Griffin v P&o Finance & Property Facilitators P/L - [2005] SADC 162

DISTRICT COURT OF SOUTH AUSTRALIA
(Civil)
GRIFFIN v P&O FINANCE & PROPERTY FACILITATORS P/L AND ORS
Reasons for Decision of His Honour Judge Smith
9 December 2005
PROCEDURE - COSTS - JURISDICTION
Plaintiff advanced money to defendants for a real estate development – development did not proceed – plaintiff sought return of the monies – natural person defendants guaranteed repayment – monies not repaid – proceedings instituted against defendants for multiple causes of action – application by plaintiff for immediate relief pursuant to r 25.02, namely enforcement of the Guarantee against the natural persons defendants – criminal proceedings instituted against one of the natural person defendants and threatened against the other – application by them for stay of civil action and/or for stay of application for Immediate Relief until resolution of criminal proceedings – discussion of principles applicable to application pursuant to r 25.02 for Immediate Relief – discussion of principles applicable to a stay of civil proceedings where there are criminal proceedings in respect of the same subject matter.
HELD - plaintiff entitled to enforce the Guarantee by way of Immediate Relief – judgment for the plaintiff against the natural person defendants under the Guarantee – application for stay dismissed.
Criminal Law Consolidation Act 1935 s 139; Law of Property Act 1936 s 41(5); Corporations Act 2001 s417B; Phillips and O’Donovan, The Modern Contract of Guarantee 2nd ed, referred to.
Rochfort v John Fairfax & Sons Ltd [1972] 1 NSWLR 16; Jefferson Ltd v Bhetcha [1979] 1 WLR 898; Baker v Commissioner of Federal Police (2000) 104 FCR 359; Cameron’s Unit Services Pty Ltd v Kevin R Whelpton Associates (Australia) Pty Ltd and Anor (1984) 4 FCR 428; McMahon v Gould [1982] 1 ACLC 98; Pennington v McGovern (1987) 45 SASR 27; Myer Queenstown Garden Plaza Pty Ltd v Port Adelaide City Corporation (1973) 6 SASR 240; General Steel Industries Inc v Commissioner for Railways (1964) 112 CLR 125; Bellas v Kipouros (1974) 8 SASR 418; Wicklow Enterprises Pty Ltd v Doysal Pty Ltd (1985) 124 LSJS 225; Settlement Wine Co Pty Ltd v National and General Insurance Co Ltd (1988) 146 LSJS 150; Allianz Australia Insurance Ltd v National Jet Systems [2004] SASC 438; Addstead Pty Ltd (In Liq) v Liddan Pty Ltd (1997) 70 SASR 21, considered.

GRIFFIN v P&O FINANCE & PROPERTY FACILITATORS P/L AND ORS
[2005] SADC 162
Introduction

In this action, on a Notice for Specific Directions dated 10^th October 2005, the plaintiff applied for:
·Immediate Relief against the second and third defendants pursuant to r 25.02, the relief sought being the enforcement of a guarantee and judgment in the sum of $250,000 plus interest.
Also, on a separate further Notice for Specific Directions dated the 22^nd November 2005, the second and third defendants applied for the following specific directions:
·that this action be stayed pending the finalisation of criminal proceedings against the second and third defendants;
·that in the alternative that the hearing of the Notice for Specific Directions seeking summary judgment against the second and third defendants be stayed pending the finalisation of criminal proceedings against the second and third defendants.
I heard argument in this matter on the 23^rd November 2005. On the 9^thDecember 2005, without publishing reasons, I ordered as follows:
·that applications of the second and third defendants for a stay or alternatively for an adjournment of all applications be dismissed;
·that the application by the plaintiff for Immediate Relief be granted and that judgment be entered for the plaintiff against the second and third defendants in the sum of $250,000; and
·that there be no orders in respect of the application by the plaintiff pursuant to r 54.05.
I adjourned the arguments as to interest and costs to Friday the 16^thDecember 2005 at which time I indicated I would publish reasons for the above decisions. Herewith are the reasons.
