Mercedes-Benz Financial Services Australia Pty Ltd v Animus Pty Ltd
[2019] WADC 133
•11 SEPTEMBER 2019
JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CIVIL
LOCATION: PERTH
CITATION: MERCEDES-BENZ FINANCIAL SERVICES AUSTRALIA PTY LTD -v- ANIMUS PTY LTD [2019] WADC 133
CORAM: SCOTT DCJ
HEARD: 18-19 OCTOBER 2018 & 20-21 FEBRUARY 2019
DELIVERED : 11 SEPTEMBER 2019
FILE NO/S: CIV 2922 of 2015
BETWEEN: MERCEDES-BENZ FINANCIAL SERVICES AUSTRALIA PTY LTD
Plaintiff
AND
ANIMUS PTY LTD
First Defendant
RICHARD SCIANO
Second Defendant
ANIMUS PTY LTD
RICHARD SCIANO
Plaintiff by counterclaim
MERCEDES-BENZ FINANCIAL SERVICES AUSTRALIA PTY LTD
Defendant by counterclaim
Catchwords:
Construction of loan agreement and further agreements - Mistake - Unconscionable conduct - Turns on own facts
Legislation:
Nil
Result:
Judgment for the plaintiff against first and second defendants
Representation:
Counsel:
| Plaintiff | : | Mr D Chandler |
| First Defendant | : | Ms C Bahemia |
| Second Defendant | : | In person |
| Plaintiff by counterclaim | : | Ms C Bahemia |
| Defendant by counterclaim | : | Mr D Chandler |
Solicitors:
| Plaintiff | : | Irsa Legal Pty Ltd |
| First Defendant | : | Carol Bahemia Lawyers |
| Second Defendant | : | Not applicable |
| Plaintiff by counterclaim | : | Carol Bahemia Lawyers & In Person |
| Defendant by counterclaim | : | Irsa Legal Pty Ltd |
Case(s) referred to in decision(s):
Australia and New Zealand Banking Group Ltd v Dzienciol [2001] WASC 305
Australian Financial Services & Leasing Pty Ltd v Hills Industries Ltd (2014) 253 CLR 560
Central City v Montevento Holdings Pty Ltd [2011] WASCA 5
Commercial Bank of Australia v Amadio (1983) 151 CLR 447
David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353
Fazio v Fazio [2012] WASCA 72
Gumland Property Holdings Pty Ltd v Duffy Bros Fruit Market (Campbelltown) Pty Ltd [2008] HCA 10
HL Diagnostics Pty Ltd v Psycadian Ltd [2005] WASC 234
Kakavas v Crown Melbourne Ltd (2013) 250 CLR 392
Lighting by Design (Aust) Pty Ltd v Cannington Nominees Pty Ltd [2008] 35 WAR 520
Louth v Diprose (1992) 175 CLR 621
Mackenzie v Albany Finance Ltd [2003] WASC 100
Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd [2015] HCA 37
Newbon v City Mutual Life Insurance Society Ltd (1935) 52 CLR 723
Permanent Mortgages Pty Ltd v Vandenbergh (2010) 41 WAR 353
Shevill v Builders Licensing Board Inc [1982] HCA 47
Vantage Systems Pty Ltd v Priolo Corporation Pty Ltd [2015] WASCA 21
SCOTT DCJ:
Overview
On about 12 October 2009 the plaintiff and the first defendant entered into an Asset Loan Agreement Chattel Mortgage contract number 274189 incorporating Asset Loan Agreement Terms and Conditions issued 02/09 (agreement) pursuant to which the plaintiff agreed to advance to the first defendant the sum of $173,195.00 (amount financed) to assist the purchase by the first defendant from Diesel Motors (dealer) of a 2009 Mercedes-Benz GL500 164D wagon motor vehicle (vehicle).
The agreement provided that the amount financed and interest in the sum of $54,400.40 together totalling $227,595.40 (total amount payable) would be repaid over a term of 60 months (agreement term) by 60 payments of $2,411.74 and a balloon payment of $82,891 (net balance due) at the expiration of the agreement term, the first instalment being due on 7 November 2009 with subsequent instalments falling due on the same day in each successive month.
On or about 7 October 2009 the second defendant entered into a guarantee and indemnity (guarantee) in terms that he unconditionally guaranteed payment of all monies owed under the agreement made, or to be made, between the plaintiff and the first defendant in respect of the purchase of the vehicle. As a separate obligation the second defendant agreed to indemnify the plaintiff against any loss that it suffered because the first defendant did not pay any amount that was payable or perform any obligation provided for under the agreement.
The amount financed was advanced and paid to the dealer and the first defendant took possession of the vehicle.
The plaintiff says that:
(a)By reason of default by the first defendant in the payment of monies due under the agreement, the plaintiff by notice in writing to the first and second defendants dated 2 February 2012 terminated the agreement. Thereafter on or about 23 February 2012 the plaintiff and the first defendant entered into a second agreement (second agreement) in respect of the vehicle on the same terms as the agreement subject to the balance due under the second agreement taking account of the payments made under the agreement. The second agreement was partly in writing and partly by conduct.
(b)By reason of default by the first defendant in the payment of monies due under the second agreement, the plaintiff by notice in writing to the first and second defendants dated 27 April 2012 terminated the second agreement. Thereafter on or about 7 May 2012 the plaintiff and the first defendant entered into a third agreement (third agreement) in respect of the vehicle on the same terms as the second agreement subject to the balance due under the second agreement taking account of the payments made under the agreement and the second agreement. The third agreement was partly in writing and partly by conduct.
(c)By reason of default by the first defendant in the payment of monies due under the third agreement the plaintiff by notice in writing to the first and second defendants dated 9 April 2013 terminated the third agreement. Thereafter on or about 15 April 2013 the plaintiff and the first defendant entered into a fourth agreement (fourth agreement) in respect of the vehicle on the same terms as the third agreement subject to the balance due under the fourth agreement taking account of the payments made under the agreement and the second and third agreements. The fourth agreement was partly in writing and partly by conduct.
(d)On or about 29 April 2013 the plaintiff and the first defendant agreed to vary the fourth agreement by reducing the monthly repayment amount payable by the first defendant from $2,411.74 to $2,387.64 commencing on 7 August 2013 and extending the agreement term by five months to 7 March 2015 (fourth agreement as varied).
(e)By reason of default by the first defendant in the payment of monies due under the fourth agreement as varied, the plaintiff by notice in writing to the first and second defendants dated 25 November 2013 terminated the fourth agreement as varied. Thereafter on or about 9 December 2013 the plaintiff and the first defendant entered into a fifth agreement (fifth agreement) in respect of the vehicle on the same terms as the fourth agreement as varied subject to the balance due under the fifth agreement taking account of the payments made under the agreement and the second, third, fourth and fourth (as varied) agreements. The fifth agreement was partly in writing and partly by conduct.
(f)By reason of default by the first defendant in the payment of monies due under the fifth agreement, on 28 January 2015 the plaintiff terminated the fifth agreement by repossessing the vehicle.
(g)As at the date of termination of the fifth agreement the sum of $98,677.73 remained due and payable by the first defendant to the plaintiff pursuant to the fifth agreement and by the second defendant pursuant to the guarantee.
