MEG Investments Pty Ltd v Wahlqvist
[2019] SADC 158
•29 October 2019
DISTRICT COURT OF SOUTH AUSTRALIA
(Civil: Application)
MEG INVESTMENTS PTY LTD & ANOR v WAHLQVIST
[2019] SADC 158
Judgment of Her Honour Judge Schammer
29 October 2019
PROCEDURE - CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS - ENDING PROCEEDINGS EARLY - SUMMARY DISPOSAL - SUMMARY JUDGMENT FOR PLAINTIFF OR APPLICANT - FOR DEBT OR LIQUIDATED DEMAND OR FOR POSSESSION OF LAND
PROCEDURE - JUDGMENTS AND ORDERS
The plaintiffs claimed damages from the defendant pursuant to personal guarantees executed by him.
Shortly prior to the trial in this action, the parties executed a Deed of Settlement and Release (Deed) whereby the defendant agreed to pay the plaintiffs a sum by way of settlement of the action by a certain date.
The Deed contained provisions outlining the procedure the plaintiffs were required to follow in the event the defendant failed to pay the settlement sum by the due date and expressly provided, inter alia, that if the plaintiffs followed that procedure, and the default by the defendant was not remedied within five business days, the defendant consented to the plaintiffs entering judgment against him for the full amount claimed.
The defendant did not pay the settlement sum. The plaintiffs purported to comply with the procedure set forth in the Deed following the defendant’s default, and payment remained outstanding for more than five business days thereafter. The plaintiffs claimed to be entitled to judgment for the full amount claimed.
Orders:
1. Judgment entered for the first plaintiff as against the defendant in the sum of $433,500.
2. Judgment entered for the second plaintiff as against the defendant in the sum of $278,000.
3. The defendant is to pay the plaintiffs’ costs of action on a party/party basis to be agreed or taxed.
4. The defendant is to pay the plaintiffs’ costs of and incidental to FDN 15 on an indemnity basis, such costs to be agreed or taxed.
District Court Civil Rules (2006) r 227, 232; Supreme Court Rules 1987 r 25.01, referred to.
Spencer v Commonwealth of Australia [2010] HCA 28; Davies v Minister for Urban Development and Planning & Anor [2011] SASC 87, applied.
Ceneavenue Pty Ltd v Martin [2008] SASC 158, discussed.
MEG INVESTMENTS PTY LTD & ANOR v WAHLQVIST
[2019] SADC 158Background
On 31 August 2018, MEG Investments Pty Ltd ACN 008 198 221 (first plaintiff) and MEG Super Nominees Pty Ltd ACN 105 473 827 (second plaintiff) issued proceedings against Peter Wahlqvist (the defendant) seeking to enforce personal guarantees executed by him pursuant to various agreements.
In the Statement of Claim, the first plaintiff claimed an entitlement to judgment as against the defendant in the sum of $433,500 and the second plaintiff claimed an entitlement to judgment as against the defendant in the sum of $278,000. Both plaintiffs sought orders for interest and costs.
The trial of this action was listed for hearing on Monday 5 August 2019. On that date, the trial was vacated by consent of the parties to enable terms of settlement to be affected, pursuant to a Deed of Settlement and Release dated 2 August 2019 (the Deed) and executed by the defendant on that day.
Pursuant to clause 3.1.1 of the Deed, the defendant agreed to pay the plaintiffs the sum of $244,816.85 (settlement sum) within 30 days of the execution of the Deed, in full and final satisfaction of the plaintiffs’ claims against him arising from the action.
The defendant did not pay the settlement sum to the plaintiffs in accordance with the Deed.
The Deed contains provisions which deal with the procedure to be followed in the event of a default by a party. The plaintiffs now seek to enforce their rights under the Deed.
The Deed
Clause 7 of the Deed states:
7.1In the event that any party fails to comply with any of the provision (sic) of this Deed, then before any other party is entitled to rescind, terminate, cancel or determine this Deed, or exercise any rights under this Deed, that party must serve a written notice on the party in default, specifying the nature of the default and requiring that the default be remedied within no less than five (5) business days from the date of the notice.
7.2If the party receiving the notice to remedy fails to remedy the default in compliance with the notice to remedy, then the party who gave the notice to remedy shall be (sic) liberty to pursue any remedy available to that party.
7.3In the event of Wahlqvist defaulting in his obligation to pay the Plaintiffs the Settlement Sum according to the terms of this Deed, upon such payment remaining outstanding for a period exceeding fourteen (14) days and the Plaintiffs complying with clause 7.1 of this Deed, Wahlqvist consents to the Plaintiffs to (sic) entering judgment against Wahlqvist for the full amount claimed by the Plaintiffs in the Statement of Claim and Wahlqvist will be liable to (sic) the Plaintiffs’ costs of and incidental to enforcement of this Deed on the basis of an indemnity.
