Martin Desmond Mullins on behalf of Settlers House v Directline Finance Pty Ltd - [2018] WASC 328

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION:   MARTIN DESMOND MULLINS on behalf of SETTLERS HOUSE -v- DIRECTLINE FINANCE PTY LTD [2018] WASC 328
CORAM:   MASTER SANDERSON
HEARD:   21 AUGUST 2018
DELIVERED          :   26 OCTOBER 2018
FILE NO/S:   CIV 2568 of 2017
BETWEEN:   MARTIN DESMOND MULLINS on behalf of SETTLERS HOUSE
Plaintiff

AND

DIRECTLINE FINANCE PTY LTD
First Defendant

JB COLLINS PTY LTD as trustee for THE COOMBS & BAREI NUMBER 2 SUPER FUND
Second Defendant

BREJON NOMINEES PTY LTD as trustee for THE BREJON FAMILY TRUST
Third Defendant

G.N.B. INVESTMENTS PTY LTD as trustee for THE HOLYOAK INVESTMENT FUND
Fourth Defendant

GEE BEE HOLDINGS PTY LTD as trustee for THE BLUE WATER TRUST
Fifth Defendant

BRUCE GORDON ROBERTS as trustee for THE BLUE WATER TRUST
Sixth Defendant

GLORIA DAWN ROBERTS as trustee for THE BLUE WATER TRUST
Seventh Defendant

BA & VJ MOORE PTY LTD as trustee for THE MOORE FAMILY SUPERANNUATION FUND
Eighth Defendant

NORMAN JOHN BAKER as trustee for THE STEEL FABRICATION SUPER FUND
Ninth Defendant

SUSAN BAKER as trustee for THE STEEL FABRICATION SUPER FUND
Tenth Defendant

DAVID THOMAS NIEHUS
Eleventh Defendant

SHARON NIEHUS
Twelfth Defendant

FORT ROSS NOMINEES PTY LTD
Thirteenth Defendant

COLIN MAXWELL KING
Fourteenth Defendant

BRAMELL INVESTMENTS PTY LTD
Fifteenth Defendant

KERRY KATHLEEN BRAMLEY
Sixteenth Defendant

YORK BELLA MIA PTY LTD
Seventeenth Defendant

ELAINE HELEN KING
Eighteenth Defendant

LEEUWIN CORPORATION PTY LTD
Nineteenth Defendant

FILE NO/S: CIV 1495 of 2018
BETWEEN: JB COLLINS PTY LTD AS TRUSTEE FOR THE COOMBS & BAREI NUMBER 2 SUPER FUND
First Plaintiff

BREJON NOMINEES PTY LTD AS TRUSTEE FOR THE BREJON FAMILY TRUST
Second Plaintiff

G.N.B. INVESTMENTS PTY LTD AS TRUSTEE FOR THE HOLYOAK INVESTMENT FUND
Third Plaintiff

GEE BEE HOLDINGS PTY LTD AS TRUSTEE FOR THE BLUE WATER TRUST
Fourth Plaintiff

SUSAN BAKER ATF THE STEEL FABRICATION SUPER FUND
Fifth Plaintiff

NORMAN JOHN BAKER ATF THE STEEL FABRICATION SUPER FUND
Sixth Plaintiff

AND

MARTIN DESMOND MULLINS
First Defendant

DIRECTLINE FINANCE PTY LTD
B.A. & V.J. MOORE PTY LTD AS TRUSTEE FOR THE MOORE FAMILY SUPER FUND
DAVID THOMAS NIEHUS
SHARON ANN NEIHUS
Second Defendants

Catchwords:

Practice and procedure - Application for summary judgment and security for costs - Turns on own facts

Legislation:

Australian Securities & Investments Commission Act 2001 (Cth)
Competition & Consumer Act 2010 (Cth)
Corporations Act 2001 (Cth)
Limitation of Actions Act 1958 (Vic)
National Consumer Credit Act 2009 (Cth)

Result:

CIV 2568/2017
Summary judgment entered for the second to tenth defendants against the plaintiff
No security for costs order
Thirteenth to eighteenth defendants' summary judgment application dismissed
Security for costs ordered

CIV 1495/2018
Summary judgment entered for the plaintiffs for the principal sum

Category: B

Representation:

CIV 2568 of 2017

Counsel:

Plaintiff	:	Ms P A Honey
First Defendant	:	No appearance
Second Defendant	:	Mr C S Williams
Third Defendant	:	Mr C S Williams
Fourth Defendant	:	Mr C S Williams
Fifth Defendant	:	Mr C S Williams
Sixth Defendant	:	Mr C S Williams
Seventh Defendant	:	Mr C S Williams
Eighth Defendant	:	Mr C S Williams
Ninth Defendant	:	Mr C S Williams
Tenth Defendant	:	Mr C S Williams
Eleventh Defendant	:	No appearance
Twelfth Defendant	:	No appearance
Thirteenth Defendant	:	Mr A P Hershowitz
Fourteenth Defendant	:	Mr A P Hershowitz
Fifteenth Defendant	:	Mr A P Hershowitz
Sixteenth Defendant	:	Mr A P Hershowitz
Seventeenth Defendant	:	Mr A P Hershowitz
Eighteenth Defendant	:	Mr A P Hershowitz
Nineteenth Defendant	:	No appearance

Solicitors:

Plaintiff	:	Maurice Blackburn
First Defendant	:	No appearance
Second Defendant	:	Solomon Brothers
Third Defendant	:	Solomon Brothers
Fourth Defendant	:	Solomon Brothers
Fifth Defendant	:	Solomon Brothers
Sixth Defendant	:	Solomon Brothers
Seventh Defendant	:	Solomon Brothers
Eighth Defendant	:	Solomon Brothers
Ninth Defendant	:	Solomon Brothers
Tenth Defendant	:	Solomon Brothers
Eleventh Defendant	:	No appearance
Twelfth Defendant	:	No appearance
Thirteenth Defendant	:	Ally Legal
Fourteenth Defendant	:	Ally Legal
Fifteenth Defendant	:	Ally Legal
Sixteenth Defendant	:	Ally Legal
Seventeenth Defendant	:	Ally Legal
Eighteenth Defendant	:	Ally Legal
Nineteenth Defendant	:	No appearance

CIV 1495 of 2018

Counsel:

First Plaintiff	:	Mr C S Williams
Second Plaintiff	:	Mr C S Williams
Third Plaintiff	:	Mr C S Williams
Fourth Plaintiff	:	Mr C S Williams
Fifth Plaintiff	:	Mr C S Williams
Sixth Plaintiff	:	Mr C S Williams
First Defendant	:	Ms P A Honey
Second Defendants	:	No appearance

Solicitors:

First Plaintiff	:	Solomon Brothers
Second Plaintiff	:	Solomon Brothers
Third Plaintiff	:	Solomon Brothers
Fourth Plaintiff	:	Solomon Brothers
Fifth Plaintiff	:	Solomon Brothers
Sixth Plaintiff	:	Solomon Brothers
First Defendant	:	Maurice Blackburn
Second Defendants	:	No appearance

Case(s) referred to in decision(s):

Nil

MASTER SANDERSON:

These reasons deal with two matters which are separate but inter‑related. In CIV 2568 of 2017, the second to tenth defendants and the thirteenth to eighteenth defendants apply for summary judgment and in the alternative security for costs. In that action, the interests of the two different sets of defendants are distinct and they are represented by separate firms of solicitors. In CIV 1495 of 2018, the plaintiffs applied for summary judgment against the first defendant. By agreement between the parties, the applications in CIV 2568 of 2017 were heard first. These reasons reflect that decision.