(h)On or about 13 March 2015 the plaintiff caused the vehicle to be sold by public auction the net proceeds from which amounted to $23,347.36 whereupon the amount due by the first and second defendants to the plaintiff amounted to $75,330.37.
(i)Notwithstanding demand by the plaintiff by letter dated 20 March 2015 the first and second defendants have failed and refused to pay that sum.
The first and second defendants:
(a)Say that on or about 12 October 2009 the first defendant entered into the agreement.
(b)Say save that the second defendant signed a document entitled 'Guarantee and Indemnity' which purported to be in respect of the payment of monies owed by the first defendant to the plaintiff pursuant to the agreement the first and second defendants deny that the second defendant had the obligations relied on by the plaintiff and says that the plaintiff has no cause of action against the second defendant.
(c)Say that the effect of the notice of termination dated 2 February 2012 was that the agreement was terminated on that day and the remedies available to the plaintiff were restricted to recovering the instalments, interest and charges outstanding at that date and to repossess the vehicle.
(d)Deny that the first defendant entered into any of the second, third, fourth, fourth (as varied) and fifth agreements and say that after 2 February 2012 the terms under which the first defendant was entitled to retain possession of the vehicle were consistent with there being a forbearance on the part of the plaintiff not to repossess the vehicle provided that the first defendant paid the instalments in the amounts and on the dates specified in the agreement.
(e)Alternatively say that in the event that a fifth agreement was entered into as the plaintiff contends and was terminated by the repossession of the vehicle on 28 January 2015, the sum to which the plaintiff is entitled is no more than the instalments, interest and charges outstanding at that date.
(f)Say that the first defendant, between 7 May 2012 and 28 January 2015 paid the total sum of $69,216 to the plaintiff in the mistaken belief that the agreement had not been terminated on 2 February 2012.
(g)Say that in or about December 2011 the second defendant was diagnosed with cancer and thereafter:
(i)his employment ceased;
(ii)he faced financial hardship;
(iii)he was under the mistaken belief that the agreement was on foot; and
(iv)on or about 17 April 2013 he told the plaintiff he had been diagnosed with cancer, he was undergoing chemotherapy treatment, he faced financial hardship and requested a variation of the agreement on the grounds of financial hardship by reason of which the plaintiff knew or ought to have known that he was suffering from cancer and it was thereby unconscionable for the plaintiff to continue to maintain that the agreement was on foot when it knew or ought to have known that the agreement had been terminated.
(h)Say that the plaintiff is not entitled to recover the sum of $75,330.33 or any sum and the first defendant counterclaims the sum of $69,216.
Matters in issue
1.Whether after the termination of the agreement on 2 February 2012 the plaintiff and the first defendant entered into the second, third, fourth, fourth (as varied) and/or fifth agreements as the plaintiff contends or whether any agreement between the plaintiff and the first defendant was on terms that the plaintiff would forbear from repossessing the vehicle as long as the first defendant paid the instalments in the amounts and on the dates specified in the agreement.
2.Whether the first defendant was induced by mistake to make payments to the plaintiff after the termination of the agreement and if so the consequences thereof.
3.Whether after the termination of the agreement the plaintiff acted unconscionably towards the first and second defendants and the consequences thereof.
4.The liability of the first and second defendant.
Evidence advanced at trial
The plaintiff did not adduce any viva voce evidence. It relied on:
(a)Statement of Agreed facts dated 18 October 2018 (exhibit 1);
(b)Tender bundle (exhibit 2.1 – 2.49) (TB) which included the plaintiff's diary entries (18 - 90) and statements of account (91 ‑ 99). These documents were agreed to be admitted into evidence as business records of the plaintiff as evidence of the facts contained in them pursuant to s 79C of the Evidence Act 1906.
(c)Affidavit of John Hodgson-Williams sworn 18 October 2018 verifying amendments to the figures in pars 10, 11 and 13 in the amended statement of claim as follows:
par 10:$101,549.23 reduced to $98,677.73
par 11:$26,000 reduced to $23,347.36 (inclusive of GST)
par 13:balance due reduced from $75,549.23 to $75,330.37
(consistent with TB 95)
The first defendant called evidence from Robert Sciano. The second defendant gave evidence and tendered his signed witness statement dated 19 October 2018 (exhibit 7), and a bundle of documents (exhibit 9).
Agreement and guarantee
The agreement
The relevant documents and terms of the agreement and guarantee are as follows:
Schedule A – Asset Loan Agreement (Chattel Mortgage)
(i)the parties are the plaintiff as lender and the first defendant as purchaser/owner;
(ii)the total amount payable of $227,595.40 is made up of $173,195.00 being the total amount financed and interest charges of $54,400.40;
(iii)the agreement term is 60 months. The total amount payable is repayable by 60 payments of $2,411.74 and at the expiration of the agreement term a balloon of $82,891 (net balance due). The first instalment is due on 7 November 2009 with subsequent instalments due on the same day in each successive month;
(iv)the signatories acknowledge receiving 'Terms and Conditions – Asset Loan Agreement issued 02/09' and agree they form part of the agreement.
Asset Loan Agreement – terms and conditions
4Mortgage, assignment of rights and completion of purchase:
4.1In consideration of you [being the plaintiff] agreeing to advance me [being first defendant] the total amount financed as noted in Schedule A and as beneficial owner I assign to you by way of mortgage all my right, title and interest in the vehicle.
4.2Purpose of advance:
I acknowledge that any advance you make to me or on my behalf is solely for the purpose of purchasing the vehicle and is to be refunded to you if I do not purchase the vehicle.
4.3Purchase of vehicle
We agree that the purchase of the vehicle will be complete when I pay you the net balance due. At that time your mortgage over the vehicle shall be discharged.
5Events of default
5.1I will be in default if
(a)I fail to pay any amount or fail to do anything required of me under this Agreement …
5.2Your rights
If I default and where the total default is capable of remedy, I fail to rectify that default within seven (7) days of notice from you, you may terminate this agreement by:
(a)notice to me in writing; or
(b)repossessing the vehicle (and I authorise you to enter any property or premises for that purpose).
If the agreement is terminated due to default I must return the vehicle to you immediately if you are not already in possession.
5.3Enforcement expenses
I acknowledge that you can recover from me a fee to compensate you for your expenses incurred in enforcing your rights under this Agreement.
6.Payments
6.1I will:
(a)pay the instalments at intervals and in the amounts set out in Schedule A;
…
(e)in addition to any other charges imposed on me by this agreement also pay all charges you reasonably determine and require me to pay:
(i)in respect of an early payout or discharge of this agreement (for whatever reason); or
(ii)if any instalment becomes 20 or more days overdue; or
(iii)if any payment I make is returned or dishonoured by my bank or financial institution; or
(iv)if I request that you amend, vary or assign my obligations under the agreement.
6.2All payments by me will be paid at the times provided for in this agreement or where no time for payment is provided for, when demanded by you.
6.4I will pay interest on the final daily balance of any amount that is overdue for payment under this agreement calculated at the Overdue Rate from the date it was due until I pay the overdue amount in full. This interest must be paid by the next scheduled payment date and in any event if outstanding at that time, upon expiration of the agreement term.
…
6.6My obligation to pay instalments … will continue regardless of any default in, or lack of performance of the vehicle or any breakdown … of the vehicle.
