FEDERAL COURT OF AUSTRALIA
Moran v Robertson [2012] FCA 371
Citation: Moran v Robertson [2012] FCA 371 Appeal from: Robertson v Moran [2011] FMCA 496 Parties: RUSTY JOHN MORAN AND ANOR v ALEXANDER ROBERTSON AND ANOR File number: NSD 1380 of 2011 Judge: FLICK J Date of judgment: 13 April 2012 Catchwords: BANKRUPTCY – application to have personal insolvency agreements set aside – terms of agreement unreasonable – derisory dividend payable to creditors – some creditors electing not to participate in distribution
GUARANTEES – construed strictly in favour of guarantor
PRACTICE AND PROCEDURE – filing of written submissions after hearing – submissions manifestly in excess of that contemplated
TRUSTS – personal liability of trusteeLegislation: Bankruptcy Act 1966 (Cth) ss 81, 116, 188, 222, 239
Bankruptcy Legislation Amendment Act 2004 (Cth)
Federal Court of Australia Act 1976 (Cth) s 27Cases cited: Agushi, Re; Ex parte Farrow Mortgage Services Pty Ltd (1992) 8 ACSR 549, considered
Andrew Nicholas Emmett, Re; Ex parte Beneficial Finance Corporation Ltd (unreported, O’Loughlin J, 16 December 1991), considered
Ankar Proprietary Ltd v National Westminster Finance (Australia) Limited (1987) 162 CLR 549, cited
Beard v Prestige Baking Industries Pty Ltd (1981) 52 FLR 384, considered
Brennan, Re; Ex parte Stokes (Australasia) Ltd (unreported, Morling J, 31 May 1988), considered
Codrington, Re; Ex parte Don McKay Tourist & Charter Pty Ltd (unreported, Burchett J, 1 September 1989), considered
Dingle, Re; Westpac Banking Corporation v Worrell (1993) 47 FCR 478, considered
Eastman v Director of Public Prosecutions (ACT) [2003] HCA 28, 214 CLR 318, cited
Frost v Sheahan as Trustee of the Bankrupt Estate of Allen Gordon Frost [2012] FCAFC 46, cited
Helvetic Investment Corporation Pty Ltd v Knight (1984) 9 ACLR 773, applied
Khera v National Australia Bank Limited (1996) 71 FCR 133, considered
Knight v Beyond Properties Pty Ltd [2007] FCAFC 170, 242 ALR 586, cited
Lockett, Re; Ex parte Northern Equity Ltd (unreported, French J, 6 April 1992), considered
Lords Holdings Pty Ltd v Brizzi [2004] NSWSC 371, considered
Mills, Re; Ex parte Lloyd’s (1997) 73 FCR 551, considered
Osborne v Gangemi [2011] FCA 1252, considered
Palazzolo v Ex parte Discusso (unreported, Neaves J, 19 July 1991), cited
Poulet Frais Pty Ltd v Silver Fox Company Pty Ltd [2005] FCAFC 131, 220 ALR 211, cited
Richards, Re; Ex parte Beneficial Finance Corporation Limited (unreported, Jackson J, 17 March 1986), considered
Robertson v Moran [2011] FMCA 496, affirmed
Tripodi, Re; Ex parte Col Johnson Pty Limited (unreported, Burchett J, 22 January 1987), considered
Westpac Banking Corporation v Hingston (No 2) [2010] FCA 116, 117 ALD 552, consideredO’Donovan, J and Phillips J C, Modern Contract of Guarantee (Lawbook Co., subscription service)
Date of hearing: 2 March 2012 Place: Sydney Division: GENERAL DIVISION Category: Catchwords Number of paragraphs: 100 Counsel for the Appellants: Mr J Lockhart SC with Mr C Colquhoun Solicitor for the Appellants: David Begg & Associates
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- Moran v Robertson [2012] FCA 371
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- [2012] FCA 371
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CaseChat Overview and Summary
In the matter of Moran v Robertson, the appeal was heard before the Federal Court of Australia. The primary dispute centred around the validity and enforceability of personal insolvency agreements (PIAs) between the debtor, Mr Robertson, and his creditors, including Mr Moran. The crux of the case was whether the terms of the PIAs were unreasonable, which would render them void under the Bankruptcy Act 1966 (Cth). Additionally, the court had to determine the personal liability of Mr Robertson, given that he acted as the trustee for the Robertson Retirement Fund when entering into the agreements.