CIV 2568 of 2017

The statement of claim in this matter was filed 19 September 2017. The action itself was commenced when I gave the plaintiff leave to bring a derivative action on 20 March 2017. The plaintiff is the sole director and shareholder of Settlers House Pty Ltd (the Company). Prior to 12 July 2012, the Company was a proprietor of land and buildings in York. It carried on business under the name Settlers House and ran a licensed restaurant and provided short stay accommodation. It also sold to private investors strata titled accommodation units constructed on the land it owned. As at July of 2012, the Company owned 38 strata titled units, details of which are provided in par 5 of the statement of claim.
The statement of claim pleads that as from 1 July 2010 any person engaged in a credit activity defined as a mortgagee under a mortgage or a person defined as a beneficiary of a guarantee, was required to hold either an Australian credit licence or be employed by a licensee. It is further pleaded after 11 October 2010, when the parties entered into a loan agreement, the first to twelfth defendants were a Syndicate (the Syndicate) engaged in credit activities.
The statement of claim pleads that on 9 June 2010, the Company, as borrower, and the first to tenth defendants, as lenders, entered into a loan agreement pursuant to which the company borrowed $1,250,000 on certain terms and conditions (the first loan). One of those terms was that the Company would pay interest at the rate of 10% per month discounted to 4% per month so long as the Company was not in default under any term of the loan. The loan was secured over certain of the strata titled lots referred to in par 5 of the statement of claim. By way of further security for the loan, the Company executed a fixed and floating charge in favour of the first to tenth defendants and the plaintiff executed a personal guarantee pursuant to which he became personally liable for all moneys payable pursuant to the loan. On 12 August 2010, the company borrowed a further $500,000 (the second loan) on much the same terms and conditions as applied to the first loan. Security was taken by the first to tenth defendants over further strata titled lots.
Paragraph 15 of the statement of claim is a curious plea. It pleads that as at 12 August 2010, the Company was short of cash and was experiencing financial difficulties. It goes on to say as a consequence of entering into the two loan agreements, the Company was unable to 'procure moneys additional to those received' by realising its assets by sale, mortgage or pledge.
On 11 October 2010, the Syndicate loaned the Company an amount of $2,750,000 on certain terms and conditions (the third loan). The interest rate payable on these borrowings was the same as on the earlier two loans - that is to say 10% per month discounted to 4% per month so long as the loan was not in default. The plaintiff pleads that $1,750,000 of the third loan was applied by the Syndicate to repay the first and second loans which were at that time in default. $466,000 was applied as payment of pre‑paid interest and loan fees. $534,000 was advanced by the Syndicate to the Company. Security for the loan was by way of a fixed and floating charge, a guarantee from Mr Martin Desmond Mullins (both of which were in the same terms as the security for earlier loans) and mortgages over fourteen lots.
Paragraph 20 is a similar plea to that found in par 15. It details the financial position of the Company and once again claims that the Company could not raise further money by the sale of its assets. Paragraphs 21 and 22 then plead that the Company was insolvent as at 12 August 2010 when it entered into the second loan with the Syndicate and was insolvent on 11 October 2010 when it entered into the third loan with the Syndicate. It is then pleaded that the first to tenth defendants knew the Company was insolvent when they entered into the second loan and the Syndicate knew the Company was insolvent when it entered into the third loan.
The plaintiff pleads that on 12 August 2011, it received an offer of finance from the Australian and New Zealand Banking Group (ANZ). Part of this finance offer was a three year facility in an amount of $500,000, the security for that facility ranking in front of the Syndicate security. Although it is not entirely clear from the pleading (par 25), it also appears that the ANZ indicated it would provide sufficient funds to discharge the Syndicate's mortgage. Either way, the Syndicate rejected the offer - presumably it rejected the proposal its security would rank behind the security for the $500,000 loaned by ANZ to the Company.
On 18 May 2012, the Company and Mullins executed a deed of settlement and discharge with the Syndicate agreeing to settle all disputes between them upon payment of an amount of $3,100,000. The settlement amount was to be paid in four tranches on 18 June 2012, 30 June 2012, 31 July 2012 and 31 December 2012. The plaintiff admits it was in default under this agreement. On 12 July 2012, the Syndicate issued a demand for repayment of the third loan. By then, the amount claimed was more than $15 million, no doubt due to the fact there had been default and interest was running at the rate of 10% per month. The letter of demand indicated the Syndicate would settle their claim for $6 million. That offer was not accepted and on that same day the Syndicate seized possession of the land, the buildings and the businesses and excluded the Company and Mr Mullins. An offer was made to settle the matter but that offer was rejected.