…
10.Your rights when this agreement terminates
The termination of this agreement for whatever reason will not affect your rights, powers and remedies with respect to any prior breach by me under this agreement.
14.Understanding this Agreement
Special Terms
In this Agreement … 'Overdue Rate' means the aggregate of 4% and the rate from time to time under s 2 of the Penalty Interest Rates Act 1983 (VIC).
Fees
Repossession fee (if an agent is instructed to repossess your vehicle due to continued default and in addition to any fees charged by such agent): $125.00.
Variation fee (if you request any amendment, variation or assignment of your finance contract): $275.00.
Submitting Payment Options
Direct Debit
Direct debit allows an automatic debit from your bank account on a monthly basis.
End of Contract Process
Upon natural maturity of your contract when all payments have been made in full, including any balloon payment and applicable fees Mercedes-Benz Financial will remove any legal interest in the vehicle and you will receive a letter confirming that your contract has been finalised.
Guarantee and Indemnity
The guarantor(s) named below absolutely and unconditionally guarantees payment of all monies owed under the agreement made, or to be made, between Mercedes-Benz Financial Services Australia Pty Ltd … and Animus Pty Ltd … in respect of the purchase … of vehicle registration number 1DEK189 …
This means, if the Borrower … fail(s) to pay any monies owed, the guarantor(s) will pay it.
As a separate obligation, the guarantor(s) agree to indemnify (the plaintiff) against any loss that it suffers because the (first defendant) does not pay any amount that is payable … under the agreement.
The plaintiff says that at all material times it dealt with the second defendant who was acting on behalf of the first defendant as a director or defacto director.
To that end:
(a)the defendants admit that the second defendant was appointed a director of the first defendant on 17 November 1993 and held that position until 28 September 2013.
(b)The defendants say that the second defendant resigned as a director of the first defendant on or about 28 September 2013 and his father Joseph Sciano was appointed a director on or about that date.
(c)The defendants say that by an email sent to Jackson Tran of the plaintiff on 7 March 2014 Joseph Sciano gave notice that he was the director of the first defendant.
(d)In evidence Joseph Sciano confirmed that he was appointed the director of the first defendant on 28 September 2013 and that the second defendant gave him a bundle of papers relating to first defendant. He said that:
(i)On 6 November 2013 the first defendant received a notice of default from the plaintiff and made a payment to the plaintiff of $7,309.59 on 10 December 2013.
(ii)On 7 March 2014 he sent an email to the plaintiff in which he advised the plaintiff that he was the director of the first defendant, and further advised that the second defendant was previously the director and was inflicted with cancer, that he (Joseph Sciano) had recently received a garnishee notice from the Australian Taxation Office (ATO) as the company had not paid its bills and had no assets to sell and was not able to pay its debts unless they loaned it more funds to save it from administration, and that he was trying to sort the matter out and needed to know what to do in that situation.
(iii)He received a response from Jackson Tran of the plaintiff by email dated 13 March 2014 advising him that due to privacy reasons he could not advise him of what options were available and it would be best if the second defendant called him back directly on a specified number.
(iv)The first defendant received default notices on 13 March 2014, 8 May 2014, and 1 August 2014 and the second defendant made the payments on behalf of the first defendant.
(v)The first defendant was a family trust company. The only communication he had with the plaintiff was the exchange of emails between him and Jackson Tran on 7 March 2014 and 13 March 2014.
(vi)The second defendant transferred monies to the first defendant's account to make the payments to the plaintiff and everything to do with the vehicle was done by the second defendant.
It is evident from the plaintiff's records in the trial bundle that after 28 September 2013 the second defendant continued to be the person who was acting on behalf of the first defendant with respect to all the dealings with the plaintiff. I am satisfied that the second defendant after 28 September 2013 acted as a defacto director of the first defendant.
Whether any agreement was entered into between the plaintiff and the first defendant after 2 February 2012
It is not in issue that by letters to the first and second defendants dated 2 February 2012 the plaintiff terminated the agreement due to default which was not remedied and required the first and second defendants to pay the sum of $5,000.05 which included default interest, or to return the vehicle.
Second agreement - 23 February 2012
The plaintiff says that in so far as the second agreement was partly in writing, it consisted of:
(a)The terms of the agreement.
(b)The following emails between the second defendant and Kathryn Crawford of the plaintiff:
(i)6 February 2012 - email from Kathryn Crawford to the second defendant:
Please see enclosed transaction statements for both of your accounts … CN274189 outstanding $2592-93. Both December and January payments bounced … Could you please advise on when we can bring these up to date.
(ii)9 February 2012 - email from Kathryn Crawford to the second defendant:
Could you please give me a call on 1300731211 to discuss payments.
(iii)9 February 2012 - email from the second defendant to Kathryn Crawford:
I will be back in Perth on Monday night. I will arrange the payments next week to bring the account to order. My apologies.
(iv)13 February 2012 - email from Kathryn Crawford to second defendant:
Thank you for your email. Could you please make payment Tuesday and send through email with receipt.
(v)20 February 2012 - email from second defendant to Kathryn Crawford:
I am back and will fix up tomorrow.
Insofar as the second agreement consisted of conduct, the plaintiff says:
(a)at all material times the first defendant maintained custody of the vehicle;
(b)the first defendant made a payment to the plaintiff on 23 February 2012 of $5,032;
(c)the first defendant attempted to make payments to the plaintiff on 5 March 2012 and 5 April 2012 but those attempted payments were dishonoured, there being no funds in the account of the first defendant for the plaintiff to access the direct debit.
The defendants say that the endeavours to withdraw the two payments from the first defendant's account by direct debit was an act on the part of the plaintiff, not an act by the first defendant.
By letters to the first and second defendants dated 11 April 2012, the plaintiff gave notice of default with respect to an overdue amount of $4,908.88 by which the plaintiff advised that unless that sum was paid within 14 days the contract between the plaintiff and the first defendant would be terminated. The plaintiff says that the default was not remedied and by letters of 27 April 2012 to each defendant the plaintiff gave notice of termination and required the first and second defendants to immediately pay the sum of $4,942.09 which included default interest, or to return the vehicle.
Third agreement - 7 May 2012
The plaintiff says that insofar as the third agreement was partly in writing, it consisted of:
(a)The terms of the agreement and second agreement;
(b)Emails between the second defendant and Kathryn Crawford on 7 May 2012, in circumstances where a repossession agent on behalf of the plaintiff was endeavouring to repossess the vehicle. Those emails were:
(i)7 May 2012 - from the second defendant to the plaintiff:
Sorry. Just got back from a month overseas. Please email me the amount outstanding on both ac and I will pay.
(ii)7 May 2012 - from the second defendant to the plaintiff:
Hi I called the number you provided and asked them to send the accounts to be paid on my email. They said they would email them so I could pay today. I have since received two phone calls and harassment to my secretary. I want this Norman guy off the case and an account sent to pay or I will contact the authorities.
(iii)7 May 2012 - from the second defendant to the plaintiff:
Hi Katharyn he is now trying to take the car as we speak after I called the Scott Co again and they assured me an email was coming. I will make payment to him but not for the tow truck.