Some Background Circumstances
The plaintiff, in about August/September 2003, borrowed $211,000 and loaned it to, or invested it in, a project promoted by the defendants, whose object was to purchase, redevelop and sell an historic home known as “The Briars” at Cudlee Creek. The development did not proceed. “The Briars” was not purchased by the said defendants or their interests. The plaintiff contended that the defendants guaranteed the repayment to her of $250,000 by the 13^th March 2005 and pointed to two documents said to establish such a guarantee. Despite demands, the plaintiff has not had the guaranteed sum paid to her.
On the 20^th November 2005, the second defendant was arrested and charged with Deception pursuant to s 139 of the Criminal Law Consolidation Act 1935. The deception was said to relate to the obtaining of money from the plaintiff. The third defendant was, at the time of the application, wanted by police for the same offence.
The above facts are undisputed as will be seen hereunder.
The Source of Evidence in respect of the Applications
The plaintiff relies upon:
·the pleadings;
·her affidavit sworn on the 30^th August 2004 (“plaintiff’s affidavit”); and
·two affidavits of the plaintiff’s solicitor, Ms Meegan Jongebloed, sworn on the 10^th October 2005 and the 21^st November 2005 (“first Jongebloed affidavit” and “second Jongebloed affidavit”).
The second and third defendants rely upon their affidavits and the affidavit of their solicitor and counsel, Mr Mark Esau, all sworn on the 22^nd November 2005.
I note that the pleadings are not closed. The defendants have not filed in the time allowed or at all a defence to the plaintiff’s Third More Explicit Statement of Claim but there is a detailed Defence to the earlier More Explicit Amended Statement of Claim.
Applications for Adjournment and Stay
A plaintiff is entitled to have his action tried in the ordinary course of the business of the Court subject to the Court’s inherent jurisdiction to order a stay of proceedings in the interests of justice where there are proper grounds for doing so (see Rochfort v John Fairfax & Sons Ltd[1]). In particular, the Court has a discretion to order the stay of civil proceedings when there are criminal proceedings concerned with the same subject matter (see Jefferson Ltd v Bhetcha[2]). However, it is clear that the mere fact of a criminal prosecution does not give rise to an automatic entitlement to a stay of civil proceedings (see Baker v Commissioner of Federal Police[3]).
[1] [1972] 1 NSWLR 16
[2] [1979] 1 WLR 898
[3] (2000) 104 FCR 359 per Gyles J at [27]
What then is the test or considerations which guide the exercise of this discretion and who bears what onus?
In Bhetcha at 905 Megaw LJ said that the applicant must “... show it is just and convenient that the plaintiff’s ordinary rights of having his claim processed and heard and decided should be interfered with ...”. The question is said to be whether there was a likelihood of causing injustice in the criminal proceedings (see Cameron’s Unit Services Pty Ltd v Kevin R Whelpton Associates (Australia) Pty Ltd and Anor[4]).
[4] (1984) 4 FCR 428 at 434 per Wilcox J
It was accepted by both counsel in this matter that the principles set out by Wooten J in McMahon v Gould[5] are an exhaustive guide to the exercise of the Court’s discretion:
[5] [1982] 1 ACLC 98
(a)    Prima facie a plaintiff is entitled to have his action tried in the ordinary course of the procedure and business of the Court (Rochfort at p 19);
(b)    It is a grave matter to interfere with this entitlement by a stay of proceedings, which requires justification on proper grounds (ibid);
(c)    The burden is on the defendant in a civil action to show that it is just and convenient that the plaintiff 's ordinary rights should be interfered with (Bhetcha at p 905);
(d)    Neither an accused (ibid) nor the Crown (Rochfort at p 21) are entitled as of right to have a civil proceeding stayed because of a pending or possible criminal proceeding;
(e)    The Court's task is one of `the balancing of justice between the parties' (Bhetcha at p 904), taking account of all relevant factors (ibid p 905);
(f)     Each case must be judged on its own merits, and it would be wrong and undesirable to attempt to define in the abstract what are the relevant factors (ibid p 905);
(g)    One factor to take into account where there are pending or possible criminal proceedings is what is sometimes referred to as the accused's `right of silence', and the reasons why that right, under the law as it stands, is a right of a defendant in a criminal proceeding (ibid p 904) ...
