Harburg Nominees Pty Ltd v Deen - [2019] QSC 291

SUPREME COURT OF QUEENSLAND

CITATION:

Harburg Nominees Pty Ltd & Anor v Deen [2019] QSC 291

PARTIES:

HARBURG NOMINEES PTY LTD ACN 103 245 923 IN ITS CAPACITY AS TRUSTEE OF THE TW SUPERANNUATION FUND
(first plaintiff)
HARBURG INVESTMENTS PTY LTD ACN 010 279 884 IN ITS CAPACITY AS TRUSTEE OF THE PETER HARBURG FAMILY TRUST
(second plaintiff)
v

ABDUL RAHMAN DEEN
(defendant)

FILE NO:

2972 of 2017

DIVISION:

Trial Division

PROCEEDING:

Claim

ORIGINATING COURT:

Supreme Court of Queensland at Brisbane

DELIVERED ON:

27 November 2019

DELIVERED AT:

Brisbane

HEARING DATE:

21 and 22 November 2019

JUDGE:

Applegarth J

ORDER:

1. Judgment be entered against the defendant in the sum of $40,057,964.18.

2. The defendant pay the plaintiffs’ costs of and incidental to the proceeding to be assessed on the indemnity basis.

CATCHWORDS:

GUARANTEE AND INDEMNITY – CONTRACT OF GUARANTEE – MISREPRESENTATION OR NON-DISCLOSURE – ENFORCEABILITY – where the plaintiffs loaned monies to a company of which the defendant was sole director for the purpose of a real estate development – where the defendant executed personal guarantees in relation to the loans – where the defendant’s case is that he is not liable under the guarantees because of alleged oral representations made by the plaintiffs’ director that the plaintiffs would not enforce the guarantees and would fund sufficient moneys to complete the development – where the defendant contends that, but for the representations, he would not have entered into a guarantee in June 2016 and would have obtained alternative finance or found another developer to complete the development – where the plaintiffs’ director denies the representations – where, in the alternative, the defendant submits that any judgment against him should not be given or should be stayed until the development has been sold – whether the defendant has proven that the representations were made – whether the defendant is liable under the guarantees – whether judgment should be deferred or stayed

Watson v Foxman (1995) 49 NSWLR 315, cited

COUNSEL:

R A Kipps for the plaintiffs

P G Jeffery for the defendant

SOLICITORS:

Enyo Lawyers for the plaintiffs

Hall & Co Solicitors for the defendant

The plaintiffs loaned moneys to Warapar Resources Pty Ltd for the purpose of a real estate development. There were a number of loan agreements, including one dated 3 June 2016 by which the plaintiffs agreed to advance Warapar a further amount of $4,450,000.
The defendant was the sole director of Warapar. The plaintiffs seek judgment against him for moneys owing under a guarantee dated 3 June 2016 by which he guaranteed the due and proper performance by Warapar of the terms and conditions of the loan agreement made the same day.
The defendant’s case is that he is not liable under the guarantee because of alleged representations made on behalf of the plaintiffs. These representations are denied.
The threshold issue is whether the plaintiffs’ director and representative, Mr Peter Harburg, made the alleged representations. The alleged representations are that the plaintiffs:
(a)would not enforce…

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: [2019] QSC 291
Decision Date: 27 November 2019

CaseChat Overview and Summary

Harburg Nominees Pty Ltd initiated legal proceedings against Deen in relation to personal guarantees executed by Deen in respect of loans provided to a real estate development company. The defendant, Deen, argued that he was not liable under the guarantees due to alleged oral representations made by the plaintiffs' director, which allegedly promised non-enforcement of the guarantees and additional funding for the development. Deen contended that had he known these representations were false, he would have either obtained alternative finance or found another developer. The plaintiffs' director denied making such representations. Deen also sought an alternative outcome, requesting that any judgment against him be deferred or stayed until the development was sold.

The court was required to determine whether Deen had proven that the alleged representations were made, whether he was liable under the guarantees, and whether any judgment should be deferred or stayed until the property was sold. The court found that the fact that sales may continue was not a sufficient reason to defer judgment, as the guarantee allows for simultaneous, contemporaneous, or successive remedies. Additionally, the plaintiffs were not entitled to double recovery but were entitled to have Deen honour his guarantee. The court concluded that judgment should be entered for the plaintiffs against Deen.