(iv)7 May 2012 - from the plaintiff to the second defendant:
I got your last email, too sorry for the late reply. I have someone on the horn to them right now and I will keep you posted.
(v)7 May 2012 - from the plaintiff to the second defendant:
I have been advised that the person there knows outstanding amounts. If you speak with him it can all be worked out and there will be no tow costs.
(vi)7 May 2012 - from the second defendant to the plaintiff:
Paying both now. They charged $550 and $600. Talk soon.
(vii)7 May 2012 - from the plaintiff to the second defendant:
I don't understand sorry. But I am happy that it is all getting sorted out for you and your accounts will be brought up to date.
(viii)7 May 2012 - from the second defendant to the plaintiff:
Hi all done. I transferred three payments plus so cancel the direct debit today please for the GL500.
(ix)7 May 2012 - from the plaintiff to the second defendant:
We have cancelled d/d on both accounts. Once your accounts are back with us I will require you to fill out a new d/d form to reactive.
(x)7 May 2012 - from the second defendant to the plaintiff:
No stress should be OK from here. Been in and out of hospital over the last five months and overseas back and forth for treatment and really missed (sic) up my accounts. All good from here on.
Insofar as the third agreement consisted of conduct the plaintiff says:
(a)At all material times the first defendant maintained custody of the vehicle.
(b)The first defendant made payments to the plaintiff on 7 May 2012, 12 June 2012, 9 July 2012, 9 August 2012, 13 September 2012, 23 October 2012, 13 November 2012, 10 December 2012, and 29 January 2013.
By letters to the first and second defendants dated 13 March 2013 the plaintiff gave notice of default with respect to an overdue amount of $4,976.21 by which the plaintiff advised that unless that sum was paid within 14 days the contract would be terminated. The default was not remedied and by letters dated 9 April 2013 to the first and second defendants, the plaintiff gave notice of termination and required the defendants to immediately pay the sum of $5,020.61 which included default interest.
Fourth agreement
The plaintiff says that insofar as the fourth agreement was partly in writing the plaintiff says it consisted of:
(a)The terms of the agreement, the second and third agreements.
(b)An email from the second defendant to Jenny Crapper of the plaintiff on 14 April 2013 in which the second defendant said:
I will pay the $5020.61 payment to the account direct tomorrow … unfortunately I was diagnosed with cancer last year and have undergone chemo and radiation treatments which has forced me into a pretty bad position on many fronts, lost time to attend to accounts and financial stress. I hope this payments fixes any issues so I don't get a bad credit rating as I really can't be put under any more pressure at the moment.
Insofar as the fourth agreement consisted of conduct the plaintiff says:
(a)at all material times the first defendant maintained custody of the vehicle;
(b)the first defendant made payments to the plaintiff on 15 April 2013, 3 September 2013 and 9 September 2013.
Hardship variation - fourth agreement (as varied)
The plaintiff says that upon being advised by the second defendant in his email of 14 April 2013 that he had been diagnosed with cancer the previous year, forcing him into 'a pretty bad position on many fronts, lost time to attend accounts and financial stress', Jim Kalambokis of the plaintiff by email dated 17 April 2013 forwarded to the second defendant hardship forms that needed to be completed and signed, in addition to which supporting correspondence was sought in support of his hardship claim including a medical certificate or report. He was advised by that email that if his request was approved there would be a $390 variation fee which would be added to the remaining balance if it was not paid up front.
The plaintiff says that by email from Mr Kalambokis dated 3 May 2013 the plaintiff forwarded to the second defendant a variation agreement and requested that when signed it be returned to the plaintiff. The plaintiff says that the variation agreement comprised a letter of 3 May 2013 from the plaintiff to the first defendant which included provision for signatures from the plaintiff, the first defendant and the second defendant.
The relevant terms of the variation agreement contained in the letter of 3 May 2013 were as follows:
We are pleased to confirm variation to your asset loan agreement contract number 274189 as agreed with you on 29 April 2013.
We confirm the following variation(s):
Your monthly repayment amount has been changed from $2,411.74 to monthly repayments of $2,387.64 commencing on 7 August 2013.
Your loan period has been extended from 60 months to 65 months and will now end on 7 March 2015.
Net Balance Due (Balloon) $82,891 and is payable on 7 March 2015.
A variation fee has been charged in the sum of $390 and has been added to the loan amount.
The total amount payable has changed to $233,819.95.
All other terms and conditions of the contract remain unchanged.
We trust this Variation Agreement assists you in managing your contractual obligations to us. Please call us if you have any questions or concerns about your contract or the agreed variations.
We kindly request that you sign and return a copy of this letter to our office within seven (7) days acknowledging that you understand the variations to your contract as outlined above.
If you have any issues with the variations or need further clarification, we strongly suggest that you contact the writer directly on (03) 8554 3386.
Once signed please return the signed letter by fax to (03) 8554 3402 or email to [email protected].
The plaintiff says that by email dated 7 May 2013 from the second defendant to the plaintiff the second defendant attached the variation agreement which he had signed where indicated.
In his evidence the second defendant said that he did not think he got the letter of 3 May 2013 until 26 August 2013 but agreed that the date of 3 May 2013 on the signing page is in his handwriting but said that he did not remember signing that page.
However in his amended statement of 19 October 2018 (exhibit 7) at par 47 he said 'On 7 May 2013 I received an email which said "Please find attached variation agreement, once signed please either email or fax back to me". The email attached pages for a deed. I signed it on behalf of myself Animus on 7 May 2013 and sent the pages back to MBFSA by email as requested'.
By an email from Jackson Tran dated 8 July 2013 (exhibit 8 R12) relevant transaction statements were attached from which the second defendant said he noticed an entry on 7 May 2013 relating to an increase in receivables due to restructuring being $2,411.74, charges of $390 and OD interest of $12.03 making a total of $4,341.48 and yet next to the description 'overdue amount' there was a dash.
On the face of it this figure of $4,341.48 is unexplained. It is clearly not the addition of $2,411.74 being the initial monthly instalment, plus the charge of $390 (being the agreed variation fee) and OD interest of $12.03. Further I note from the plaintiff's statement of payments due (TB 95 and 96) that there is no entry relating to that sum for which the first defendant is liable and from the plaintiff's statement of actual payments made (TB 98 and 99) there is no payment made by the first defendant with respect to that entry. Even though this entry is unexplained it would not appear to have resulted in a sum of $4,341.48 being debited to the first defendant.
At this juncture it is relevant to observe that as to the issues which were joined on the pleadings, at which time the second defendant was represented by the solicitors for the first defendant, although there was a denial that the plaintiff was entitled to the sum claimed by it, or any sum, there was no pleading in which it was asserted that the plaintiff had levied to the account of the first defendant any specific charges or amounts to which it was not entitled, such as to put the plaintiff on notice.
Counsel for the plaintiff objected on a number of occasions to reference being made by the second defendant in evidence to specific sums which he said were unexplained. Counsel maintained that such evidence fell outside the parameters of the issues joined by the pleadings. Given that the second defendant was not represented, he was provided with some latitude however it became evident that the plaintiff was being disadvantaged in that it was being taken by surprise and, if the second defendant was allowed to assert these alleged irregularities or inaccuracies, not only would the plaintiff need to be put on specific notice but may need to call evidence in rebuttal.