(h)    However, the so-called `right of silence' does not extend to give such a defendant as a matter of right the same protection in contemporaneous civil proceedings. The plaintiff in a civil action is not debarred from pursuing action in accordance with the normal rules merely because to do so would, or might, result in the defendant, if he wished to defend the action, having to disclose, in resisting an application for summary judgment, in the pleading of his defence, or by way of discovery or otherwise, what his defence is likely to be in the criminal proceeding (ibid pp 904-905);
(i)     The Court should consider whether there is a real and not merely notional danger of injustice in the criminal proceedings (ibid p 905);
(j)     In this regard factors which may be relevant include:
(i)the possibility of publicity that might reach and influence jurors in the civil proceedings (ibid p 905);
(ii)the proximity of the criminal hearing (ibid p 905);
(iii)the possibility of miscarriage of justice e.g. by disclosure of a defence enabling the fabrication of evidence by prosecution witnesses, or interference with defence witnesses (ibid p 905);
(iv)the burden on the defendant of preparing for both sets of proceedings concurrently (Beecee Group Ltd v Barton);
(v)whether the defendant has already disclosed his defence to the allegations (Caesar v Sommer[1980] 2 NSWLR 929 at 932, Re Saltergate Insurance Co at p 736);
(k)    The effect on the plaintiff must also be considered and weighed against the effect on the defendant ... ;
(l)     In an appropriate case the proceedings may be allowed to proceed to a certain stage, eg, setting down for trial, and then stayed (Beecee Group v Barton).
With those principles in mind I turn to this case.
The affidavits of Ongley, Pettingill and Esau which were sworn after Ongley’s arrest and for the purpose of the application for a stay do not allege any specific prejudice beyond, in Ongley’s case, the fact of being arrested for the offence of Deception and, in Pettingill’s case, the likelihood of it. I note that Ongley says that police have seized computers and files relating to this matter. Such a seizure is not evidence that the continued prosecution of this civil action is thereby prejuding him in relation to any criminal trial. Rather, it is the reverse. As indicated, the fact of criminal proceedings is not by itself a sufficient ground for staying civil proceedings. The question is whether the evidence discloses “... a real and not merely notional danger of injustice in the criminal proceedings ...” (see McMahon v Gould (supra) Wooten J at 905).
Deception is an offence created by s 139 of the Criminal Law Consolidation Act1935 (SA), which provides as follows:
139.   A person who deceives another and, by doing so –
(a)     dishonestly benefits him/herself or a third person; or
(b)     dishonestly causes a detriment to the person subjected to the deception or a third person,
is guilty of an offence.
It can be seen that the focus of the offence of Deception is dishonesty.
The plaintiff’s application here was confined to the issue of whether the defendants were liable under the letter to the plaintiff dated the 25^th August 2003 and/or the Deed of Guarantee and Indemnity dated the 1^st April 2004, to indemnify the plaintiff. As will be seen, there is no evidence of deception, deceit or dishonesty relied upon by me to arrive at the conclusion that the plaintiff is entitled to a summary judgment on the Guarantee of the 1^st April 2004. So proceeding to enforce the Deed of Guarantee and Indemnity could not be said to prejudice any trial of the second and third defendants for the offence of Deception, at least not to the extent of requiring a stay bearing in mind all the circumstances and in particular the considerations on both sides of the type canvassed by Wooten J above.
In this respect, the case of Rochfort is instructive. The plaintiff Rochfort sued the defendant John Fairfax & Sons Ltd for defamation arising out of a newspaper report which stated that Rochfort had been charged with a criminal offence. The defendant obtained a stay of the defamation action until after the conclusion of the criminal trial. The New South Wales Court of Appeal allowed the appeal against the order staying the civil action. The Court held that the issue in the civil case was not whether the plaintiff was guilty or innocent of the offence, but rather whether it was true that he had been charged as reported. So the issues in the criminal trial and those of the civil action were, in that sense, different. Sugerman ACJ with whom Holmes and Mason JJA agreed, said at 22:
Thus the plaintiff's reputation cannot be taken to have been affected in the way in which it might have been affected by the very different statement that he had in fact committed the crime in question; and the measure of his damages in respect of the statement in fact made cannot be affected by the answer to the question whether the quite different statement referred to, if it had been made, would have been true or false. It follows that the question of the actual guilt or innocence of the plaintiff of the crime of aiding and abetting theft with which he was charged is wholly irrelevant, in relation to damages or otherwise, in this action for libel. The result is that the whole substratum of an argument based on alleged contravention of public policy by a prior trial of the same issue of guilt or innocence as will be tried in the criminal proceedings must in any event collapse.
