Lizina Designs & Anor v Mainplan Investments & Ors No. DCCIV-96-687 Judgment No. D3558

[1997] SADC 3558

Court

DISTRICT COURT OF SOUTH AUSTRALIA

Judgment of His Honour the Chief Judge

Hearing

05/02/97.

Catchwords

Appeal from a decision of a District Court Master to grant the plaintiffs leave to sign judgment in respect of certain aspects of their claim against the defendants - discussion of principles to be applied in the consideration of applications for summary judgment and for immediate relief - appeal allowed.

Materials Considered

• Fancourt v Mercantile Credits Ltd (1983) 154 CLR 87, applied.

Representation

Appellant MAINPLAN INVESTMENTS PTY LTD:
Counsel: MR M DURRANT - Solicitors: KELLY &; CO

Appellant STRATOS SAFRALIDIS:
Counsel: MR M DURRANT - Solicitors: KELLY &; CO

Respondent LIZINA DESIGNS PTY LTD:
Counsel: MR M CLISBY - Solicitors: GILBERT SANTINI

Respondent TOMMY CAMPBELL:
Counsel: MR M CLISBY - Solicitors: GILBERT SANTINI

DCCIV-96-687

Judgment No. D3558

26 February 1997

On Appeal from MASTER KELLY

(Civil)

LIZINA DESIGNS PTY LTD & TOMMY CAMPBELL

v MAINPLAN INVESTMENTS PTY LTD, MAINPLAN PTY LTD, STRATOS SAFRALIDIS & AUSTRALIAN ABORIGINAL ART SUPPLIES PTY LTD

Civil

Chief Judge

This is an appeal from a decision of a District Court Master to grant the plaintiffs leave to sign judgment in respect of certain aspects of their claim against the defendants.

The summons in this action was issued on 4 June 1996.The statement of claim that was annexed to the summons asserted on behalf of the plaintiffs three separate claims against the defendants.

First, it was alleged that the first plaintiff had agreed in principle to subscribe for 100,000 shares in the capital of the first defendant for the sum of $100,000 of which one-half was to be paid on 10 February 1996 and the balance on 29 February 1996.It was alleged that the first payment had been made in advance of the agreed date at the request of the third defendant.It was further alleged that the first plaintiff had agreed to make the payments as a consequence of representations that had been made to it and that it had subsequently discovered that such representations were false.The first plaintiff declined to make the second payment and sought the return of the $50,000 that it had paid.

Secondly, it was alleged that the second plaintiff had loaned the first defendant the sum of $20,000 on 12 March 1996.It was asserted that the loan had been made in order to assist the first defendant to fulfil its obligation under a franchising agreement into which it had entered with another company. It was alleged that repayment of the loan had been guaranteed by the third defendant.With reference to the alleged loan, two further assertions were made which did not appear to be in dispute between the parties, namely, that the monies loaned were to be used for similar purposes to those previously been mentioned with respect to the subscription for shares and that two payments of $5,000 each were subsequently made in part repayment of the loan.

Thirdly, it was alleged that the first plaintiff had entered into an agreement with the fourth defendant to purchase certain works of art from the fourth defendant at prices which corresponded to the respective sums which the fourth defendant had itself paid for the paintings.It was alleged that the third defendant had agreed to act on behalf of the first plaintiff in negotiating the resale of the paintings to members of the public.The first plaintiff alleged that the third and fourth defendants had combined to claim and receive from the first plaintiff far more for the paintings than had been agreed.

On 29 June 1996, the defendants filed a defence which patently did not comply with the requirements of the Rules of Court.It simply denied the substantive allegations contained in the statement of claim.

On 5 August 1996, the plaintiffs filed the application for summary judgment upon which the learned Master made the orders now under appeal.The application was first listed for hearing before the learned Master on 21 August 1996.On that day, the hearing was adjourned to allow the defendants additional time in which to file answering affidavits and to prepare a draft of an amended defence.

On 1 October 1996, the defendants filed an application to strike out the statement of claim and, presumably in the alternative, to file an amended defence and a counterclaim.The proposed amended defence was exhibited to one of the defendant's answering affidavits.A draft counterclaim was not, however, produced.

The draft of the amended defence indicated that there was a substantial dispute between the parties as to the events which led up to the first plaintiff's admitted payment of $50,000 to the first defendant and as to the first defendant's liability to refund that sum to the plaintiff.