The court exercised its discretion to award costs on the indemnity basis as per the contractual provision in the guarantee, which requires the guarantor to pay all reasonable costs on demand. Deen did not provide any reason why the court should not follow the parties' agreement. The court ordered judgment against Deen for the sum of $40,057,964.18, along with an order for Deen to pay the plaintiffs’ costs of and incidental to the proceeding to be assessed on the indemnity basis.

Orders

Orders of the court

1. Judgment be entered against the defendant in the sum of $40,057,964.18.

2. The defendant pay the plaintiffs’ costs of and incidental to the proceeding to be assessed on the indemnity basis.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

The fact that sales may continue is not a reason to defer giving judgment. The guarantee provides for the plaintiffs to exercise their remedies simultaneously or contemporaneously or successively. It would be inconsistent with the terms of the guarantee for the plaintiffs to be forced to delay obtaining judgment until the sale of the secured property. The plaintiffs are not entitled to double recovery. However, they are entitled to look to Mr Deen to honour his guarantee. If and when the subject property is sold then the proceeds will be appropriately accounted for and if Mr Deen has paid all or some of the money owed by him pursuant to the guarantee, he can look to recover that amount from Warapar. Therefore, judgment should be entered for the plaintiffs against the defendant.Judgment and costs orders Clause 14 of the guarantee provides for the guarantor “on demand” to pay all reasonable costs, charges and expenses of or incidental to enforcement of the guarantee. This is stated to include legal costs on a solicitor-client basis and all fees charged by counsel. Such a contractual provision is relevant to the exercise of the discretion to award costs on the indemnity basis. Mr Deen does not advance any reason as to why I should not exercise my discretion so as to accord with the parties’ agreement by ordering costs on the indemnity basis. I will do so. The orders will be:1.Judgment be entered against the defendant in the sum of $40,057,964.18.2.The defendant pay the plaintiffs’ costs of and incidental to the proceeding to be assessed on the indemnity basis.

Ratio Decidendi

Legal Principle Established

Full text does not contain this section.

CITATION:	Harburg Nominees Pty Ltd & Anor v Deen [2019] QSC 291
PARTIES:	HARBURG NOMINEES PTY LTD ACN 103 245 923 IN ITS CAPACITY AS TRUSTEE OF THE TW SUPERANNUATION FUND (first plaintiff) HARBURG INVESTMENTS PTY LTD ACN 010 279 884 IN ITS CAPACITY AS TRUSTEE OF THE PETER HARBURG FAMILY TRUST (second plaintiff) v ABDUL RAHMAN DEEN (defendant)
FILE NO:	2972 of 2017
DIVISION:	Trial Division
PROCEEDING:	Claim
ORIGINATING COURT:	Supreme Court of Queensland at Brisbane
DELIVERED ON:	27 November 2019
DELIVERED AT:	Brisbane
HEARING DATE:	21 and 22 November 2019
JUDGE:	Applegarth J
ORDER:	1. Judgment be entered against the defendant in the sum of $40,057,964.18. 2. The defendant pay the plaintiffs’ costs of and incidental to the proceeding to be assessed on the indemnity basis.
CATCHWORDS:	GUARANTEE AND INDEMNITY – CONTRACT OF GUARANTEE – MISREPRESENTATION OR NON-DISCLOSURE – ENFORCEABILITY – where the plaintiffs loaned monies to a company of which the defendant was sole director for the purpose of a real estate development – where the defendant executed personal guarantees in relation to the loans – where the defendant’s case is that he is not liable under the guarantees because of alleged oral representations made by the plaintiffs’ director that the plaintiffs would not enforce the guarantees and would fund sufficient moneys to complete the development – where the defendant contends that, but for the representations, he would not have entered into a guarantee in June 2016 and would have obtained alternative finance or found another developer to complete the development – where the plaintiffs’ director denies the representations – where, in the alternative, the defendant submits that any judgment against him should not be given or should be stayed until the development has been sold – whether the defendant has proven that the representations were made – whether the defendant is liable under the guarantees – whether judgment should be deferred or stayed Watson v Foxman (1995) 49 NSWLR 315, cited
COUNSEL:	R A Kipps for the plaintiffs P G Jeffery for the defendant
SOLICITORS:	Enyo Lawyers for the plaintiffs Hall & Co Solicitors for the defendant