In my view, that is sufficient to dispose of the application to stay this action or rather, stay the application for Immediate Relief, which became the focus of counsel, Mr Esau’s, application.
In the course of his argument on the 23^rd November 2004, counsel for the second and third defendants, Mr Esau, at one stage sought an adjournment of the application to stay the action as a whole as opposed to the application for Immediate Relief (5). He characterised it as “not wanting a ruling on that part of his application”. However, as his argument proceeded it seemed to develop into a general application to adjourn the hearing of all the applications (11, 39, 41 and 51). Whatever the breadth of the application to adjourn, I confirm that I refused it on the 9^th December 2005 on the following grounds:
·the Immediate Relief sought and granted could not prejudice the second and third defendants in the anticipated criminal proceedings because of the factual basis upon which it was granted;
·the evidence adduced by the defendants did not allege any matters of prejudice sufficient to lead to a stay; and
·given that counsel made a full argument, he could not seek an adjournment in the event that the Court was against him.
So, in balancing the interest of justice as between the parties I was of the view that there was no real danger of injustice accruing to the two defendants in the anticipated criminal proceedings sufficient to order, either, a stay or an adjournment, of the application for Immediate Relief.
Immediate Relief – Rule 25.02 – Enforcement of Guarantees
I turn to the application for Immediate Relief.
The Third More Explicit Amended Statement of Claim discloses a detailed pleaded case against five defendants which raises multiple causes of action. The summary application is against only the second and third defendants, and is in respect of only one of the causes of action, namely the enforcement of alleged guarantees. It is no bar to the entitlement to summary relief that the application is in respect of some only of the claimed relief in the action (see Pennington v McGovern[6]).
[6] (1987) 45 SASR 27
Some principles
This of course is not an interlocutory application, but is an application for final relief. The following are the parameters:
·The Court has a general discretion as to whether it will allow the summary disposal of an action (see Myer Queenstown Garden Plaza Pty Ltd v Port Adelaide City Corporation[7]).
·This discretion should be exercised with caution (see General Steel Industries Inc v Commissioner for Railways[8]; see also Bellas v Kipouros[9]).
·Summary determination of issues in dispute should only be determined in the clearest of cases. The object of r 25.02 is to facilitate the expeditious disposal of cases in respect of which there is not substantial dispute or in which the nature of the dispute is such that can be resolved readily and speedily in chambers. It should not be used where there are complex issues of law and fact (see Wicklow Enterprises Pty Ltd v Doysal Pty Ltd[10]).
·What needs to be clear is that there is no serious question to be tried so that the matter is amenable to speedy resolution without the need for a trial (see Settlement Wine Co Pty Ltd v National and General Insurance Co Ltd[11]).
·There must be sufficient evidence on all essential matters to enable a full and final determination of the claims (see Allianz Australia Insurance Ltd v National Jet Systems[12]). Generally speaking, the issues must be capable of resolution on affidavit evidence without the necessity of cross-examination of the deponents (see Wicklow[13]).
·Urgency is not an essential pre-requisite. Applications may well be justified even where there is “no apparent urgency” (see Addstead Pty Ltd (In Liq) v Liddan Pty Ltd[14]).
[7] (1973) 6 SASR 240
[8] (1964) 112 CLR 125
[9] (1974) 8 SASR 418 per J Bright at 419
[10] (1985) 124 LSJS 225
[11] (1988) 146 LSJS 150 at 153
[12] [2004] SASC 438
[13] (supra) per King CJ at 226
[14] (1997) 70 SASR 21 per Perry J at 52, 53
The Evidence - Findings
I turn to the evidence.
On the 21^st October 2002, the first defendant, P&O Finance & Property Facilitators Pty Ltd (“P&O Finance”), was registered. Both the second defendant, Malcolm Dean Ongley (“Ongley”), and the third defendant, Malcolm Pettingill (“Pettingill”), were, at the material time, shareholders and Directors of P&O Finance (see Annexures A and B to first Jongebloed affidavit).
