FTV Tweed Finance v King
[2009] VCC 62
•24 February 2009
| IN THE COUNTY COURT OF VICTORIA | Revised |
Not Restricted
AT MELBOURNE
CIVIL DIVISION
COMMERCIAL LIST
Case No. CI-03-01841
| FTV TWEED FINANCE PTY LTD (A.C.N. | Plaintiff |
| 073 550 357 | |
| v | |
| JEFFREY WILLIAM KING | Defendant |
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| JUDGE: | HER HONOUR JUDGE KENNEDY |
| WHERE HELD: | Melbourne |
| DATE OF HEARING: | 23 February 2009 |
| DATE OF JUDGMENT: | 24 February 2009 |
| CASE MAY BE CITED AS: | FTV Tweed Finance v King |
| MEDIUM NEUTRAL CITATION: | [2009] VCC 0062 |
REASONS FOR JUDGMENT
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| APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr. N. Frenkel | Amad & Amad |
| For the Defendant | No appearance | No appearance |
| HER HONOUR: |
1 In this proceeding, the plaintiff claims an amount of principal ($100,000) and interest ($107,013.69) pursuant to a written loan agreement dated 30 June 1998.
2 The defendant, through his former solicitors filed a detailed Amended Defence and Counterclaim dated 22 July 2004 which primarily relied on claims of misleading and deceptive conduct and deceit. However, the defendant did not appear- through solicitors or otherwise- to adduce any evidence in support of such claims.
3 Given the plaintiff only pursues its claim pursuant to the loan agreement, the issues for the court are therefore:
(a) whether it was appropriate to proceed to hear this matter in the
absence of the defendant;
(b) whether the plaintiff has established its entitlement based on a
simple breach of the loan agreement.
Absence of defendant
4 This proceeding has a long and complex history. However, it appears that there were solicitors on the record for the defendant from the date of issue of these proceedings in April 2003 until March 2008.
5 At a directions hearing on 25 March 2008 there was no appearance by the defendant.
6 Shortly thereafter, by Notice that a Solicitor has Ceased to Act, Robert James lawyers gave notice that they ceased to act for the defendant from 27 March 2008. The address given for the defendant in that notice was c/o BDO Kendalls, level 30, 525 Collins Street Melbourne Victoria 3000. Pursuant to rule 20.05(1)(c) of the County Court Rules of Procedure in Civil Proceedings 1999, the address for service of the defendant was thereafter the address given in that Notice.
7 A further directions hearing followed on 30 May 2008 at which the defendant did not appear.
8 By correspondence of 2 June 2008 the defendant sought to advise Mr Brereton, a director of the plaintiff that “the address for contact and or correspondence is no longer c/o BDO Kendalls at level 30 525 Collins Street” and that he had “no further association with that firm.” He further requested: “please do not use this address for any future correspondence as it will not be received.” However, the defendant gave no new or substituted address with the result that his address for service remained c/o BDO Kendalls as described by his former solicitors, in the Notice, above.
9 By correspondence of 27 August 2008 of Zolis solicitors (who were newly retained on behalf of the plaintiff) Zolis advised the defendant of a directions hearing of 29 August 2008. This correspondence was forwarded to 53 Campbell Road Hawthorn East which was an address which corresponded with that given in the electoral roll for the defendant. However, the defendant failed to appear at the directions hearing. At that directions hearing, I made orders that the proceeding be listed for trial (yesterday). A copy of my orders were then sent to the defendant by Zolis c/o BDO Kendalls by letter of 29 August 2008.
10 By correspondence dated 1 September 2008 addressed to Zolis lawyers, BDO Kendalls advised that the defendant was not employed or engaged by or based at BDO Kendalls. Again, however, it did not provide an alternative address and stated that “we hold no forwarding details for him.”
11 The defendant has also failed to respond to further correspondence from the new solicitors acting for the plaintiff, Amad and Amad, of 16 December 2008 as well as to correspondence of 16 February 2009, wherein Mr Brereton again gave notice of the trial date.
12 In these circumstances I am satisfied that the plaintiff has done all it can do to give notice of the trial date to the defendant at the correct address for service under the Rules. The actions of the defendant in failing to provide any alternative address and in failing to attend directions hearings suggests a lack of any interest in defending this proceeding.
13 In these circumstances, and having ensured that the case was called in and outside court, I am satisfied that it was appropriate to proceed to hear the case for the plaintiff in the absence of the defendant.
Whether plaintiff entitled to judgment
14 The plaintiff called one witness, Ms Kristen Moran, administrator manager of the plaintiff.
15 Ms Moran gave evidence of the loan agreement entered into between the plaintiff (under its former name, Omni Finance Pty Ltd) and the defendant of 30 June 2008.
16 Pursuant to clause 3 the plaintiff financier agreed to lend the principal to the defendant borrower on the drawdown date which was 30 June 1998.
17 Pursuant to clause 5.1, the borrower defendant was obliged to repay the outstanding principal to the plaintiff financier on the “repayment date” of 30 June 2000 (being the second anniversary of the “drawdown date” of 30 June 1998 - see clause 1.1).