On 10 September 2019, the solicitors representing the plaintiffs sent an email to the solicitor representing the defendant, notifying him that his client was in breach of his obligations under the Deed and requiring the breach to be remedied by the defendant.
The breach was not remedied by the defendant.
Application
By application dated 26 September 2019 (FDN 15) the plaintiffs seek orders, inter alia:
1That there be judgment for the first plaintiff in the sum of $433,500.
2That there be judgment for the second plaintiff in the sum of $278,000.
3Costs with respect to the action on a party/party basis, to be agreed or taxed.
4Costs with respect to the enforcement of the defendant’s obligations under the Deed on an indemnity basis.[1]
[1] Noting the application expressly seeks an order for interest, which was subsequently not pursued by the plaintiffs.
In support of the application the plaintiffs filed and served affidavits from Travis John Shueard sworn on 26 September 2019 (the first Shueard affidavit) and 3 October 2019 (the second Shueard affidavit).
In addition, the plaintiffs filed Written Submissions.
The defendant opposed the application.
The application was listed for hearing before me on 3 October 2019.
After hearing argument, I made orders as follows:
1Judgment entered for the first plaintiff as against the defendant in the sum of $433,500.
2Judgment entered for the second plaintiff as against the defendant in the sum of $278,000.
3The defendant is to pay the plaintiffs’ costs of action on a party/party basis to be agreed or taxed.
4The defendant is to pay the plaintiffs’ costs of and incidental to FDN 15 on an indemnity basis, such costs to be agreed or taxed.
These are my reasons for ruling.
The Rules
The plaintiffs seek orders for consent judgment pursuant to Rule 227 of the District Court Civil Rules 2006 (the Rules).
Rule 227 states:
(1) The Court may give judgment by consent of the parties.
(2)Unless the Court directs to the contrary, a sum of money for which judgment is given by consent of the parties is taken to be in addition to any sum already recovered.
(3)A judgment given by consent has the same force and effect as a judgment given on adjudication of claims on which the judgment is based.
(4) A consent to judgment –
(a) may be given by the party personally or by a lawyer acting on behalf of a party; and
(b) may be given-
(i) orally before a Judge or Master; or
(ii)by written notice of consent, signed by the consenting party or his or her lawyer, and filed with the Registrar; or
(iii)by electronic notice of consent transmitted to the Registrar’s email address.
(5)The Registrar may enter a judgment by consent if satisfied by written or electronic notices of consent that all parties consent to the judgment.
In the alternative, the plaintiffs seek summary judgment pursuant to Rule 232, which states:
(1) The Court may, on application by a party, give summary judgment for that party.
(2) Summary judgment may only be given if the Court is satisfied that -
(a) if the applicant is a plaintiff – there is no reasonable basis for defending the applicant’s claim; or
(b) if the applicant is a defendant – there is no reasonable basis for the claim against the applicant.
Submissions
Counsel for the plaintiffs submitted that the defendant had not paid the Settlement Sum within the relevant period and the plaintiffs had complied with the procedure under clause 7.1 of the Deed by serving a written notice specifying the nature of the default and requiring that the default be remedied. It was submitted that the defendant’s continued failure to remedy the breach thereafter should therefore be taken as consent by the defendant to the entering of judgment against him for the amounts claimed by the plaintiffs in the Statement of Claim, in accordance with clause 7.3.
As such, it was submitted that it was appropriate for Consent Judgment to be ordered in the terms as sought pursuant to Rule 227, the wording of clause 7.3 being clear and unequivocal.
Counsel for the plaintiffs argued that the defendant had not opposed the application on any substantive ground, rather it was simply seeking an adjournment, purportedly to enable further time to source the settlement funds.
In this respect, I was referred to an exchange of correspondence between the solicitors for the parties. The defendant’s solicitor provided the plaintiffs’ solicitors with a copy of a letter dated 13 September 2019 received by the defendant from Hoskins and Associates Limited, a lending institution in the Netherlands, wherein that lender outlined it was prepared to facilitate a private loan to the defendant in the sum of USD $250,000 upon certain terms and conditions being met.[2]
[2] Exhibit TJS-3 to the second Shueard affidavit.
The plaintiffs’ solicitors had requested certain documents be provided to them to evidence the defendant’s ability to comply with such terms and conditions and had not received a response to that request.[3]
[3] Second Shueard affidavit at [6]-[7].
Subsequently, the defendant’s solicitors had forwarded to the plaintiffs’ solicitors a further letter received from Hoskins and Associates Limited, wherein the lender again outlined its agreement to facilitate a private loan to the defendant in the sum of USD $250,000, on certain terms and conditions being met, including the verification of security being offered relating to a Statutory Fishing Right.[4]
[4] Second Shueard affidavit at [8].