The plaintiff alleges that in August 2003 Ongley and Pettingill approached her with a proposal to invest in the purchase of a property known as “The Briars” and located at Lot 42 Cudlee Creek Road, Cudlee Creek. She alleges that they induced her into providing $200,000 to facilitate their purchase of the said property (see paras 5, 6 and 7 of plaintiff’s affidavit and see also para 8 of plaintiff’s More Explicit Amended Statement of Claim). Ongley and Pettingill in response say that in August 2003 they discussed with the plaintiff whether she wished to invest in the purchase and development of The Briars (see para 8 of Amended Defence of first, second, third and fourth defendants). So it is at least common ground that Ongley and Pettingill discussed with the plaintiff whether she wished to invest in the redevelopment of “The Briars”.

The plaintiff alleges that she was offered a number of inducements to invest (see paras 9, 10 and 11 of plaintiff’s affidavit). None of these allegations are admitted so they are not established in evidence for the purpose of this application.
The plaintiff said that she then received a letter dated the 25^th August 2003 from Pettingill and Ongley on P&O Finance letterhead (see para 14 of plaintiff’s affidavit and Exhibit RDG1). The defendants do not challenge the letter, its receipt by the plaintiff or their signatures, but rather plead that “it speaks for itself” (see para 10 of Amended Defence). I set out the letter hereunder:
P&O FINANCE & PROPERTY FACILITATORS PTY LTD
(A.C.N. 102 575 897)
PO Box 219
FULLARTON SA 5063
Telephone:          8370 3200
Facsimile:           8370 3239
Mobile               0409 559 757
Ms. Robyn Griffin,
6 Sandpiper Court,
MAWSON LAKES SA 5095
Dear Robyn,
In response to our discussion and after further confirmation from Malcolm Pettingill I now confirm my understanding of our proposed arrangement.
We will continue with the purchase of the property at Cudlee Creek known as “The Briars” at a cost as shown below.
Contract Price  $480,000
Stamp Duty & Settlement costs 8%  $38,400
Extra payment to vendor at settlement Ref. 2^nd mortgage
Between Cudlee Creek & McNamara Road  $30,000
Loan back of six months interest to you on $200,000 at 10%            $10,000
Total Settlement costs  $558 400
In addition to settlement costs it is necessary to factor in other relevant costs prior to calculating profit
The factors are
[1]    Interest which would normally be charged on this debt
       for say six months @ 7%  $19,500
[2]    The cost of renovation $50-$100K Say  $75,000
[3]    The interest on renovation costs @ 7% for an
       average of 3 full months  $1,300
[4]    Your guaranteed $50,000 profit  $50,000
TOTAL POSSIBLE JOB COSTS  $704,200
Malcolm Pettingill believes he agreed to the following:
[1]You would invest $200,000 into the project and we will loan you $10,000 at settlement which represents six months interest at 10% p.a. on $200,000.
[2]We will trade in our property at McNamara Road at settlement which reduces the price by $240,000.
[3]We will borrow the funds required to settle and any amount required to renovate.
[4]We will guarantee you the return of your $200,000 at the end of six months and a further guaranteed sum of $50,000.
[5]We will then calculate the profit by taking the selling price of the property after commissions and advertising costs are taken into account and deducting the real costs as on page one above. We believe this figure as previously calculated will be approximately $700,000.
[6]Sale proceeds over $700,000 will be shared 50% to you 50% to us.
[7]If the property does not sell for more than $700,000 you will still be paid a total of $250,000 as promised.
[8]You are to be involved in all decisions as to the property renovation and sale.
I am happy to continue with the offered transaction should all parties be satisfied of these conditions.
In consideration of these matters all parties should indicate their agreement by signing where indicated below.
Upon receipt of a fully signed copy I will instruct our solicitor to draft an agreement covering all of the above and I will proceed to arrange the loan on your property.
Yours faithfully
Malcolm Ongley
Director
We Agree in principle to the above terms
M.E Pettingill 25/8/2003         M.D. Ongley 25/8/2003          R. Griffin    /8/2003
The plaintiff relies on this letter as itself constituting a guarantee of repayment of the loan or investment which she eventually made. I do not agree. The terms set out in the letter are made specifically subject to the drafting of a further agreement. So on its face it appears to be “an agreement to agree” (see generally Masters v Cameron[15]. Further, it should be borne in mind that a guarantee is a secondary liability. The letter is rather ambiguous in that respect. If it is a guarantee, who is the entity primarily liable and who is the guarantor? Further, who is the “we” used so liberally in the letter? Is it necessarily Ongley and Pettingill as opposed to P&O Finance?