As a consequence, the action was adjourned part-heard to 20 February 2019 in order that the first and second defendants could foreshadow any amendments to the defence to make clear these assertions. I also suggested to the second defendant that it may be prudent for him to seek legal advice if he was able.
When the proceedings resumed the second defendant remained self‑represented. Counsel for the first defendant said that the first defendant did not intend to propose any amendments to this effect. Nor were any amendments sought by the second defendant.
In his evidence the second defendant said his understanding of the variation was that given there was an extension of the term by five months there would be no obligation to pay any payments for five months after the variation agreement was entered into and he was unable to understand how the plaintiff came to the figures asserted by it. He said that by the variation agreement he had to pay about $12,000 more and was only getting two months grace.
The second defendant said he received an email from Jackson Tran on 2 September 2013 (exhibit 9 R16) in which Mr Tran informed him that he had further advice from the plaintiff's hardship department that the plaintiff did not provide five months of assistance and that the term was for three months given that he was a month behind already. He said, that was incorrect because he was not behind in any payment at that time. I will make reference to whether the first defendant was or was not in arrears and its relevance, later.
The second defendant said that what he was being told by the plaintiff back in 2013 with respect to the state of the first defendant's account was never correct and he was 'so confused' about how the plaintiff got to their numbers.
I am satisfied that:
(a)Under cover of the email from Mr Kalambokis of 3 May 2013 the variation agreement including the signing clause was forwarded to the second defendant.
(b)The second defendant signed on behalf of the first defendant and on his own behalf as guarantor and by email on 7 May 2013 he returned those signed documents to the plaintiff.
(c)The terms of the variation agreement were clear. That is that the monthly instalment amount would be reduced from $2,411.74 to $2,387.64 commencing 7 August 2013 (there being no payments falling due in June and July), the net balance due would be unchanged at $82,891 and was payable on 7 March 2015, the variation fee of $390 had been added to the loan amount and in lieu of the sum of $227,595.40 stipulated in in the agreement the total amount financed was increased to $233,819.95 - a difference of $6,224.55.
By letters to each of the first and second defendants dated 6 November 2013 the plaintiff gave notice of default with respect to an overdue amount of $4,857.33 by which the plaintiff advised that unless that sum was paid within 14 days the contract between the plaintiff and the defendant would be terminated. Payment of that sum was not received within 14 days and by letters to each of the first and second defendants dated 25 November 2013 the plaintiff gave notice of termination and required the defendants to immediately pay the sum of $4,892.13 which included default interest.
Fifth agreement
The plaintiff says that insofar as the fifth agreement was partly in writing it consisted of:
(a)the terms of the agreement, second, third, and fourth (as varied) agreements;
(b)an email between the second defendant and Jackson Tran of the plaintiff dated 10 December 2013 in which the second defendant said:
Re CN274189 & 298448.
Hi Jackson,
Payments were made at the WPac in fremantle WA today.
$7,303.59 to BSB 034002 ac 298448 I added the ref no also to the slip. GL500.
$2,455.95 to BSB 034002 ac 298448 I added the ref no also to the slip. ML320.
I have the receipts if you need them.
Once the payments are complete could you send me an up to date schedule and pay out list on both vehicles.
It would seem that the incorrect account number was referred to by the second defendant with respect to the payment of the sum of $7,303.59 given the identification of the vehicle as GL500 - the other Mercedes vehicle having been financed by the first defendant being ML320.
Insofar as the fifth agreement consisted of conduct the plaintiff says:
(a)at all material times the first defendant maintained custody of the vehicle;
(b)the first defendant made payments to the plaintiff on 9 December 2013, 9 January 2014, 28 March 2014, 15 May 2014, 18 June 2014, 7 July 2014, 20 and 27 August 2014, and 26 September 2014.
The plaintiff says that the first defendant defaulted under the fifth agreement by failing to make payments due thereunder and by letters to each of the first and second defendants dated 30 October 2014 the plaintiff gave notice of default with respect to outstanding payments totalling $4,907.33 requiring payment within 14 days. The plaintiff says that payment of that sum was not received within 14 days entitling the plaintiff to terminate the fifth agreement and to retake possession of the vehicle and offer it for sale.
The plaintiff says that the first defendant failed to pay any payments to the plaintiff after 26 September 2014. The plaintiff repossessed the vehicle on 28 January 2015 thereby terminating the fifth agreement.
The plaintiff caused the vehicle to be sold by public auction and after the deduction of costs, repairs, sales commission and taxes the net realised proceeds of sale totalled $23,347.36. By letter from the plaintiff to the first and second defendants dated 20 March 2015 the plaintiff demanded payment of the sum of $75,549.23 alleged by the plaintiff to be owing under the fifth agreement.
The first and second defendants say that:
(a)The effect of the notices of default and notices of termination of the agreement was that the agreement was terminated on 2 February 2012.
(b)The remedies which were available to the plaintiff pursuant to the agreement were to:
(i)recover the amounts payable by the first and second defendants as at the date of termination together with interest calculated pursuant to cl 6.4 of the agreement; and
(ii)to repossess the vehicle.
(c)The first defendant paid the sum of $5,032 to the plaintiff on or about 23 February 2012.
(d)The plaintiff did not repossess the vehicle which remained in the possession of the first defendant.
The first and second defendants deny that the plaintiff and the first defendant entered into any of the second, third, fourth (as varied) or fifth agreements. In her closing submissions, although it was not pleaded, counsel for the first defendant contended that the conduct of the parties subsequent to 2 February 2012 was equally consistent with the arrangement thereafter constituting a forbearance on the part of the plaintiff not to proceed to recover the vehicle provided that the first defendant made payments referred to in the agreement and that upon any default the entitlement of the plaintiff was to terminate the first defendant's right to possession of the vehicle and to recover possession of it and any payments and overdue interest then due.
The rights and obligations of the parties after 2 February 2012
There is no issue that upon notice of termination by the plaintiff any future commercial relationship between the parties was neccesarily by a new contract: see Newbon v City Mutual Life Insurance Society Ltd (1935) 52 CLR 723 733, 734. The extent to which the parties intended to be contractually bound falls to be determined objectively, from the point of view of reasonable persons on both sides, according to the intention disclosed by their words and conduct including pre and post-contractual conduct: Vantage Systems Pty Ltd v Priolo Corporation Pty Ltd [2015] WASCA 21 [98] - [102]. A succinct summary of the principles is referred to in Fazio v Fazio [2012] WASCA 72 by Murphy JA who said:
189A contract may be inferred from the acts and conduct of parties, as well as or in the absence of their words: Integrated Computer Services v Digital Equipment Corporation (11,117); Empirnall Holdings Pty Ltd v Machon Paull Partners Pty Ltd (1988) 14 NSWLR 523, Lighting by Design v Cannington [21], [90], [204]. The parties' dealings with each other are relevant both 'for what was said and not said': Branir Pty Ltd v Owston Nominees (No 2) [369].
190The question is whether the parties' conduct, viewed objectively, reveals a tacit understanding or agreement, or a manifestation of mutual assent, which evinces an intention to create legal relations: Bell Group Ltd (in liq) v Westpac Banking Corporation (No 9) and (No 10) [2659]; Lighting by Design v Cannington [204]; Branir Pty Ltd v Owston Nominees (No 2) [369].