As to the claim of the plaintiffs with respect to the alleged loan and guarantee, the defendants did not dispute that the monies had been paid by the second plaintiff to the first defendant or that the first defendant and third defendant had respectively executed the documents upon which the second plaintiff relied.The draft of the amended defence went on, however, to allege a number of implied terms of the agreement for loan which, it was said, had not been met and, further, alleged that the loan agreement had been "procured by undue influence and/or in circumstances which would make it unconscionable to enforce the said terms of the loan agreement against the defendants."An affidavit filed by the third defendant made certain assertions in support of the proposed pleas.

The draft of the proposed defence indicated a clear factual dispute between the parties with respect to the issues arising out of the alleged sale of the aboriginal paintings.

The competing applications were argued before the learned Master on 8 October 1996 and, on 5 December 1996, the learned Master published reasons for the orders that he then made.In brief, it may be said that he refused the plaintiffs' application for leave to sign judgment in respect of the first and third of their claims, but granted the plaintiffs leave to sign judgment in respect of the monies allegedly owing under the agreement for loan and the guarantee.On the defendants' application, he declined to make an order striking out the statement of claim, but did grant the defendants leave to file an amended defence.That leave was subject to the deletion from the draft defence of the paragraph which denied liability under the loan agreement and the guarantee.

The present appeal is against that part of the Master's order on the plaintiffs' application which gave leave for the second plaintiff to sign judgment in respect of the loan agreement and guarantee.

I am indebted to counsel for their researches into the law and for the clear and careful manner in which they marshalled their arguments on the appeal. Counsel for the defendants referred me to the cases which define the principles to be applied in the consideration of applications for summary judgment and for immediate relief.The authority of those decisions was not questioned by counsel for the plaintiffs.The cases referred to were Wicklow v Doysal (1985) 124 LSJS 225, Taylor v District Council of Munno Para (1984) 115 LSJS 333, Bellas v Kipouris (1974) 8 SASR 418, Fancourt v Mercantile Credits Ltd [1983] 154 CLR 87 and Clarke v Union Bank of Australia Limited (1917) 23 CLR 5.I shall refer in detail only to Fancourt v Mercantile Credits Ltd (supra).In that case, the High Court was concerned with Order 18 Rule 1 of the Rules of the Supreme Court of Queensland amongst other things.That rule was in similar terms to Order 14 of the former Rules of the Supreme Court of South Australia. Of course, present rule 25.01 is not in precisely similar terms, but it would seem that similar principles should be applied when applications for summary judgment under the present rules are under consideration.In that case the Court delivered a single judgment in which it made the following pronouncement (at p99):-

"In these circumstances, the appellants ought, we think, to have been given leave to defend.The power to order summary or final judgment is one that should be exercised with great care and should never be exercised unless it is clear that there is no real question to be tried:see Clarke v Union Bank of Australia Ltd (1917 23 CLR 5;Jones v Stone [1894] AC 122;Jacobs v Booth's Distillery Co (1901) 85 LT 262.In our view, it is not possible to say without doubt, on the whole of the material, that there is no question to be tried concerning the payment of the deposits by the appellants.The facts which are established are inconclusive, but the respondent, as well as the appellants, was in a position to establish conclusively the payment of the deposits if that fact could be established and, given the opportunity, it did not do so.That leaves, we think, a question to be tried and, although the appellants have not succeeded in positively establishing a defence, they should not in the circumstances be debarred from defending the action."

So the question to be posed is whether there is a real question to be tried with respect to the claims based upon the loan agreement and the mortgage. Counsel for the defendants argued that those claims are so intertwined with the facts and circumstances surrounding the first of the plaintiffs' claims that the merits of the plaintiffs' claim, the strengths or otherwise of the defence, can only be assessed after all of the evidence in respect of both claims has been taken.In particular, he argued that the defence of unconscionability depends upon a full examination of all of the available evidence.He asserted that the learned Master had made assumptions on the facts which were not justified upon the affidavits before the court.

Counsel for the plaintiffs argued that the defendants' contentions did not sit well with the admitted fact that two payments of $5,000 each had been made in reduction of the loan.He contested the argument advanced on behalf of the defendants that there was an interrelationship between the first two of the plaintiffs' claims.He contended that the evidence did not show any inequality in bargaining power in the present case and that such an inequality was fundamental to a finding of unconscionable conduct.

One can well understand that the learned Master was sceptical about the merits of the defendants' case on the subject of the loan and the guarantee, but that is not the final test.In my opinion, one cannot go so far as to say that on the unequivocal facts there is no real question to be tried.In my opinion, it is necessary for the evidence to be heard in the normal way for justice to be done.

For these reasons the appeal will be allowed and the orders made by the learned Master:-

"1. granting leave to the plaintiff to sign judgment against the first defendant for the balance of the loan plus interest and costs;

2. granting leave to the plaintiffs to sign judgment against the third defendant on the guarantee together with interest and costs;"

will be set aside.