[15] (1954) 91 CLR 353
The letter, however, is relevant and therefore admissible to explain the events which then unfolded.
The plaintiff then proceeded to borrow $211,000 from the Rockhampton Building Society on the security of her house at 6 Sandpiper Court, Mawson Lakes (see para 12, 24 and 25 of the plaintiff’s affidavit; see also para 10 of More Explicit Amended Statement of Claim and para 10 of Amended Defence). That sum was paid into the Trust Account of the fifth defendant, the solicitor Stephen McNamara (“McNamara”). The payment into Trust occurred on the 10^th October 2003 and three days later on the 13^th October 2003 the sum of $190,000 was paid out of Trust to P&O Finance (see plaintiff’s affidavit Exhibit RDG4). No issue is taken as to these matters. I accept these facts as established.
On the 21^st September 2003, pursuant to a Deed, “The Briars Property Unit Trust” was established. The founder was McNamara and P&O Finance was appointed the Trustee. On the same date, according to the unit certificate, the plaintiff was issued 200,000 Class A units. The schedule of unit holders shows her as having been issued with 200,000 B Class units. I do not regard this inconsistency as being of any material consequence. The price per unit was set out as $1.00 (see Exhibit RDG2 to plaintiff’s affidavit). Again, there is no debate about this evidence which I accept.
It is notable that the unit certificate asserts that “payment in full is acknowledged”, though as at the 21^st September 2003 the solicitor acting for the Trust, namely McNamara, (see para 12 of Amended Defence), had yet to receive the monies from the Rockhampton Building Society.
The plaintiff, in her affidavit, said that “The Briars” was not purchased (see paras 16 to 23 of plaintiff’s affidavit). It was common ground that “The Briars” has not been purchased directly or indirectly by the defendants. The plaintiff then said that after discussions with Ongley and Pettingill they provided her with a letter dated the 1^st April 2004 and a document headed Guarantee and Indemnity dated 1^st April 2004 (see para 23 of plaintiff’s affidavit and Exhibit RDG3). The defendants said in respect of those documents, that the documents speak for themselves and that any guarantees given by P&O Finance, Ongley and Pettingill were not supported by consideration from the plaintiff and are therefore void and of no effect (see Amended Defence para 19). The affidavits of the two defendants do not take issue with the plaintiff’s assertion. So again I accept it as established that the plaintiff received those documents from the defendants and I accept what is on their face as to the identity of the signatories.
I set out hereunder the letter of the 1^st April 2004.
P.& O. Finance & Property facilitators Pty Ltd.
2A Russell Street Belair Sa 5052
Phone     08 3703200
Fax       08 8370 3239
Ms. Robyn Griffin
6 Sandpiper Chase
Mawson Lakes Sa 5095
Dear Robyn,
Further to our discussion yesterday I confirm Malcolm Pettingill and I are committed to full repayment of the funds invested in The Briars project.
The original amount advanced was $200,000 and our agreement was to repay $250,000 in redemption of your units in the trust on the 13th March 2004.
At this point in time the Briars property has not settled. There are several reasons for this as discussed with you last night but as you correctly pointed out until it does the investment trust has no registerable security.
Therefore Malcolm Pettingill and I agree to the following
[1]    We will meet all interest payments on your borrowed funds up to the date of repayment of the $250,000.
[2]    Interest will be paid on the amount of $25,000 at 10 percent per annum from 13th March 2004 up to repayment of the $250,000 with all payments as in [1] above adjusted.
[3]    We will provide you with personal guarantees on the amount of $250,000. [these are being prepared and will be signed as soon as possible].
[4]    Mortgage security will be offered on The Briars as soon as it settles or in the alternative security on the Colac property or the Port Adelaide property as soon as either settles during this month.
[5]    We will repay the sum of $250,000 plus additional interest upon settlement of our Colac investment property which as discussed will occur by 30th April 2004.
We trust this offer is acceptable to you and will continue to keep you informed of our progress.
Yours faithfully
Malcolm Ongley           Malcolm Pettingill
1^st April 2004
It is to be noted that the letter is:
·on P&O Finance letterhead;
·signed by both Ongley and Pettingill; and
·dated 1^st April 2004.