191In Brambles Holdings v Bathurst City Council [81], Heydon JA (in observations adopted by Le Miere AJA in Lighting by Design v Cannington [205]) posed the following question for determination:
In the light of the above cases, it is relevant to ask: in all the circumstances can an agreement be inferred? Has mutual assent been manifested? What would a reasonable person in the position of [one party] and a reasonable person in the position of the [other party] think as to whether there was a concluded bargain?
192In relation to the admissibility of subsequent conduct, the general principle is that subsequent conduct is not to be used as an aid in the construction of an instrument or written agreement: The Administration of the Territory of Papua and New Guinea v Daera Guba [1973] HCA 59; (1973) 130 CLR 353, 446 per Gibbs J, citing James Miller & Partners Ltd v Whitworth Street Estates (Manchester) Ltd [1970] AC 583, 603; Agricultural & Rural Finance Pty Ltd v Gardiner [2008] HCA 57; (2008) 238 CLR 570 [35].
193Where, however, an informal agreement (oral or inferred) is alleged to have been made on or by a certain date, the conduct of the parties, including conduct subsequent to the postulated date, may be considered in deciding whether a contract has been concluded: Allen v Carbone [1975] HCA 14; (1975) 132 CLR 528, 532–533; Barrier Wharfs Ltd v W Scott Fell & Co Ltd [1908] HCA 88; (1908) 5 CLR 647, 669; Brambles v Bathurst [25]. Such conduct may be considered for the purpose of inferring not only whether a binding agreement had been reached, but also its subject matter and the identification of its necessary terms: Bell Group [2665] – [2672]; County Securities Pty Ltd v Challenger Group Holdings Pty Ltd [2008] NSWCA 193 [7] ‑ [27], [45] (Spigelman CJ); Australian Estates Ltd v Palmer (Unreported, NSWCA, 22 December 1989).
The subjective intentions or understandings of the parties is not a relevant factor in determining whether a contract exists: Lighting by Design (Aust) Pty Ltd v Cannington Nominees Pty Ltd [2008] 35 WAR 520 [24]. Even if it is difficult or impossible to analyse a transaction in terms of offer and acceptance the existence of a contract may be found: Fazio [188]; Lighting by Design [21].
The payment of monies may be accepted as an act of part performance. The test being whether the act relied on is unequivocally referrable to the agreement alleged: Lighting by Design [48].
Finding
I am not satisfied that the conduct of the first defendant is consistent with it entering into the second agreement. The first defendant paid the sum of $5,032 on 23 February 2012 which was the instalment and default interest owing pursuant to the agreement. The fact that the plaintiff then endeavoured to access the payments on 5 March 2012 and 5 April 2012 by direct debit was not conduct of the first defendant.
However the conduct of the parties is consistent only with the plaintiff and the first defendant entering into each of the third – fifth agreements in the manner and on the terms contended by the plaintiff. To that end in addition to the correspondence and the conduct pleaded by the plaintiff:
(a)In communications from the plaintiff to the first and second defendants the contract number the subject of the agreement namely contract number 274189 was specified.
(b)As to the third agreement the first defendant paid instalments in the amounts specified in the agreement. With respect to the fourth agreement (as varied) and the fifth agreement the first defendant paid instalments in the amounts specified in the variation agreement.
(c)There were progressive undertakings by the second defendant on behalf of the first defendant to pay the instalments due from time to time by the first defendant.
(d)On 7 May 2012 the second defendant on behalf of the first defendant advised the plaintiff that he had been overseas and would make good the outstanding payments. In addition on that day there were a number of emails in which the second defendant objected to the repossession agent for the plaintiff attempting to repossess the vehicle following which a payment of $8,032.28 was made on 8 May 2012 in order that the first defendant was able to retain the vehicle.
(e)The variation agreement executed by the first and second defendants in May 2013 recited the terms of the agreement pertaining to the instalments payable under the agreement, the instalments payable under the variation and when those reduced payments were to commence, the extension of the term of the agreement and the new total amount payable.
(f)On 2 September 2013 the second defendant on behalf of the first defendant sought an explanation of the calculation pursuant to the variation agreement and confirmed that a payment was made the previous day and another payment would be paid that night so there was no 'need to terminate'.
(g)In an email of 23 January 2015 from the second defendant to a person who he understood to be a repossession specialist working for Mercedes Benz, he said, in respect to the complaint he had made about the road worthiness of the vehicle:
I really hope this give you an overview of what has transpired here I am the guarantor and borrower I am not disputing this fact. (TB 26)
Viewed objectively, the emails between the parties and their conduct are not consistent with any agreement after 2 February 2012 being other than the plaintiff contends. It is not consistent with there being an arrangement by which there was a mere forbearance or indulgence on the part of the plaintiff from recovering possession of the vehicle if the first defendant made payments when they fell due, as the first defendant contends.
I am satisfied that due to the default in payment by the first defendant the plaintiff was entitled to terminate the fifth agreement and did so.
Whether the first defendant made payments after 2 February 2012 in the mistaken belief that the agreement had not been terminated
The first defendant counterclaims the sum of $71,624.20 being the difference between the total amount paid by the first defendant to the plaintiff and the amount paid up to 2 February 2012 as being monies paid by the first defendant to the plaintiff under the mistaken belief that the agreement was still on foot when, as a fact it had been terminated on that date.
There is no issue that there is a prima facie entitlement to recover monies paid when a mistake of law or fact has caused the payment: David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353 [376] cited with approval in Australian Financial Services & Leasing Pty Ltd v Hills Industries Ltd (2014) 253 CLR 560 [67], [106].
The fact that the payment has been caused by a mistake is sufficient to give rise to a prima facie obligation on the part of the recipient of the monies to make restitution. Before that prima facie liability is displaced, the recipient must point to circumstances which the law recognises would make an order for restitution unjust. The law will not allow recovery except where the enrichment is unjust. It follows that the recipient of a payment, which is sought to be recovered on the ground of unjust enrichment, is entitled to raise by way of answer any matter or circumstance which shows that his or her receipt (or retention) of the payment is not unjust. To that end it will be necessary for the recipient to demonstrate that it acted to its detriment on the faith of the receipt: Australian Financial Services & Leasing Pty Ltd v Hills Industries Ltd [81].
Finding
I am not satisfied that the first defendant by the second defendant made any payment after 2 February 2012 in the mistaken belief that the agreement had not been terminated. To that end:
(a)The notices of default and notices of termination with respect to the agreement and the subsequent agreements made clear that by reason of defaults in payments not being rectified the relevant agreement was thereby terminated.
(b)The first defendant by the second defendant repeatedly made it clear to the plaintiff that it wanted to retain the vehicle and to that end continued to make payments over a number of years until 26 September 2014.
(c)On each occasion after the notice of termination of the agreement and the third – fourth (as varied) agreements the second defendant on behalf of the first defendant contacted the plaintiff advising it that a late payment had been made or would be made in order that the vehicle would not be repossessed by the plaintiff. A stark example being on 7 May 2012 when the second defendant repeatedly complained to the plaintiff about its agent attempting to repossess the vehicle.