At this point it is necessary to jump ahead in the statement of claim to par 43. It is alleged by the plaintiff that since taking possession, the Syndicate has remained in possession of the land, buildings and businesses, has carried on the businesses formerly conducted by the Company and not accounted to Mr Mullins (or presumably the Company) in respect of any of the land sales and the carrying on of the businesses.
Paragraph 44 pleads the sale of certain strata titled lots at prices which 'were substantially below the market values of those interests in land'. In the prayer for relief of the claims made against the first to twelfth defendants, the plaintiff seeks a declaration that the Syndicate's conduct was unlawful pursuant to s 29 of the National Consumer Credit Act 2009 (Cth). It also seeks a declaration that the Syndicate's conduct referred to was unlawful, incompetent and of no effect. In other words, it is seeking a declaration that the Syndicate was not entitled to take possession of the secured assets. The plaintiff also seeks an order for accounts, damages and a declaration the securities were void ab initio. That is the claim made against the first to twelfth defendants. It is that claim which those defendants maintain raises no triable issue and would justify summary dismissal. Counsel for the Syndicate accepted on a summary judgment application the facts pleaded by the plaintiff must be accepted and it was on that basis the application proceeded. Before dealing with the application, I should outline the different claims made against the thirteenth to eighteenth defendants.
Paragraphs 34 to 40 of the statement of claim pleads that between August 2012 and April 2014, certain members of the Syndicate through companies, leased some of the assets then in possession of the Syndicate for nominal amounts. In one case, there was a transfer of the liquor licence to a Company controlled by the eleventh defendant. That leads to par 41 which pleads a series of 'duties' the plaintiff said the Syndicate owed the Company. Without detailing the nine sub‑paragraphs, it is sufficient if I say the plaintiff alleges that the Syndicate was under a duty after it took possession of the plaintiff's property to realise the land, buildings and businesses. It is further alleged the Syndicate was under a duty to act in good faith and not to 'wilfully disregard …' the interests of the Company as mortgagor and of Mullins' guarantee. Some of the duties are nebulous - for instance it is not clear what is meant by a duty to 'refrain from acting with improper motives'. Insofar as there is a plea the Syndicate was obliged not to act fraudulently that can be accepted. It is worth noting in passing that nowhere is it pleaded how a duty arose on the Syndicate to realise the land, buildings and businesses after they had taken possession of those assets. As to the duties of a mortgagee who sells assets, that was a central issue between the parties and it is a matter to which I will return later in these reasons. Suffice it to say that as I have indicated above, the plaintiff alleges the properties that were sold were sold undervalued.
Up to this point, the statement of claim has been concerned with the Syndicate - that is the first to twelfth defendants. By par 44, it is pleaded that a number of lots were sold. By way of example, it is said that on 2 September 2015, lot 77 was sold by the Syndicate to Fort Ross Nominees Pty Ltd, the thirteenth defendant, (FRN) for $19,166.66. On the same day FRN on‑sold the property to Bradley Co Pty Ltd (Bradley Co) for an amount of $45,000. Not all of the lots bought by FRN were on‑sold; but thirty of the transactions took place on the same date - 2 September 2015. In two instances involving lot 86 and lot 93, FRN on‑sold to Bramell Investments Pty Ltd, the fifteenth defendant (Bramell). A further seven lots were sold to York Bella Mia Pty Ltd, the seventeenth defendant (YBM). None of these appear to have been on‑sold. On 20 April 2015, lot 76 was sold to Ms Elaine Helen King, the eighteenth defendant. By par 45, it is alleged the sale of the property was under value and in the cases where the property was immediately on‑sold, it is the plaintiff's position the sale at under value is demonstrated by the fact the lot was on‑sold on the same day for a higher price. By way of example, lot 110 was sold to FRN for $19,166.66 and on the same day sold by FRN to Bradley Co for $55,000. It is worth noting then that there are two aspects to this claim that the lots were sold under value. On the one hand there were the back‑to‑back transactions which showed an immediate profit to the purchaser. In other instances, there was the sale of the lots at prices very similar to those which were the subject of back‑to‑back transactions indicating the sale was under value.
From this point onwards, the statement of claim is a little difficult to follow. It would appear the claim against the thirteenth to eighteenth defendants is that they were aware the lots they purchased were sold by the Syndicate under value and that they were therefore in some way implicated in the Syndicate's unlawful conduct. Paragraphs 46 and 47 of the statement of claim is in a slightly different vein. It alleges on 3 September 2015, the Syndicate gave YBM and Ms King 'early and rent free possession of lot 76 pursuant to guarantees'. The plaintiff alleges the undertakings pursuant to the guarantee have not been enforced as a consequence of which YBM remains in rent free possession of lot 76. As I understand it, this is a plea of further collusion between the Syndicate, the fourteenth, seventeenth and eighteenth defendants. On any level, this plea is confusing.

