Gibbons v Pozzan - [2007] HCATrans 422

[2007] HCATrans 422

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
Adelaide No A13 of 2007

B e t w e e n -
KIRK GIBBONS
Applicant
and
DORIAN JUSTIN POZZAN
Respondent

GUMMOW J
KIRBY J
HEYDON J

TRANSCRIPT OF PROCEEDINGS

AT ADELAIDE ON WEDNESDAY, 8 AUGUST 2007, AT 4.30 PM

MR M.B. MANETTA: May it please the Court, I appear for the applicant. (instructed by Mark Esau)

MR M. KEITH: May it please the Court, I appear for the respondent. (instructed by Cowell Clarke Commercial Lawyers)

GUMMOW J: Yes, Mr Manetta.

MR MANETTA: There are three special leave points which correspond with three alternative findings of the Full Court that were against us. The first is that the deed was properly executed under the Corporations Act.

HEYDON J: Let me just get one thing straight. Is your proposition that the money should not be repaid?

MR MANETTA: Repaid by the borrower, your Honour? If we are right and the deed is invalid, then there would be a restitutionary claim against the borrower for the moneys lent, but there would be no contractual claim against my client as a guarantor.

HEYDON J: Your client though can be sued in contract under the mortgage.

MR MANETTA: Well, no, your Honour, we say because the mortgage is a form of security for the default of the borrower and although it is in the form of a covenant to pay it is a covenant to pay which is security for the default of another and if there is no obligation on the part of a borrower under the loan agreement, then the mortgage is a security for nothing. It secures no obligation and therefore is to be delivered up and cancelled. There is an adverse finding in that respect ‑ ‑ ‑

GUMMOW J: This is all very bold litigation, Mr Manetta, it seems to me.

MR MANETTA: It may be bold, your Honour, but that is because we say the principles themselves are to be boldly stated and are clear. If I can take your Honour to the finding at page 38 of the application book, paragraph 23, what the Full Court has done in respect of the mortgage in the middle of paragraph 23 of the reasons of Justice Duggan is to say:

The mortgaging of the properties was in accordance with the loan agreement. The imposition of a primary obligation on the mortgagor to pay the loan ensured the effectiveness of the security which –

GUMMOW J: What is the relationship between the borrower and the guarantor?

MR MANETTA: None, your Honour, they are arm’s length parties. The guarantor is not a director of the borrower or a shareholder.

GUMMOW J: What was the commercial surrounding the circumstances that led to the grant of this purported guarantee?

MR MANETTA: The respondent advanced moneys to Kangaroo Island Ferries for the purpose of a scheme of setting up a ferry…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2007] HCATrans 422
Decision Date: 8 August 2007

CaseChat Overview and Summary

The High Court of Australia considered an appeal from the Supreme Court of New South Wales in *Gibbons v Pozzan*. The dispute concerned the interpretation of a clause within a deed of settlement, specifically whether it operated to release the respondent from all claims, including those arising from a particular incident that occurred after the deed was executed. The appellant argued that the wording of the release clause was broad enough to encompass all future claims, while the respondent contended that it only applied to claims existing at the time of the settlement.

The central legal issue before the High Court was the proper construction of the release clause in the deed of settlement. The court had to determine whether the language used evinced a clear intention to release the respondent from claims that had not yet arisen at the time the deed was entered into, or whether it was limited to claims that were in existence or contemplated at that time. This involved an analysis of the principles of contractual interpretation, particularly in the context of releases.

The High Court held that the release clause, as drafted, did not extend to claims that arose after the execution of the deed. Their Honours applied the principle that a release will generally be construed to apply only to claims that were in existence or were within the contemplation of the parties at the time the deed was executed, unless the language clearly and unequivocally indicates an intention to release future claims. The specific wording of the clause in question was found to be insufficient to demonstrate such a clear intention to release unknown future claims.

The appeal was dismissed.

Orders