Even if, contrary to my finding, the first defendant did make payments in the mistaken belief that the agreement had not been terminated, the continued possession of the vehicle by the first defendant over the period after 2 February 2012 resulted in the payments made to the plaintiff being received for good consideration. In addition the plaintiff by entering into the subsequent agreements as I have found changed its position to its detriment in that it refrained from repossessing the vehicle enabling it to then be sold.
Unconscionable conduct
The defendants at par 8C of their defence plead that:
(a)On or about December 2011 the second defendant was diagnosed with cancer and thereafter:
(i)his employment ceased;
(ii)he faced financial hardship;
(iii)he was under the mistaken belief that the agreement was on foot; and
(iv)on or about 17 April 2013 he told the plaintiff that he had been diagnosed with cancer, was undergoing chemotherapy treatment, faced financial hardship and requested a variation of the agreement on the grounds of financial hardship.
(b)As such the plaintiff knew or ought to have known that the second defendant was suffering from cancer and it was therefore unconscionable of the plaintiff to continue to maintain that the agreement was on foot when it knew or ought to have known that the agreement had been terminated.
Although the first defendant pleads unconscionability there is no relief sought in the counterclaim with respect to that plea. In the first defendant's outline of submissions counsel submits that the agreements entered into after 2 February 2012, if found to exist, should be set aside on the grounds of unconscionable conduct. That relief ought to have been pleaded in to the counterclaim but it was not.
In his evidence the second defendant referred to a letter to him dated 12 January 2012 (exhibit 9 R1) at the top of which there was the following note:
In hospital.
Notified Merc Benz of cancer and loss of job. 28/02/12.
In his amended statement of 19 October 2018 (exhibit 7) he said the following:
32.I was hospitalised for 24 hour, 5 day constant drip chemo and mixed chemo/radiation treatment that initially last 6 months, I started chemotherapy on the 28th February 2012. It was a very aggressive cancer and I knew I might not survive.
33.When I went into hospital for treatment I brought my accounts with me as I knew I had about seven urgent creditors to deal with. I telephoned my various creditors while I was in hospital. I do not specifically remember calling MBFSA (plaintiff). I see a note that I made on the letter form MBFSA dated 12 January 2012. It states 'notified Merc Benz of cancer and loss of job'. It also has another notation which says 'in hospital 28/02/12'. I made the second notation after this action had started, to instruct my solicitors. The date reflects when I first entered hospital and started chemotherapy.
He said in evidence that as a 'best educated guess' the first notation would have been made around January or February 2012 but he could not guarantee 100%. He was pretty sure because when he did that statement he pulled out this document and the notation was already done and the document had been sitting in the file.
In cross-examination he was asked to whom he spoke and he said that it would have been Kathryn because she was the lady who was talking to him at the time. There was then this exchange at (ts 306):
What did you say to Kathryn? - - - I would have said 'Kathryn, I am sick and I am not well'. I don't know exactly.
Do you remember what you said? - - - Yeah. 'I am in hospital and I am - I have been diagnosed with cancer'.
Are you telling me you suddenly remembered that? That's exactly what you said? - - - It's all very confusing. I mean its - you're trying to bring me back to a time when I just have two different notes on there. I don't really know.
He said he was talking to Kathryn all the way through the month of February so that was when the conversation would have happened.
He was then referred to the plaintiff's diary in the trial bundle during February 2012 and agreed that there was no record of a conversation between him and Kathryn. There were the following emails:
(a)6/02/2012 from Kathryn Crawford to the second defendant (TB 81):
Subject CN274189/298448:
Good afternoon Richard,
Please see enclosed transaction statements for both of your accounts.
CN274189 - outstanding $2,592.93. Both December and January payments bounced …
Could you please advise on when we can bring these up to date.
(b)Email 9/02/2012 from Kathryn Crawford to the second defendant (TB 80):
Subject CN274189/298448
Hi Richard,
Could you please give me a call on 1300 731 211 to discuss payments.
(c)Email 9/02/2012 from the second defendant to Kathryn Crawford (TB 80):
Subject CN274189/298448
Dear Kathryn,
I will be back in Perth on Monday night.
I will arrange the payments next week to bring the accounts to order.
My apologies.
(d)Email 13/02/2012 from Kathryn Crawford to the second defendant (TB 79):
Hi Richard,
Thank you for your email. Could you please make payment Tuesday and send through email with receipt.
(e)Email 20/02/2012 from the second defendant to Kathryn Crawford (TB 79):
Hi Kathryn,
I am back and will fix up tomorrow.
(f)He was then referred to par 42 of his signed statement in which he said:
I notified MBFSA of my loss of job and health issues by telephone conversations prior to the 7 May 2012 and by email on 7 May 2012.
On or about 7 May 2012 a repossession agent was instructed by the plaintiff to repossess the vehicle by reason of alleged default in payment by the first defendant.
The second defendant was referred to the following entries of 7 May 2012 in the trial bundle namely (TB 76 - 74):
(a)
Hi,
Sorry.
Just got back from a month overseas.
Please email me the amount outstanding on both ac and I will pay.
Thanks.
(b)Plaintiff's diary note 7/05/12:
Cust rang regarding both a'c's as the agent guy is hanging around his office. Call transferred to SCOTTS to advise cust full arrears plus costs as he is wanting to get both a'c's up to date.
(c)Email dated 7/05/2012 from the second defendant to the plaintiff in the following terms:
Hi,
I called the number you provided and asked them to send the accounts to be paid on my email. They said they would email them so I would pay today.
I have since received two phone calls and harassment to my secretary.
I want this Norman guy off the case and an account sent to pay or I will contact the authorities.
(d)Email dated 7/05/2012 from the second defendant to the plaintiff:
Hi Katharyn he is now trying to take the car as we speak after I called the Scott Co again and they assured me an email was coming.
I will make payment to him but not for the tow truck.
(e)Email dated 7/05/2012 from the second defendant to the plaintiff:
No stress should be OK from here.
Been in and out of hospital over the last five months and overseas back and forth for treatment and really missed [sic] up my accounts.
All good from here on.
He was then referred to other communications and diary notes in the trial bundle of 7 May 2012 and 8 May 2012 and agreed that none of them made reference to the matters the subject of par 42 of his amended witness statement.
In addition in par 8C of the defence and counterclaim there is no reference to any conversation with Kathryn Crawford in which she was said to have been notified of the second defendant's cancer and loss of job. It is there pleaded that on or about 17 April 2013 the second defendant told the plaintiff that he had been diagnosed with cancer.
In light of these facts I do not accept that the second defendant made the plaintiff aware of his diagnosis with cancer, his treatment and resulting financial hardships until his email to the plaintiff of 17 April 2013 to Jenny Crapper.
The plaintiff's response was the email from Jim Kalambokis to the second defendant on 17 April 2013 to which hardship application forms were attached and in which the first defendant was notified of the information which he would need to provide to the plaintiff. The relevant matters relating to the finalisation of the variation agreement are referred to by me, earlier.
In her outline of submissions counsel for the first defendant submitted that the plaintiff:
(a)Knew of the illness suffered by the second defendant from February 2012. It knew or ought to have known the personal toll such as an illness and the associated treatment and the consequent impact upon the first defendant.
To that end, I have found that the first notification of the second defendant's illness to the plaintiff occurred on14 April 2013.