Second to tenth defendants' chamber summons filed 22 May 2018

Dealing first with the summary judgment application by the second to tenth defendants, it is said that as at 6 November 2012, the date of winding up of the Company, the Company was indebted to the lenders in an amount of $27,435,204.01. That is an extraordinary figure given the amount of the loan. It is directly attributable to the 10% per month interest rate payable on default. It is nowhere alleged by the plaintiff that figure is incorrect. Indeed, it is doubtful whether that argument could be raised. As counsel in his written submissions noted, leave was given to Mr Mullins under s 236 and s 237 of the Corporations Act 2001 (Cth). It was not part of that leave that the plaintiff could challenge the amount of the debt. Effectively, what the leave did was give Mr Mullins the right to claim damages for sale under value.
As counsel correctly points out, s 553C of the Act operates to set off the company's indebtedness to the lenders against any liabilities which the lenders had to the Company. There is no evidence to suggest that any claims the plaintiff might have against the lenders exceed the indebtedness. It must be concluded then that there is an extinguishment of any claim the Company may have against the lenders.
In her written submissions, counsel for the plaintiff appears to suggest that the interest rate was unconscionable and therefore the Syndicate cannot claim an amount of over $27 million. Leaving to one side the fact that point is not pleaded and for reasons I have set out above probably cannot be pleaded, no authority is quoted for that proposition. As counsel for the second to tenth defendants noted, the interest is not compounded; it is simple interest. While the rate would doubtless strike the average person as extraordinary, it was a rate that was agreed to by Mr Mullins on behalf of the Company. There is nothing in the plaintiff's pleaded case which would justify some nebulous conclusion that the conduct was unconscionable.
The second argument put by the second to tenth defendants is that there is no evidence that any of the properties were not dealt with in good faith or were recklessly sacrificed. As counsel notes, a breach of these duties is not demonstrated by establishing that a valuer has given an opinion that a property is worth more than was realised in the exercise of a power of sale. Nor is it demonstrated by the fact that the property was on‑sold by a purchaser for a price greater than what the purchaser paid. For the purposes of a summary judgment application, I would not accept this latter submission. Any right minded person looking at a sale and on‑sale which took place on the same day and yielded a substantial profit to a purchaser from the mortgagee, would be put on inquiry as to whether or not the property was sold under value. Remembering the low threshold for a plaintiff on a summary judgment application, I would not have been prepared to uphold this aspect of the second to tenth defendants' claim.

For the reasons I have set out above, I am satisfied that the plaintiff has no reasonable prospect of success against the second to tenth defendants. For that reason I would dismiss the plaintiff's claim against the second to tenth defendants.
Strictly speaking, it is then unnecessary for me to deal with the question of security for costs. However, for the sake of completeness I will do so.
It is the second to tenth defendants' position that the proper plaintiff in this case is the Company, despite the description of the plaintiff in the writ. Clearly that is correct. Mr Mullins was given leave to bring action on behalf of the Company - this is a derivative action. If he had a cause of action in his own right then he could have brought proceedings. As it is, he obtained leave and he is acting as the moving hand of the Company. Accordingly, any application for security for costs is to be determined under s 1335(1) of the Corporations Act.
Clearly, as the Company has been wound up in insolvency, it is unable to pay its debts as and when they fall due. That enlivens the court's discretion to make a security for costs order. There are any number of authorities setting out the discretionary factors to be considered but in this case three matters are of importance. First, whether the impecuniosity of the plaintiff arises out of the misconduct alleged against the relevant defendant. Second, whether the making of an order for security for costs would prevent the plaintiff from pursuing its claim. Third, the merits of the claim.
The difficulty for the plaintiff in this case is that the indebtedness of the plaintiff to the second to tenth defendants arises from the plaintiff entering into the various loan agreements. As I have noted above, even if the plaintiff were to establish the various lots and businesses were sold under value, there is nothing to suggest the result would have been a surplus in the hands of the Company. That leads into the conclusion I have reached that the plaintiff's claim is weak - to the point where I would enter summary judgment for the second to tenth defendants.
In the circumstances, I see no discretionary factors which would weigh against granting an order for security.
The amount of security sought by the second to tenth defendants in the chamber summons was $164,647. That is security for the full cost of a trial. If I was to order security, I would have ordered it in an amount of $50,000. I regard this as the first tranche of security perhaps up to and including any mediation. Thereafter, the defendants could seek further security to take the matter through to trial.