The plaintiffs were concerned at the defendant’s prospects of successfully complying with the terms and conditions as stipulated by the lender and argued that a simple adjournment was unlikely to advance the matter.
Counsel for the defendant acknowledged his client was in default of clause 3.1.1 of the Deed, as he had not paid the Settlement Sum to the plaintiffs within 30 days of executing the Deed.
He informed the court that the defendant did not consent to the entering of judgment against him. He submitted that none of the various methods foreshadowed by the Court in Rule 227(4) had been utilised, meaning there was no basis for the Court to proceed as per that rule. Rather, he argued any application could only be made pursuant to Rule 232.
However, he submitted that the plaintiffs had not complied with Clause 7.1 of the Deed, such that the application, purportedly made pursuant to clause 7.3, was premature.
On 10 September 2019, the plaintiffs’ solicitor sent an email to the defendant’s solicitor in the following terms:[5]
[5] Exhibit TJS-1 to the first Shueard affidavit.
Dear Mark
We refer to the above proceedings.
We also refer to the Deed of Settlement (“Deed”) entered into by your client in relation to the Proceedings.
For the avoidance of doubt, this email constitutes a Notice to Remedy Default pursuant to clause 7.1 of the Deed.
Your client is in default of the Deed due to failing to pay the Settlement Sum to our trust account by 1 September 2019 (see clauses 3.1.1 and 4.1 of the Deed).
We call on your client to remedy this default under the Deed, pursuant to clause 7.3 of the Deed.
Our clients reserve all of their rights.
Regards
Travis Shueard
It was submitted that as the purported Notice to Remedy Default did not expressly state that the defendant’s default was required to be remedied ‘within no less than five (5) business days from the date of the notice’, the plaintiffs had not complied with the procedure set out in clause 7.1. It was submitted that as such, the defendant simply did not know what he had to do to comply with the notice.
Finally, it was argued that it was unclear from the application whether the plaintiffs sought judgment under the original loan agreements or pursuant to the Deed.
Findings/Discussion
Rule 227
Despite clause 7.3 of the Deed, the defendant maintained that it did not consent to judgment.
In those circumstances, I simply cannot be satisfied that any of the criteria set forth in Rule 227(4) have been met, meaning I am not satisfied I have the power to make the orders as sought.
I agree with the submissions advanced by counsel for the defendant that Rule 227 envisages a process whereby the parties either orally, or by appropriate written notice lodged by the defendant with the court, expressly consent to the terms of a judgment to be entered.
I am not satisfied the defendant’s execution of the Deed, despite the terms of clause 7.3, fulfils any of the requirements listed in Rule 227(4).
I decline to enter consent judgment in favour of the plaintiffs as sought.
Rule 232
It should be noted that the wording of Rule 232 differs from that set forth in Rule 25.01 of the Supreme Court Rules 1987 which specifically stated:
(1) Where a party wishes to obtain –
(a) summary judgment in, or the disposal of the whole of part of, an action; or
(b) immediate relief,
he or she may do so on application accompanied by an affidavit specifying –
(c) why the other party does not have a good action or defence on the merits on any possible view of the facts or law; or
(d) why such relief should be granted.
In Ceneavenue Pty Ltd v Martin[6] (Ceneavenue), the Full Court considered the history of the Supreme Court Rule and concluded that the change in wording between that in the 2006 Rules and that in the 1987 Rules meant that the burden to be discharged on summary judgment applications in the Supreme Court is now less than it formerly was. Debelle J stated:[7]
A comparison of the test in Rule 25.04 with the test in Rule 232(2)(b) readily discloses that the burden to be discharged by the defendant on an application under paragraph (b) is lighter than the burden that had to be discharged under Rule 25.04. The reasoning in General Steel is, therefore, no longer applicable. I respectfully agree with Bleby J that the barrier to summary judgment on an application by a defendant has been lowered …
[6] [2008] SASC 158.
[7] [2008] SASC 158 at [80].
Further, he stated, by reference to cases dealing with plaintiffs’ applications for summary judgment against defendants:[8]
The only question to be considered is whether there is a real question to be tried and whether that question has reasonable as distinct from fanciful prospects of success. Once the Court concludes that there are reasonable prospects of success, it must dismiss the application for summary judgment.
[8] [2008] SASC 158 at [94].
There are numerous decisions dealing with the issue as to the circumstances in which summary judgment will be granted and what is the correct interpretation to be given to the words ‘no reasonable basis’ for an action or defence.
