Hill Foundation Pty Ltd v 131 MVR Pty Ltd - [2022] NSWSC 520

Supreme Court

New South Wales

Medium Neutral Citation: Hill Foundation Pty Ltd v 131 MVR Pty Ltd [2022] NSWSC 520
Hearing dates: 23 March 2022
Date of orders: 3 May 2022
Decision date: 03 May 2022
Jurisdiction: Common Law
Before: Macfarlan JA
Decision:
(1) Order Hill Foundation within 7 days to calculate the appropriate amount of the judgment to be entered in its favour, calculated in accordance with this judgment, and advise the first defendant and the Court of that amount.
(2) Order that Ms Walker be given leave to respond within a further 3 working days if she wishes to.

Catchwords:
GUARANTEE AND INDEMNITY — construction of contract of guarantee — creditor’s claim was a claim in debt for a liquidated sum as distinct from a claim for damages for breach of contract — distinction important as principles of mitigation only apply to the latter
MORTGAGES AND SECURITIES — mortgages — duties, rights and remedies of mortgagee — power of sale — no duty to sell at any particular time or at all
CIVIL PROCEDURE — Court of Appeal — costs orders — interest component of a judgment is included when determining whether a judgment meets the $500,000 threshold in UCPR r 43.34

Legislation Cited:
Civil Procedure Act 2005 (NSW), s 100(1)
Contracts Review Act 1980 (NSW), s 7
Uniform Civil Procedure Rules 2005 (NSW), r 42.34
Supreme Court Act 1970 (NSW), s 101(2)(r)

Cases Cited:
Commonwealth Bank of Australia v Lee (1996) 22 ACSR 574
Edwards v Australian Securities and Investments Commission (2009) 235 FLR 207; [2009] NSWCA 424
Mailman v Challenge Bank Ltd (1991) 5 BPR 11,721
Maund v Crown in right of the State New South Wales [2013] NSWCA 226
Re Castleplex Pty Ltd (in liq) [2010] QCA 59
Starrs v Retravision (WA) Ltd [2012] WASCA 67
UBS AG v Tyne (2018) 265 CLR 77; [2018] HCA 45
Westpac Banking Corporation v Kingsland (1991) 26 NSWLR 700
Young v Queensland Trustees Ltd (1956) 99 CLR 560; [1956] HCA 151

Texts Cited:
B Edgeworth, Butt’s Land Law (7th ed, 2017, Lawbook Co)
J.W. Carter, Contract Law in Australia (7th ed, 2018, LexisNexis Butterworths)
J O’Donovan and J Phillips, Modern Contract of Guarantee (Looseleaf ed 2020, Thomson Reuters)

Category: Principal judgment
Parties: Hill Foundation Pty Ltd (ACN 105 270 611) (Plaintiff)
131 MVR Pty Ltd (ACN 140 772 050) (First Defendant)
Karen Walker (Second Defendant)
Representation:
Counsel:
A Rogers / P Lin (Plaintiff)
P J Beazley (sol) (Second Defendant)
Solicitors:
Baccus Investments Limited (Plaintiff)
Beazley Lawyers (Second Defendant)

File Number(s): 2021/69903
Publication restriction: Nil

Judgment

In these proceedings the plaintiff, Hill Foundation Pty Ltd (“Hill Foundation”), claims an amount alleged to be owing by the second defendant, Ms Karen Walker, under a guarantee given by Ms Walker to Hill Foundation in respect of indebtedness of the first defendant, 131 MVR Pty Ltd. The first defendant is in liquidation and Hill Foundation’s proceedings against it have been discontinued.
Ms Walker does not dispute that on…

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: [2022] NSWSC 520
Decision Date: 03 May 2022

CaseChat Overview and Summary

The dispute between Hill Foundation Pty Ltd and 131 MVR Pty Ltd involved the interpretation of a guarantee agreement and the obligations of a mortgagee. The case was heard in the Court of Appeal, where the primary issue was whether the creditor's claim was for a liquidated sum or for damages for breach of contract. The distinction was crucial because the principles of mitigation only apply to claims for damages, not to those for liquidated sums. Additionally, the case addressed the rights and obligations of a mortgagee, specifically the power of sale and whether there was a duty to sell at any particular time or at all.

The court had to determine the nature of the creditor's claim to apply the appropriate legal principles. It examined whether the guarantee agreement constituted a debt for a fixed amount or if it was a claim for damages. Furthermore, the court reviewed the mortgagee's power of sale, considering whether the mortgagee had a duty to sell at any specific time or under certain conditions. The court's analysis hinged on the precise wording of the guarantee and mortgage documents and the applicable legal principles.

The Court of Appeal found that the creditor's claim was for a liquidated sum rather than damages for breach of contract, thus absolving the guarantor from the duty to mitigate. The court also held that there was no obligation on the mortgagee to sell the property at any particular time. The court emphasised the importance of the precise language used in the guarantee and mortgage agreements in reaching these conclusions. The appeal was allowed, and the matter was remitted to the lower court for further proceedings.

The Court of Appeal's judgment included an order on costs, taking into account the interest component of the judgment to determine if it met the $500,000 threshold under UCPR r 43.34. This was a significant aspect of the decision, as it influenced the costs awarded to the parties involved. The final orders reflected the court's findings on the nature of the creditor's claim and the rights of the mortgagee.

Orders