This letter acknowledged “... our agreement was to repay $250,000 in redemption of your units in the Trust on the 13^th March 2004”. Of course at that point in time the obligation to redeem had passed a fortnight earlier. The letter offers personal guarantees in the following terms:
“... we will provide you with personal guarantees on the amount of $250,000 [these are being prepared and will be signed as soon as possible] ...”
The letter offered the plaintiff a number of other inducements which plainly intended to encourage the plaintiff to delay pursuing the recovery of the monies.
The Guarantee was duly prepared and signed. It is to be noted that it is a Deed and is signed, sealed and delivered by, not only the guarantors Ongley and Pettingill, but also, P&O Finance. The recital provides as follows:
WHEREAS:-
A.Pursuant to a certain investment advance (hereinafter call “the said Agreement”) entered into between GRIFFIN as Investor and THE BRIARS UNIT TRUST as the Borrower on the 13^th date of September 2003 wherein the investor agreed to advance the trust the sum of Two hundred thousand dollars ($200,000.00) and whereby the TRUST agreed to redeem the Units at Two hundred and fifty thousand dollars ($250,000.00) on 13^th March 2004.
B.GRIFFIN has agreed to enter into the investment at the express request of MALCOLM DEAN ONGLEY of 1/22A Broughton Avenue Mitcham 5062 in the said State, AND MALCOLM PETTINGILL of 107 Main Road Glenalta 5052 in the said State (hereinafter together with their respective executors administrators and assigns called “THE GUARANTORS”) on condition that the Guarantors would Guarantee to GRIFFIN the payment of all monies by the TRUST to GRIFFIN as and when the same fell due and payable pursuant to the terms of the said TRUST AGREEMENT and the due and proper compliance by the TRUST with each and every other of the TRUSTS obligations and liabilities pursuant to the said Trust Agreement.
It is significant that the Trustee, P&O Finance, is a party to the Guarantee and Indemnity because it thereby categorically acknowledges in the recital that it was obliged to have redeemed the plaintiff’s units for $250,000 on the 13^thMarch 2004.
Further, by clause 2 the liability of the guarantors cannot be affected by any indulgence granted to the Trust or the guarantors. So the fact that the plaintiff allowed matters to drift on beyond the 13^th March 2004 and in that time accepted payments from the Ongley/Pettingill interests, said to be “amounts to cover the plaintiff’s monthly mortgage payment”, until as late at August 2004, cannot prejudice her right to insist on payment under the Guarantee.
Also by reason of clauses 6 and 7, the plaintiff is entitled to enforce the Guarantee “... without first having recourse to any such security or without taking any steps or proceedings against the Trust pursuant to the said Trust Agreement or otherwise ...”. So the plaintiff can enforce the Guarantee as if the guarantors were primary debtors. Accordingly, there is no need, for instance, for the plaintiff to comply with the notice and machinery provisions in the Trust Deed for the redemption of units, which on their face appear to be a precondition to requiring the Trust to redeem units. Indeed, there is no need for the plaintiff to make demand on the Trust at all.
The pleadings, though not the oral argument before me, contend that the Guarantee is not enforceable by reason of a lack of consideration. In this case there probably was consideration for the execution of the Guarantee on the 1^stApril 2004, but it is unnecessary to explore it. The Guarantee and Indemnity document was plainly a Deed which was duly signed, sealed and delivered so obviating the need for demonstrable consideration (see s 41(5) Law of Property Act 1936; Phillips and O’Donovan, The Modern Contract of Guarantee[16]).
[16] 2nd ed at 58, 59
Counsel for the second and third defendants argued that there could not be an obligation on the Trust to redeem the units unless and until the plaintiff had taken all the steps require by the Trust Deed as preconditions to any redemption. In my view, there is no substance to that argument. The Trustee of the Trust, P&O Finance, had agreed to redemption of the units on the 13^th March 2004 in its letter of the 1^st April 2004. Moreover, that agreement was set out in the recital of the Deed of Guarantee and Indemnity to which the Trustee, P&O Finance, was a signatory. Further, that argument fails to address the provision in the Guarantee which entitles the plaintiff to have immediate recourse to the guarantors when the guaranteed funds are not repaid. Also, it is my view, if it were necessary to explore it, that the Trustee P&O Finance would be estopped from refusing to redeem the units on the basis that the machinery provisions had not be complied with.
