Irani v St George Bank Limited (No 3)
[2005] VSC 456
•26 October 2005
| IN THE SUPREME COURT OF VICTORIA | Not Restricted | |
AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION
COMMERCIAL LIST
No. 6093 of 2003
F5553
| BOMAN IRANI & ORS | Plaintiffs |
| V | |
| ST GEORGE BANK LIMITED (ACN 055 513 070) | Defendant |
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JUDGE: | WHELAN J | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 21 and 25 October 2005 | |
DATE OF JUDGMENT: | 26 October 2005 | |
CASE MAY BE CITED AS: | Irani v St George Bank Limited (No 3) | |
MEDIUM NEUTRAL CITATION: | [2005] VSC 456 | |
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PRACTICE AND PROCEDURE – Application for judgment for a money sum on counterclaim when not pleaded – Defendant not permitted to reopen case to prove quantum of debt – Relief pursuant to Rule 59.01 of the Supreme Court (General Civil Procedure) Rules 1996 not granted.
PRACTICE AND PROCEDURE – Costs – Application for indemnity costs on the basis of contractual indemnity – Order for costs on the ordinary basis.
Reading Entertainment Australia Pty Ltd v Burstone Victoria Pty Ltd (No 2) [2005] VSC 137, distinguished.
PRACTICE AND PROCEDURE – Stay of execution and injunction granted pending application for a stay to the Court of Appeal.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiffs | Mr P G Nash QC with Mr G J Parncutt | Comlaw Solicitors |
| For the Defendant | Mr R M Garratt QC with Mr D L Bailey | Herbert Geer & Rundle |
HIS HONOUR:
In this matter I delivered reasons for judgment on 13 October 2005.[1] An earlier trial of preliminary issues had been conducted before Justice Byrne, who delivered his reasons for judgment on 27 August 2004.[2] I indicated in my reasons that I would hear the parties further on the orders that ought to be made and on the issue of costs. The parties made submissions on these issues on 21 October and 25 October 2005. These reasons assume knowledge of my reasons delivered on 13 October 2005.
[1]Irani v St George Bank Limited (No 2) [2005] VSC 403.
[2]Irani v St George Bank Limited [2004] VSC 260.
The defendant and plaintiff by counterclaim, St George Bank Limited (“St George”), which has been successful in the proceeding, sought orders in accordance with a facsimile transmission of 20 October 2005, which I have initialled and which will remain on the court file.
The plaintiffs and defendants by counterclaim (“the guarantors”) submitted that on the basis of the reasons for judgment delivered, St George was entitled to the declarations sought in paragraphs B, C, D and E of the proposed orders. Those declarations concern enforcement of the securities. Counsel for the guarantors submitted that St George was not entitled to the order sought in paragraph A, which was judgment for a money sum, and the order sought in paragraph F, which was indemnity costs.
The guarantors also sought a brief stay, on the basis that they intend to appeal and wish to have the opportunity to make an application for a stay pending appeal to the Court of Appeal. An affidavit filed on behalf of the guarantors indicated that such an application could be able to be made on 25 November 2005 or 2 December 2005, if it is issued in the next seven days.
Accordingly, there are three issues of controversy: (1) St George’s proposed order A, giving a judgment for a money sum; (2) St George’s proposed order F, giving it indemnity costs; and (3) the application for a stay.
Judgment for a money sum
St George’s amended counterclaim dated 4 August 2004 does not seek judgment for a money sum; it seeks only declarations and other relief as to the enforcement of its securities. Counsel for the guarantors submitted that St George should not now be permitted to seek relief which would, it was submitted, involve amendment and reopening of the case. Counsel for the guarantors proffered an undertaking in the following terms in order to meet a concern that I raised:
“Should a subsequent proceeding be brought for a monetary sum due pursuant to the guarantees, the plaintiffs will not raise any Anshun estoppel or related point as a defence to such action.”
Counsel for St George submitted that the matter was simple and clear and should be resolved now in order to avoid a multiplicity of proceedings. Their submission foreshadowed reliance on certificates given by a bank officer, Mr Bateson, who, it was said, could be made available for cross-examination. The certificate that deals with the current indebtedness reads as follows:
“RE: PINNACLE INVESTMENTS PTY LTD
OFFERS OF FACILITY DATED 15 JUNE 2000, 15 JUNE 2001, 8 AUGUST 2001 AND 21 NOVEMBER 2001
I, Alan Bateson, Chief Manager Loans Management Unit, St George Bank Ltd, Sydney, New South Wales, hereby certify that:
1.I am the Manager in charge of the account of Pinnacle Investments Pty Ltd with St George Bank Ltd.
2.The amount owing to St George Bank Ltd by Pinnacle Investments Pty Ltd as at 21st October 2005 is $3,298,070.03, which amount excludes all legal costs of Supreme Court proceeding 6093 of 2003 and interest thereon.
3.This certificate is given pursuant to clause 23 of the Commercial Banking Facilities – Standard Terms (07/2001 version), which are incorporated into the Offers of Facility.”
Counsel for St George relied upon Rule 59.01 of the Supreme Court (General Civil Procedure) Rules 1996, and submitted that, if necessary, an amendment to make the claim ought to be permitted, even at this late stage.
