaintiff's affidavit, the second defendant does not contradict the only important, in the sense of relevant, facts deposed to by the plaintiff and in a number of instances confirms the facts.
The plaintiff's application was supported by his affidavit affirmed 18 June 2021. His evidence discloses that the first defendant, who is his daughter, was married to the second defendant in 2013 or 2014 and that they were still married at the time of the alleged loan in 2015.
The plaintiff deposes to the circumstances in which the alleged loan was made, being in essence that the defendants were the owners of two properties, one being in Middle Swan and one being in Koongamia and the defendants' desire to buy a third property in Mullaloo. However, difficulties arose in obtaining finance from the bank to buy the Mullaloo property because, according to the information given to the plaintiff by his daughter, the defendants did not have sufficient assets between them for the finance to be approved.
The plaintiff then goes on to state that prior to August 2015 he said to the first defendant words to the effect:[1]
Would it help if I lend you and Brad some money. Then once you get the loan you can both pay the money back to me?. Leigh said it would help and so I agreed to lend them $189,000 ... and that the defendants would pay $650 interest per month until the money was paid back.
[1] Plaintiff's affidavit, par 16.
The plaintiff then swears it was agreed 'that the funds would be held in an account for the purpose of securing the loan and that as soon a loan was secured, the funds would be returned to me'.[2] A copy of the plaintiff's account annexed to his affidavit demonstrates a transfer of the $189,000 on 20 August 2015 and shows payments of $650 per month commencing 21 September 2015 subsequently paid into his account, apparently by the first defendant.
[2] Plaintiff's affidavit, par 17.
The second defendant filed an affidavit in opposition to the application. The affidavit reveals a relationship between the first defendant and the second defendant in which the first defendant was responsible for making all of the major financial decisions relating to property and finances, that the second defendant knew nothing about the details of the arrangement she entered into, and did not appear to care to be involved. He says that 'Leigh had always been responsible for making financial decisions throughout our relationship' and 'For example, Leigh wanted us to invest in real estate. I recall at one stage Leigh travelling interstate to attend a seminar about property investing. Lee would often make decisions, and then tell me what we were going to do'.[3]
[3] Second defendant's affidavit sworn 16 September 2021, pars 8 - 9.
The second defendant confirmed the defendants wished to buy the Mullaloo property, stating that 'we put in an offer for that property'[4] that to the best of his recollection he was aware that an extension in relation to the settlement was required 'so we could sort out our finance' and that after they had made the offer on the Mullaloo property, but before settlement, the first defendant had told him that she was going to try and speak to the plaintiff about him assisting them with buying the property.
[4] Second defendant's affidavit sworn 16 September 2021, par 17.
The second defendant goes on to say that he recalls coming home from work in about mid-2015 to be advised by the first defendant the plaintiff is going to 'give us the money' to purchase the Mullaloo property, but that she did not discuss with him there being any agreement in relation to the repayment of those funds or any interest component. The second defendant did say however that he understood from the first defendant that both he and the first defendant were going to have to repay the plaintiff at some stage but that the first defendant did not discuss with him and he did not discuss with the plaintiff any specific terms or timelines for repayment.[5]
[5] Second defendant's affidavit sworn 16 September 2021, pars 19 - 24.
During submissions, the second defendant's counsel conceded that the second defendant was liable to repay the loan but argued there was a triable issue in respect of what were the terms and conditions of repayment.[6]
[6] ts 10 - ts 12.
In my view, in view of the concession that the second defendant is in fact liable to repay the loan, which is a concession he is party to the loan agreement, the irresistible inference is that he became a party to the loan because the first defendant had the second defendant's actual authority (either express or implied) to enter into the loan agreement with the plaintiff and to borrow the money from the plaintiff on behalf of both defendants jointly. Such an inference is, in my view, further supported by the second defendant's evidence referred to above to the effect that the first defendant made the financial decisions for the two of them, and the evidence that they had a contract to purchase the Mullaloo property but that there was a problem getting finance for which an extension of the settlement date had been required for the purpose of sorting out their finances.
In the circumstances in which settlement was being delayed because there was a problem with financing it, seems likely that the defendants had limited choices in accepting whatever alternative financing might be on offer and the terms and conditions in respect thereof.
Having regard to all the circumstances described above, it also seems inevitable that the first defendant, armed with authority to obtain a loan from the plaintiff, also had authority to agree the terms and conditions of the loan.
The evidence is that the terms and conditions of the loan were agreed, namely that the money would be repaid once the bank loan was secured. There is no evidence to the contrary from the second defendant, and whilst the second defendant avers he had no knowledge of the repayment arrangements entered into, he does not give evidence that the first defendant was without authority to bind him to the agreement.