Thirteenth to eighteenth defendants' amended chamber summons filed 29 May 2018

Turning then to the position of the thirteenth to eighteenth defendants, it was submitted there was no evidence to establish that various lots were sold at a price which indicated the Syndicate had acted recklessly. As I have indicated above, I am satisfied that position is arguable. The difficult question is assuming the thirteenth to eighteenth defendants did realise the lots were being sold under value, whether or not they had any liability to the plaintiff. They certainly had no contractual relationship with the plaintiff so any liability must arise either in tort, in equity or be statutory in nature.
Remembering this is a summary judgment application, once a conclusion is reached it is arguable the Syndicate sold the lots under value and accepting it is pleaded and must be accepted for the purposes of the application the thirteenth to eighteenth defendants knew of that fact, it is inappropriate to take the analysis any further. Quite how the knowledge of a wrong by the thirteenth to eighteenth defendants plays out is a matter for trial.
That being the case, it is necessary for me to deal with the thirteenth to eighteenth defendants' application for security for costs. It is then a question of what discretionary factors are to be taken into account in ordering security. It cannot be said that the impecuniosity of the plaintiff is the fault of the thirteenth to eighteenth defendants - that is a consequence of the loan agreement entered into by the plaintiff with the Syndicate. The merits of the plaintiff's claim do not fall one way or the other. I have determined the plaintiff's claim should not fail at a summary judgment level and implicit in that conclusion is there is a serious question to be tried. The merits do not weigh one way or the other.
In my view this is a case where security ought be ordered. As I indicated above, an amount of $50,000 by way of security up to the point where a mediation takes place is appropriate. Further security may be ordered thereafter.

CIV 1495 of 2018

Plaintiffs' chamber summons filed 22 May 2018

That then leaves the plaintiffs' application for summary judgment against the first defendant in CIV 1495 of 2018. The claim in this action is quite straightforward. The plaintiffs seek to enforce the loan and guarantee which are described above as the third loan. The requirements of summary judgment have been satisfied. An affidavit of Bruce Gordon Roberts sworn 21 May 2018 verifies the facts and the statement of claim and confirms Mr Roberts believes there is no defence to the action. It is perhaps worthy of note that the amount claimed pursuant to the loan agreement is just over $4 billion.
The primary submission of counsel for the first defendant was that these proceedings were 'an abuse of process by reason of the Syndicate's delay in commencing proceedings'.[1] With respect, that cannot be correct. As I have indicated above, in CIV 2568 of 2017, the correct plaintiff is the Company. The action in CIV 1495 of 2018 is primarily concerned with enforcing the guarantee against Mr Mullins. There are two separate and distinct actions, although of course they are inter‑related. But it cannot be an abuse of process to attempt to enforce a guarantee against an individual even when separate proceedings are underway which deal with what might be described as the liability of the primary debtor. There is no substance in the argument this action represents an abuse of process.
[1] ts 55, 21 August 2018.
The first defendant raises two other arguments in opposition to the plaintiffs' application. The first is what might be described as the limitation defence. Pursuant to cl 15.1 and sch 1 'Commercial Details' of the loan agreement, the loan agreement is governed by and construed in accordance with the laws of Victoria. The unpaid arrears of interest due under the loan agreement is subject to the limitation period provided in s 5(7) of the Limitation of Actions Act 1958 (Vic) (LAA). Section 5(7) of the Act provides that action shall not be brought to recover any arrears of interest in respect of any sum of money whether payable in respect of (relevantly) a speciality, mortgage or otherwise or any damages in respect of such arrears after the limitation of six years after they became due. It is the first defendant's position that pursuant to this section and s 20(1) of the Act the plaintiffs are precluded from claiming interest accrued prior to 20 March 2012. While not conceding this was the case counsel for the plaintiffs acknowledged that there was a serious question to be tried on this issue. He made the point however that it did not stop judgment being entered for the principal amount in interest accruing subsequent to 20 March 2012. No argument was put by the first defendant.
The second argument advanced was what might be called the unconscionability argument. It was submitted the principal sum was advanced for a short term (three months) and that was reflected in the high interest loan. On the first defendant's calculations at the time the Syndicate took possession and control of the assets of the Company the total assets were just under $9,000,500. The first defendant notes the Syndicate has been in possession and control of the Company's assets since 12 July 2012. Because there have been no steps taken to recover the claim debt under the loan agreement the intended short term high interest loan has become a long term high interest loan. It is said by the first defendant this amounts to unconscionable conduct pursuant to s 12CB of the Australian Securities & Investments Commission Act 2001 (Cth) and s 21 of sch 2 of the Competition & Consumer Act 2010 (Cth).
For present purposes it is unnecessary to consider in any detail the unconscionability submission. Suffice it to say I am satisfied the position is arguable. Once that conclusion is reached it is necessary to adjust any summary judgment ordered in favour of the plaintiffs.
In my view this is an appropriate case where there should be judgment for the plaintiffs for the principal sum. There can be no question at all but that such an amount is owing. Any further amount the plaintiffs seek from the first defendant should be the subject of a trial of this action.
On publication of these reasons I will hear the parties as to the form of orders and as to costs.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
DG
ASSOCIATE TO MASTER SANDERSON
31 OCTOBER 2018