(b)Sent multiple letters of default and termination notices and form 16 (insurance notice of right to cancel mortgaged property insurance) to the first defendant.
(c)Entered into five separate agreements to loan funds to the first defendant at times when it knew or ought to have known that the first defendant was in no position to make the payments after 2 February 2012.
(d)Relies upon its own action in accessing the direct debit facility to establish the alleged agreement of 23 February 2012 (second agreement).
(e)Relies on the first defendant's compliance with default notices and termination notices as evidence to establish the alleged subsequent agreements.
(f)Failed to provide the first defendant with sufficient information to allow it to verify amounts debited by the plaintiff.
In the event that the plaintiff sought to recover interest on any instalment that, pursuant to the fifth agreement fell due after the date of termination it would need to claim damages at common law for the loss of the bargain. This is because upon termination the parties are discharged from the obligations to perform the fifth agreement. The interest component in the total amount financed is calculated by reference to repayments of the amount financed over time including repayments payable after termination.
I have found that upon termination of the fifth agreement the balance of the amount financed is recoverable by the plaintiff on demand. That is consistent with the manner in which the plaintiff's claim is pleaded. The plaintiff does not plead a claim in damages. It is therefore not necessary nor appropriate for me to deal with the question as to whether the plaintiff may also be entitled to maintain a claim in damages.
Guarantee
Relevantly the guarantee provides that the second defendant guarantees payment of all monies owed under the agreement made or to be made between the plaintiff and the first defendant in respect of the purchase of the vehicle.
On a proper construction of the guarantee the liability of the second defendant extends to the agreement and any other agreement made between the plaintiff and the first defendant in respect of the purchase of the vehicle which includes any of the first, third, fourth (as varied) and fifth agreements into which I have found the first defendant entered.
The plaintiff's statements of account of 'payments due' and 'actual payments made' appear at TB 97 - 99.
In his evidence the second defendant maintained that there were a number of errors in the statement of actual payments made (statement of payments made) in which he said various sums paid by the first defendant were not brought to account by the plaintiff. To that end, he referred to a transaction account record which he had prepared as part of a draft Scott schedule but which had not been agreed with the plaintiff (exhibit 9 R33). He said that he had marked up in red type a number of payments which he said had not been brought to account by the plaintiff (ts 261 - 265) in its statement of payments made.
In cross-examination counsel for the plaintiff put to the second defendant that each of the amounts identified by the second defendant in red had in fact been brought to account by the plaintiff in the statement of payments made with which the second defendant disagreed (ts 322 ‑ 326). I have set out below a schedule of the respective positions of the parties.
Defendants' contention that monies were paid but not credited by the plaintiff (exhibit 8 R33)
Amount paid Date paid Due date $2,479.31 4/01/2011 7/11/2010 $2,558.00 17/02/2011 7/02/2011 $4,955.85 27/10/2011 7/10/2011 $2,456.14 3/11/2011 7/11/2011 $5,032.00 23/02/2012 7/02/2012 $8,032.28 7/05/2012 7/05/2012
(payment to repossession agent)
$2,701.50 23/10/2012 7/10/2012 $5,020.61 15/04/2013 7/04/2013 $2,461.45 3/09/2013 7/08/2013 $2,395.89 19/09/2013 7/09/2013 $4,832.91 27/03/2014 7/03/2014 $2,550.00 27/08/2014 7/08/2014 $2,628.38 25/09/2014 7/09/2014
Plaintiff's statement of payments (TB 98 - 99)
Amount received by plaintiff Date received $2,479.31 5/01/2011 $2,558.00 18/02/2011 $4,955.85 3/11/2011 $2,456.14 4/11/2011 $5,032.00 23/02/2012 $8,032.28 7/05/2012 $2,701.50 23/10/2012 $5,020.61 15/04/2013 $2,461.45 3/09/2013 $2,395.89 19/09/2013 $4,832.91 28/03/2014 $2,550.00 27/08/2014 $2,628.38 26/09/2014
In cross-examination of the second defendant as to the assertion by Jackson Tran in his email to the second defendant of 2 September 2013 (TB 138) that at the time of the variation agreement the first defendant was one payment behind, counsel for the plaintiff referred the second defendant to TB 98 at the foot of which there appears to be no payment which had been made in February 2013. There was a payment on 29 January 2013 and the next payment was on 28 March 2013. The second defendant agreed that the February 2013 payment was missed but said that it was picked up in the payment of 15 April 2013 which was the sum of $5,020.61. It appears to me that the second defendant is correct because in the plaintiff's statement of payments made on 15 April 2013 the net payment after charges and interest of amounts of $197.13 were deducted is $4,823.48 which is exactly two payments of $2,411.74.
Otherwise I accept the plaintiff's statements of payments due and payments made as an accurate reflection of their contents.
Conclusions
The vehicle was lawfully repossessed on 28 January 2015 due to the default on the part of the first defendant. Although the vehicle was delivered to Mercedes-Benz in Bentley in October 2014, the first defendant’s purpose was not to voluntarily surrender the vehicle as was made clear in correspondence from the second defendant in mid‑November 2014 but to make complaints as to the roadworthiness of the vehicle. So it was not until 28 January 2015 that the vehicle was repossessed by the plaintiff.
Although I have found that Mr Tran was mistaken when he said in his email to the second defendant of 2 September 2013 that the first defendant was in arrears with respect to the instalment payment due in February 2013, nothing turns on that finding given that the plaintiff has accounted for that sum, in any event, as having been paid.
As I say the plaintiff is entitled to recover from the first defendant pursuant to the fifth agreement and from the second defendant pursuant the guarantee the following sums:
(a)The instalments which accrued due to 28 January 2015; and
(b)The balance of the amount financed remaining unpaid less the net sum for which the vehicle was sold.
At TB 97 the interest on instalments payable by the first defendant is there calculated. There is no interest on the net payment due of $82,891. However there is an interest component with respect to the instalments otherwise payable on 7 February 2015 ($594.61) and 7 March 2015 ($582.35) totalling $1,176.96. That sum is to be deducted from the amount claimed by the plaintiff in the amended statement of claim.
The sum which the plaintiff is entitled to recover against the first and second defendants is $74,153.41 calculated as follows:
Total amount payable under the agreement and subsequent agreements: total sum due (statement of payments due)
$234,348.62
Plus overdue interest, sundry charges/agents fees (TB 95)
$1,701.51
Total due
$236,050.13
Less amounts paid
$137,350.64
$98,699.49
Less rebate
$21.76
$98,677.73
Less net proceeds on sale of vehicle
$23,347.36
$75,330.37
Less interest included in the instalments otherwise payable on 7/2/15 and 7/3/15
$1,176.96
$74,153.41
There will be judgment in the following terms:
1. The first and second defendants do pay to the plaintiff:
(a)the sum of $74,153.41;
(b)interest at the rate of 6% per annum pursuant to s 32 of the Supreme Court Act 1935 calculated from 21 March 2015 until judgment; and
(c)costs to be taxed if not agreed.
2. The first defendant's counterclaim be dismissed.
I certify that the preceding paragraph(s) comprise the reasons for decision of the District Court of Western Australia.
KM
Associate to Judge Scott11 SEPTEMBER 2019
0
12
1