Whilst the plaintiff and the second defendant in their affidavits go on to give evidence of who made what payments following settlement on the Mullaloo property, and what was said or not said between the plaintiff and the defendants subsequent to the settlement, and what agreements were entered into between the defendants subsequent to the settlement regarding repayment of the loan, (arrangements in respect of which there is no evidence that the plaintiff was contractually bound as a party), what demands for payment were made by the plaintiff and what were the subjective thoughts and expectations of the parties, it is my view those matters are irrelevant to determining the terms and conditions of an agreement reached on or about 15 August 2015 to lend the money to the defendants jointly.
The High Court in Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52[40]:
This Court, in Pacific Carriers Ltd v BNP Paribas, has recently reaffirmed the principle of objectivity by which the rights and liabilities of the parties to a contract are determined. It is not the subjective beliefs or understandings of the parties about their rights and liabilities that govern their contractual relations. What matters is what each party by words and conduct would have led a reasonable person in the position of the other party to believe. References to the common intention of the parties to a contract are to be understood as referring to what a reasonable person would understand by the language in which the parties have expressed their agreement. The meaning of the terms of a contractual document is to be determined by what a reasonable person would have understood them to mean. That, normally, requires consideration not only of the text, but also of the surrounding circumstances known to the parties, and the purpose and object of the transaction.
(footnotes omitted)
Having regard to what the High Court said, I have no difficulty in coming to the conclusion that the words used by the plaintiff would have led a reasonable person in the position of the defendants to believe exactly what the words meant, namely the principal was to be repaid once the loan from the bank was secured and that interest would run at $650 per month until the principal was repaid. It seems to me the words are simple enough to understand without more. Moreover, when regard is had to the surrounding circumstances, namely the circumstances in which the defendants had to approach the plaintiff to assist them to secure funding from the bank, the meaning of the words becomes clearer still.
However, the second defendant argues that there should be a trial of the issue because 'there really is facts that need to be tried, evidence that needs to be ventilated and considered, and witnesses that need to be called that are key in these proceedings'.[7]
[7] ts 20.
I can imagine that there are circumstances in which a defendant responding to a summary judgement application will find himself in a difficult, if not impossible, position from which to defend himself. It may be that many of the facts allegedly relied upon by the plaintiff are facts peculiarly within the knowledge of the plaintiff or persons other than a defendant and until such time as there has been a measure of discovery or a reasonable opportunity given to the defendant to locate material witnesses or documentation, it would be unfair to order summary judgement.
In this case the evidence of the plaintiff as to what was said is not contradicted by the second defendant. Having regard to the second defendant's affidavit it is difficult to see how he could give evidence at trial to suggest the words were not said.
In light of my conclusion that the first defendant was authorised to enter into an agreement with the plaintiff to borrow the money and to pay interest thereon at $650 per month until the principal was repaid when the loan from the bank was secured, I cannot see what facts need to be tried. Nor can I see what other evidence needs to be ventilated and considered in determining what were the terms and conditions of the agreement. Whilst clearly there are other witnesses, there is nothing presented to me to explain what they would say or might reasonably be expected to say that is relevant to the nature and terms of the agreement between the parties and would assist the second defendant. The second defendant does not say he needs more time to make enquiries in order to have a sufficient opportunity to defend himself.

Conclusion

In my view it is clear that a defendant was party to an agreement to borrow $189,000 from the plaintiff to be repaid once the loan from the bank was secured. It is clear the loan from the bank was subsequently secured and that none of the $189,000 lent to the defendants by the plaintiff has been repaid. It is equally clear that interest was to run on the loan at $650 per month and that although a number of monthly payments have been made to the plaintiff, the payments that have been subsequently made never exceeded the interest payable in terms of the agreement, namely $650 per month.
In my view there is no question of fact to be tried, it is the clearest of cases and there are no difficult or substantial questions of law to resolve.
Accordingly, I am of the view that on the evidence presented to me the second defendant does not have a defence to the claim. Nor am I of the view that for some other reason there should be a trial.
I am prepared to order judgment for the plaintiff against the second defendant in the sum of $189,000 reflecting the principal amount owing. As I have not been provided with a schedule calculating the balance of the interest owing, having regard to the total amount payable pursuant to the agreement to date, less the amounts actually paid having regard to the evidence in the affidavits, I will hear further from the parties in this regard.

I certify that the preceding paragraph(s) comprise the reasons for decision of the District Court of Western Australia.
RB
Court Officer
8 OCTOBER 2021