Despite demands upon Ongley and Pettingill and P&O Finance, the guaranteed funds have not been paid to the plaintiff (see para 27 of plaintiff’s affidavit and see also para 3 of second Jongebloed affidavit).
Finally, on the 5^th September 2005, Mr Hugh Martin, of Bernardi Martin, was appointed Liquidator of P&O Finance (see first Jongebloed affidavit Annexure M). The liquidation of P&O does not affect the plaintiff’s entitlement to enforce the Guarantee against Ongley and Pettingill though of course further proceedings against P&O Finance are not permissible without leave of the Court (see s 417B of the Corporations Act 2001). It is notable that, in the Summary of Affairs and the Report as to Affairs of P&O Finance completed and lodged by Pettingill with the Australian Security and Investment Commission, the plaintiff is recorded as an unsecured creditor of P&O Finance in the sum of $250,000 (see Annexure G of First Jongebloed affidavit and Annexure N of the Second Jongebloed affidavit). There is a bare denial that P&O Finance was so indebted in the affidavit of Pettingill sworn on the 27^th November 2005. His assertion is not supported by any facts and is contradicted by the ASIC Report and is otherwise wholly untenable given the unchallenged documents under his hand. So the inclusion of the plaintiff as an unsecured creditor in the sum of $250,000 is further evidence confirming the already overwhelming evidence that P&O Finance at all material times from 13^th March 2004 was obligated to redeem the plaintiff’s units for $250,000 and thereby pay to her that sum.
In the light of the above findings, it is of no moment that, in some of the affidavit material before me, there is some confusion as to whether the plaintiff’s “advance” was a loan or investment.
Conclusion - Immediate Relief - enforcement of Guarantee
So the evidence established that:
·Firstly, before the advance was made by the plaintiff, P&O Finance in its letter of the 25^th August 2003, promised the repayment of $250,000 at the end of six months;
·Secondly, the plaintiff advanced $200,000 which was duly paid into the Trust account of the Solicitor acting for the Trust and the Trustee P&O Finance and, further, the bulk of the funds were paid out of Trust to P&O Finance;
·Thirdly, by the 1^st April 2004 the plaintiff had not been paid by P&O Finance in accordance with the promise made in its letter of the 25^th August 2003. Accordingly, P&O Finance on the 1^st April 2004 wrote to the plaintiff offering a range of inducements to her, including the provision of a document of Guarantee;
·Fourthly, a Deed of Guarantee and Indemnity was duly executed on the 1^stApril 2004 under which Ongley and Pettingill guaranteed payment to the plaintiff of monies paid by her into the investment. Notably the Trustee, P&O Finance, who could be loosely characterised as the “primary debtor”, is a signatory to the Guarantee and Indemnity thereby further acknowledging the overdue obligation to redeem the plaintiff’s units at $250,000 on the 13^th March 2004.
·Finally, the Trust has not redeemed the units and, in particular, P&O Finance has not paid the plaintiff in accordance with its promises or at all.
So I was satisfied on the basis of the affidavits, and the admissions in the defence, that there was sufficient evidence on the necessary issues to conclude that the plaintiff was entitled to enforce the Guarantee and Indemnity of the 1^st April 2004. It was a clear case which called for an exercise of the discretion to grant summary relief. There was nothing arising from the evidence which suggested that there was a serious question about the liability of Ongley and Pettingill which could only be resolved by a trial in the usual way.
Accordingly, the plaintiff is entitled to Immediate Relief, namely judgment in the sum of $250,000 pursuant to the terms of the Guarantee and Indemnity dated the 1^st April 2004 and I so ordered on the 9^th December 2005.
In the course of his argument counsel for the plaintiff, Mr Keen, invoked r 54.05 in connection with the admissions by Pettingill in the ASIC documents that the plaintiff was an unsecured creditor of P&O Finance in the sum of $250,000. I accepted that as an established fact in the application for Immediate Relief. It does not require a specific order from me under r 54.05. It was an item of evidence I took into account.
So on the 9^th December 2005 I entered judgment for the plaintiff against the second and third defendants in the sum of $250,000.
I will hear the parties as to interest and costs.