In Spencer v Commonwealth of Australia[9] (Spencer), the High Court was dealing with a similar albeit not identical provision relevant to summary judgment applications in s 31A of the Federal Court of Australia Act 1976. That section provided, inter alia, that for summary judgment to be granted the Court must be ‘satisfied that the other party has no reasonable prospect of successfully prosecuting the proceeding or that part of the proceeding’. In a joint judgment of Hayne, Crennan, Kiefel and Bell JJ their Honours stated:[10]
First, the central idea about which the provisions pivot is ‘no reasonable prospect’ (emphasis added). The choice of the word ‘reasonable’ is important. If s 31A is to be seen as deriving from r 24.2 of the Civil Procedure Rules 1998 of England and Wales, its provisions underwent an important change in the course of their translation from that jurisdiction to this. The English rule speaks of ‘no real prospect’; s 31A speaks of ‘no reasonable prospect’. The two phrases convey very different meanings …
The inquiry required in this case is whether there is a ‘reasonable’ prospect of prosecuting the proceeding, not an enquiry directed to whether a certain and concluded determination could be made that the proceeding would necessarily fail.
[9] [2010] HCA 28.
[10] [2010] HCA 28 at [51]-[52].
Their Honours further concluded:[11]
How then should the expression ‘no reasonable prospect’ be understood? No paraphrase of the expression can be adopted as a sufficient explanation of its operation, let alone definition of its content. Nor can the expression usefully be understood by the creation of some antimony intended to capture most or all of the cases in which it cannot be said that there is ‘no reasonable prospect’. The judicial creation of a lexicon of words or phrases intended to capture the operation of a particular statutory phrase like ‘no reasonable prospect’ is to be avoided.
[11] [2010] HCA 28 at [58].
His Honour Justice Bleby’s decision in Davies v Minister for Urban Development and Planning & Anor[12] (Davies) provides a very useful summary of the more recent decisions in this area. Bleby J concluded that the High Court’s decision in Spencer overruled the earlier decision of the Full Court in Ceneavenue in attempting to substitute a meaning for the text of Rule 232(2) which it did not bear.
[12] [2011] SASC 87.
I am satisfied that the application made by the plaintiffs makes it clear that the plaintiffs are pursuing an application for judgment based on the terms of the Deed. By that Deed, provided the conditions as set forth in clauses 7.1 and 7.3 are met, the defendant has acknowledged the plaintiffs right to enter judgment against him for the sums as sought in the Statement of Claim.
It is for the plaintiffs to establish that there is no reasonable basis for the defence.
Following the reasoning of the High Court in Spencer and of Bleby J in Davies the issue is whether there is a ‘reasonable’ basis for the defence, having regard to the ordinary meaning of those words, rather than whether there is ‘any possible basis’ for the defence.
It is clear that the power to dismiss an action or a defence summarily is not a power to be exercised lightly. As observed by Bleby J in Davies:[13]
The Court must be cautious not to do a party an injustice by summarily dismissing the proceedings where, for example, contested evidence might reasonably be believed one way or the other so as to enable one side or the other to succeed. However what amounts to no reasonable basis will ultimately be decided through a succession of decided cases.
[13] [2011] SASC 87 at [44].
The defendant did not file any affidavit material in response to the application.
There is no dispute that the defendant has failed to comply with clause 3.1.1 of the Deed.
There is no dispute that as at the date of the application and the date of the hearing, the defendant had not paid the Settlement Sum. There is no dispute that the Deed is binding on the parties.
There is no dispute that the application was filed more than five business days after the plaintiffs’ solicitors email to the defendant’s solicitor dated 10 September 2019.
I reject the contention that the email sent by Mr Shueard to the defendant’s solicitor dated 10 September 2019 does not comply with clause 7.1 of the Deed in that it does not repeat the express wording of that clause.
The email expressly refers to both clauses 7.1 and 7.3 of the Deed, being a Deed executed by the defendant and expressly requires the default be remedied. By reference to the Deed, the defendant must have known that if he did not remedy the default within five working days of the date of the email, being notice under clause 7.1, the plaintiffs were then entitled to judgment as set forth in clause 7.3.
I am satisfied the email from the defendants’ solicitors to the plaintiff’s solicitors dated 10 September 2019 constitutes a written notice requiring the defendant to remedy a breach of the Deed pursuant to clause 7.1.
I am satisfied the defendant did not remedy the breach of Deed within a period of no less than five working days from the date of the notice.
I am satisfied that the defendant has no reasonable basis to dispute the operation of clause 7.3 of the Deed and therefore no reasonable basis to defend the plaintiffs’ claim made in reliance upon that Deed.
Orders
1Judgment entered for the first plaintiff as against the defendant in the sum of $433,500.
2Judgment entered for the second plaintiff as against the defendant in the sum of $278,000.
3The defendant is to pay the plaintiffs’ costs of action on a party/party basis to be agreed or taxed.
4The defendant is to pay the plaintiffs’ costs of and incidental to FDN 15 on an indemnity basis, such costs to be agreed or taxed.
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