18 The “principal” was defined as $300,000 (clause 1.1) although Ms Moran gave evidence that $100,000 only was advanced on behalf of the defendant by way of a payment being made to a company called Toxfree Systems Limited (“TFS”).
19 This payment was made to enable the defendant as a partner in the DCS Tweed Partnership to inject a total sum of $1,000,000 into TFS which enabled TFS to cease being in administration and pursue its business of treating and removing pesticides and other chemicals from soil.
20 An extract from a National Australia bank account in the name of TFS shows an amount of $1,000,000 being credited on 1 July 1998. This amount included the amount of $100,000 paid by the plaintiff.
21 Clause 4.1 of the loan agreement provides for the borrower to pay interest on the outstanding principal until it becomes due and owing and for such interest to be paid on each “interest payment date.” The interest payment date means the drawdown date and the first anniversary of the drawdown date. If interest is received on or before the relevant interest payment date and in the absence of default the interest was to be at the “lower rate” of 10 per cent per annum. However, in the event that interest was not received on the due date the rate was set at the higher rate of 14 per cent per annum and was payable on demand.
22 Pursuant to clause 4.1, Ms Moran gave evidence that payments of interest were made on 30 June 1998 and 30 June 1999 in the amount of $30,000 in each case.
23 Pursuant to clause 13.1 the lender could extend the term of the loan by 3 years from 30 June 2000. If such rights were exercised by the lender, pursuant to clause 13.2, the outstanding principal shall be repayable on the fifth anniversary of the drawdown date (being 30 June 2003) and the days comprising the second, third and fourth anniversaries of the drawdown date were deemed to be interest payment dates.
24 By correspondence of 6 December 2000 the plaintiff advised the defendant that it agreed to extend the term for three years to 30 June 2003. The correspondence confirmed that interest would continue to be due and owing on 30 June of each year of the extended term and that the principal must be repaid on the repayment date.
25 Ms Moran gave evidence that, although interest was duly paid on 30 June 2000, the annual interest due as at 30 June 2001 and 30 June 2002 was not paid.
26 Pursuant to clause 9.1(a) an “event of default” includes where a party does not pay any money due for payment under any “transaction document” (which included the loan agreement).
27 By two letters from Harrisons insolvency of 21 October 2002 Harrisons noted:
• that the defendant was in default for failing to make interest payments due on 30 June 2001 and 30 June 2002 respectively; • gave notice that the lender required interest at the higher rate of 14 per cent per annum pursuant to clause 4.1; • demanded payment failing which it claimed that it would exercise its right under the agreement including its rights in relation to security.
28 Ms Moran gave evidence that there was no response to this correspondence from the defendant.
29 Pursuant to clause 9.2(b) if an event of default occurs the financier may at any time by notice made the outstanding principal and any unpaid accrued interest and other moneys owing immediately due for payment.
30 By correspondence of 17 December 2002 Anthony Peterson wrote to the defendant demanding the principal plus interest failing which he was instructed to issue proceedings. However, it appears that this correspondence incorrectly cites the principal owing of $300,000 rather than $100,000.
31 The outstanding interest and principal of $100,000 have never been paid.
Findings
32 I accept the evidence of Ms Moran which was not the subject of challenge.
33 There may be an issue which I raised with Mr Frenkel, Counsel for the plaintiff, as to whether the plaintiff is entitled to the outstanding principal pursuant to clause 9.2 given the letter of 17 December 2002 sought an incorrect amount of principal.
34 However, no such matter has been raised by the defendant (the Amended Defence at paragraph 10 actually admits that the solicitors for the plaintiff sent a demand dated 17 December 2002). Moreover, even if the plaintiff was not entitled to the principal pursuant to clause 9.2 on an accelerated basis, I am satisfied that there has been a failure to pay the outstanding principal on the fifth anniversary of the drawdown date as at 30 June 2003 as provided for in clause 13.2. Such a failure to pay this amount then constitutes a default pursuant to clause 9.1(a).
35 Accordingly there will be judgment for the plaintiff in the amount of $100,000.
36 I also accept that there was a default pursuant to clause 9.1(a) of the loan agreement constituted by the non-payment of interest due on the interest payment date as provided for in clauses 13.2 and 4.1 of the agreement which interest was due on 30 June 2001 and 30 June 2002. Pursuant to clause 4.1(b) the defendant is to pay interest which remains unpaid at the higher rate until such moneys are paid in full. As at the date of this judgment –given the effluxion of time- the amount of interest based on the higher rate of 14 per cent is $107, 013.69.
37 Accordingly the plaintiff is also entitled to interest at $107, 013.69.
38 Mr Frenkel did not pursue a claim for indemnity costs. The plaintiff is therefore entitled to costs of the proceeding to be taxed on scale D in default of agreement.
39 The Defendant’s counterclaim should be dismissed.
40 I will hear from Mr Frenkel further on the question of certificates.
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