The clause relied upon in paragraph 3 of the certificate is a clause in standard terms – 07/2001 version – which are attached to the letter of offer dated 21 November 2001. This letter and these terms are in evidence as part of exhibit P1. The clause provides that a certificate is “sufficient evidence of the matter or amount, unless it is proved to be incorrect”.
The other letters of offer referred to in the certificate are not in evidence and I do not believe a letter of 8 August 2001 which might properly be described as an “offer of facility” is in the court book. The standard terms attached to the 15 June 2001 letter are different to the 07/2001 version referred to in the certificate, although the particular provision concerning certificates is the same. Yet a further different version of the standard terms is attached to the 15 June 2000 letter, and the term there is different in that it purports to render the certificate conclusive “except in the case of manifest error”.
The proposed certificate does not purport to rely on the certificate provisions in the guarantees. Those provisions are also different to the standard terms 07/2001 version, in that they purport to be conclusive “in the absence of manifest error”.
I do not consider it to be fair to permit St George to reopen its case now in order to prove the quantum of its debt, or to give St George relief relying upon Rule 59.01 of the Supreme Court (General Civil Procedure) Rules 1996 which St George has not claimed. I reach this conclusion for the following reasons.
First, there is not, and has never been, in the proceeding a claim by St George to recover a money sum on the debt from the guarantors.
Secondly, there are uncertainties raised by the evidence foreshadowed if I permit St George to seek to prove the quantum of the debt. There is a distinct possibility, it seems to me, that the matter will become protracted and perhaps complex, thereby delaying the final disposition of this already protracted proceeding.
Thirdly, the undertaking concerning Anshun addresses a concern I had in that respect. I think it is most unlikely that any Anshun point would have been open, but argument might have complicated any subsequent proceeding.
Fourthly, after realisation of the securities, it may never be necessary for St George to seek a judgment for the debt. Further, there are peculiar complications referable to the position of Dr Kermani which will not be eliminated until the securities are realised.
Accordingly, I will not make order A in St George’s proposal, and I will make orders B, C, D and E.
Costs
Each of the guarantees provides that the guarantor indemnifies St George against all costs it incurs in exercising, or attempting to exercise, any power or right in relation to the recovery of “guaranteed money”. On the basis of this contractual indemnity, St George seeks indemnity costs of the proceeding. St George’s counsel rely upon a decision of mine in Reading Entertainment Australia Pty Ltd v Burstone Victoria Pty Ltd (No 2).[3]
[3][2005] VSC 137, particularly at [22]-[23] (“Reading”).
Counsel for the guarantors did not dispute the principles I referred to in Reading, but submitted that such an order ought not to be made when no allegation of the provision relied upon had been pleaded, and no claim for indemnity costs had been included in the prayer for relief. They relied upon a recent New South Wales Court of Appeal decision to this effect in Kyabram Property Investments Pty Ltd v Murray.[4]
[4][2005] NSWCA 87 (“Kyabram”).
The position in Reading is distinguishable from the position here in two respects. First, the contractual provisions in that case specifically and expressly dealt with legal costs.[5] Secondly, no point was taken there as to any failure to plead or alert the other side to the foreshadowed claim for indemnity costs, and although no claim for indemnity costs was made in the writ in that proceeding, a claim was made by Reading Entertainment Australia Pty Ltd, as lender, for a declaration that the borrower and the guarantors were liable to indemnify it.
[5]See Reading Entertainment Australia Pty Ltd v Burstone Victoria Pty Ltd (No 2) [2005] VSC 137, [20].
I do not think an order for indemnity costs should be made here for the following reasons:
(1) The provisions relied upon here are not as clear and unequivocal as some such provisions can be; for example, those in Reading.
(2) There has been a failure to plead or otherwise appropriately alert the other party to the claim, as was the case in Kyabram.
(3) Such an order would operate in a confusing and unsatisfactory manner in relation to Dr Kermani, and I do not think that position is adequately dealt with by an undertaking by St George, as was suggested by St George’s counsel.
I will accordingly make an order for costs on the ordinary basis against the defendants to the counterclaim. If the New South Wales Court of Appeal’s analysis in Abigroup Ltd v Sandtara Pty Ltd[6] is correct, St George can pursue contractual recovery of any entitlement to indemnity under the provisions of the guarantees.
[6][2002] NSWCA 45.
Stay
As I indicated in argument, I consider that the guarantors should have the opportunity to make their application to the Court of Appeal for a stay. I cannot, of course, stay the declarations, but subject to further order, I will stay execution of the judgment for possession until 4.30 pm on 2 December 2005, and I will, subject to one further matter, restrain St George from disposing of the shares, the subject of the equitable share mortgage, until 4.30 pm on 2 December 2005.[7]
[7]As to my power to take this course, I refer to Butterworths, Civil Procedure Victoria, vol 1, ¶64.25.55 and the cases cited therein.
The further matter raised by this course is whether the guarantors should be required to give an undertaking as to damages. In the circumstances, I think such an undertaking should be given.
[The matter was stood down and when resumed an undertaking as to damages was given].
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