Krohn v Suncorp Metway Ltd

[1999] QCA 151

IN THE COURT OF APPEAL [1999] QCA 151

SUPREME COURT OF QUEENSLAND

Appeal No. 10469 of 1998

Brisbane

[Krohn & Ors. v. Suncorp Metway]

BETWEEN:

BRIAN ATHOL KROHN

(First Defendant)

AND:

PAZEATON PTY LTD (A.C.N. 010 898 530)
(Third Defendant)

AND:

HESTAGE PTY LTD (A.C.N. 010 899 233)
(Fourth Defendant)

AND:

CARRICK INVESTMENTS PTY LTD

(A.C.N. 003 687 054)

(Fifth Defendant) Appellants

AND:

SUNCORP METWAY LIMITED

(A.C.N. 010 831 722)

(Plaintiff) Respondent

DIANNA KROHN

(Second Defendant)

McMurdo P.
Pincus J.A.

Thomas J.A.

Judgment delivered 7 May 1999

Judgment of the Court

APPEAL ALLOWED WITH COSTS. JUDGMENT ENTERED BELOW SET ASIDE AND APPLICATION FOR SUMMARY JUDGMENT REMITTED TO THE TRIAL DIVISION, TO BE BROUGHT ON FOR FURTHER HEARING ON NOT LESS THAN THREE DAYS NOTICE.

CATCHWORDS:	PRACTICE - summary judgment against guarantors of a debt - error
in material before primary judge - whether appeal should be dismissed despite misapprehension as to facts or judgment set aside.
Supreme Court Rules, O. 18, r. 1
Counsel:	Mr P R Dutney QC, with him Mr D A Savage for the appellants. Mr J C Sheahan QC, with him Mr R M Derrington for the respondent.
Solicitors:	Connolly Suthers (Townsville) for the appellants. Clayton Utz for the respondent.
Hearing Date:	21 April 1999.

IN THE COURT OF APPEAL

SUPREME COURT OF QUEENSLAND

Appeal No. 10469 of 1998

Brisbane

Before McMurdo P.
Pincus J.A.
Thomas J.A.

[Krohn & Ors. v. Suncorp Metway]

BETWEEN:

BRIAN ATHOL KROHN

(First Defendant)

AND:

PAZEATON PTY LTD (A.C.N. 010 898 530)
(Third Defendant)

AND:

HESTAGE PTY LTD (A.C.N. 010 899 233)
(Fourth Defendant)

AND:

CARRICK INVESTMENTS PTY LTD

(A.C.N. 003 687 054)

(Fifth Defendant) Appellants

AND:

SUNCORP METWAY LIMITED

(A.C.N. 010 831 722)

(Plaintiff) Respondent

DIANNA KROHN

(Second Defendant)

REASONS FOR JUDGMENT - THE COURT

Judgment delivered 7 May 1999

1. This is an appeal from a judgment of the Supreme Court given on 14 October 1998 in favour of the respondent for a sum of about $2.9M. The judgment was given under O. 18 r. 1, the primary judge holding that there was no arguable defence. It is common ground that no sum

   approaching $2.9M is due at present and that there was an error in the material before the primary

   judge.

2. The appellants were sued as guarantors of the obligations of Ko Huna Village Resort Pty

   Ltd, which had borrowed funds from the respondent and did not repay at the time when it had

   promised to do so. The appellants make various contentions in their outline of argument, but the

   only point pressed is that the primary judge was induced to give summary judgment, rather than to

   take some other course, by a misapprehension as to the facts, induced by the respondent's material.

   Mr Dutney Q.C. told us on the appellants' behalf that the other arguments in the outline would not

   be pursued further, here or below. The primary judge had before him an affidavit made on behalf

   of solicitors acting for the respondent and also acting for receivers and managers who had been

   appointed in respect of the principal debtor. The affidavit explained that a contract was made in

   June 1998 for the sale of real property owned by the principal debtor, for the sum of $2.7M - a

   sum, it will be noted, about $200,000 less than the amount of the judgment. The affidavit went on

   to say that the contract had been terminated on behalf of the vendor on 1 October 1998.

3. It appears that the use of this affidavit at the hearing below occurred as a result of some lack

   of communication within the office of the solicitors for the respondent. Those solicitors were at the

   time the matter came before the primary judge aware, in one section of their office, that the contract

   which was terminated on 1 October 1998 had, on the eve of the hearing, been reinstated;

   unfortunately, this information did not come to the knowledge of the solicitors responsible for the application for summary judgment, the judgment in which is the subject of this appeal. The judge

   and the lawyers involved on both sides in the application before his Honour proceeded, erroneously,

   on the basis of the evidence that the contract was dead.

4. It is argued for the appellants that had the primary judge appreciated that the contract had

   been revived and, as was the fact, due to settle fairly soon, the judgment for about $2.9M which

   we have mentioned would probably not have been entered. The respondent was of course entitled

   to apply for summary judgment against the guarantors in the full amount of the debt, even if it had

   every expectation or even a certainty of receiving that sum, through a sale, in the near future. In that

   situation, however, the primary judge could have thought it desirable to adjourn the application to

   a date immediately after the due date for settlement. The advantage of doing so would have been

   to avoid entering a judgment for a very large sum which would soon be no longer due. The

   settlement in fact took place on the agreed date, 26 October 1998. Nothing was put before us to

   suggest that such a short adjournment would have involved any special disadvantage for the

   respondent; had that been so, then an order for adjournment would not necessarily have been

   appropriate. Nor is it submitted that there was in truth any reason to doubt that the contract for

   sale, which the judge understood had been simply terminated, would be completed, as it was 12

   days after the hearing.

5. The possible courses open to this Court are to dismiss the appeal, despite the

   misapprehension as to facts, on the ground that if the true facts had been known they could have

   made no difference, or to set the judgment aside. What might have been an attractive third possibility is not open, since we are told the gap of about $200,000 which, on the papers before

   us, appears to exist between the amount of the judgment and the sum received on sale has swollen,

   because of interest, receiver's charges and perhaps other matters, to a considerable extent. The

   amount presently due is not agreed. It is therefore not possible simply to reduce the judgment to

   that amount due.

6. In our opinion the appeal should be allowed and the orders made below set aside. If the

   true facts had been before the primary judge it would have been a sound exercise of discretion on

   his Honour's part to adjourn the application until on or after the due date of settlement rather than

   enter judgment for $2.9M. It is argued for the respondent that the Court should not treat

   adjournment as having been a possibility, since no adjournment was asked for below; but that was

   because the true position under the contract of sale was, through an error, not disclosed. Counsel

   for the respondent also argues that if the appeal is allowed the judgment for $2.9M should be

   replaced by judgment for a sum to be fixed in the Trial Division. Assuming this Court has power

   to give such an interlocutory judgment, on a claim for a debt, it is difficult to discern any real point

   in doing so. The appeal is allowed with costs, the judgment entered below set aside and the

   application for summary judgment remitted to the Trial Division, to be brought on for further hearing

   on not less than three days notice.