The legal issues before the court encompassed several key areas: the interpretation of the terms of the PIAs, the applicability of the doctrine of unconscionability, the status of Mr Robertson as a creditor, and the enforceability of the guarantees provided by the defendants. The court needed to ascertain whether Mr Robertson was indeed a creditor under the act, a determination crucial for his standing to apply for the PIAs to be set aside. Furthermore, the court had to construe the guarantees strictly in favour of the guarantors and assess the personal liability of Mr Robertson as the trustee of the Robertson Retirement Fund.
The court meticulously examined the documents and testimonies provided. It concluded that Mr Robertson was indeed a creditor under the act, as the references to the non-existent Alex Robertson Superannuation Fund were likely a drafting error rather than a condition precedent for the agreements' enforceability. The court rejected the notion of uncertainty in the documents and affirmed that Mr Robertson could enforce the PIAs in his personal capacity. The analysis was grounded in the intention of the parties as discerned from the commercial context and the immediate execution of the loan agreements. The court also highlighted the strict construction of guarantees in favour of the guarantors, ensuring that any ambiguity was resolved against the creditor.
The final orders of the court, as noted in the judgment, were to be entered on 26 April 2012, as per Rule 39.32 of the Federal Court Rules 2011. The specific content of these orders was not detailed in the excerpt provided, but they would likely address the enforceability of the PIAs and any other consequential matters arising from the court's findings.
The legal issues before the court encompassed several key areas: the interpretation of the terms of the PIAs, the applicability of the doctrine of unconscionability, the status of Mr Robertson as a creditor, and the enforceability of the guarantees provided by the defendants. The court needed to ascertain whether Mr Robertson was indeed a creditor under the act, a determination crucial for his standing to apply for the PIAs to be set aside. Furthermore, the court had to construe the guarantees strictly in favour of the guarantors and assess the personal liability of Mr Robertson as the trustee of the Robertson Retirement Fund.
The court meticulously examined the documents and testimonies provided. It concluded that Mr Robertson was indeed a creditor under the act, as the references to the non-existent Alex Robertson Superannuation Fund were likely a drafting error rather than a condition precedent for the agreements' enforceability. The court rejected the notion of uncertainty in the documents and affirmed that Mr Robertson could enforce the PIAs in his personal capacity. The analysis was grounded in the intention of the parties as discerned from the commercial context and the immediate execution of the loan agreements. The court also highlighted the strict construction of guarantees in favour of the guarantors, ensuring that any ambiguity was resolved against the creditor.
The final orders of the court, as noted in the judgment, were to be entered on 26 April 2012, as per Rule 39.32 of the Federal Court Rules 2011. The specific content of these orders was not detailed in the excerpt provided, but they would likely address the enforceability of the PIAs and any other consequential matters arising from the court's findings.
Orders
Orders of the court
1. The proceeding is stood over to 9.30 am on 26 April 2012 for the determination of final orders.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
Background
Background to the litigation
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Evidence
Evidence Before The Court
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Decision
Reasons for decision
In addition to the terms of the agreements, a number of factual matters were also common ground both in the proceeding before the Federal Magistrate and before this Court on appeal, namely:·$500,000 was advanced to Tailored Property Capital;·the initial $250,000 and the subsequent payment of $250,000 were made by Spinitu; and·there never has been an “Alex Robertson Superannuation Fund”. It was also common ground that:·Spinitu is the trustee of the Robertson Retirement Fund, a self-managed superannuation fund; and·Spinitu and Mr Robertson as trustee for the Robertson Retirement Fund in October 2008 brought proceedings against Tailored Property Capital and Messrs Moran and Daniel in the District Court in relation to the two Deeds of Loan Agreement.THE DECISION THE SUBJECT OF APPEAL The first of the issues presented for resolution before the Federal Magistrate was whether or not Mr Robertson was “a creditor” for the purposes of s 222(1)(d). If he was not “a creditor” – and hence a person with standing to make an “application” – none of the other elements set forth in s 222 arose for consideration. The Federal Magistrate concluded that Mr Robertson was “a creditor” as follows:[26] There is no reliable extrinsic evidence to explain why Mr Robertson was described in the two deeds dated 29 August 2007 by reference to a trust fund which did not exist and was never brought into existence. The lawyers who negotiated the drafting of the deeds have not given evidence, and neither their records of the drafting nor all of their written correspondence is in evidence. Mr Robertson is now an elderly person, and frankly conceded in his evidence that he has poor memories of the events in 2007 in relation to his instructions to his solicitor and execution of the documents. He said, and I accept, that he has no recollections of noticing or adverting to how precisely he was described as the Lender in the documents which he executed in August 2007.[27] The cross-examination of Mr Robertson opened up possibilities that the references to “as Trustee for the Alex Robertson Superannuation Fund” were a mistake on the part of everyone, and that the words were intended to refer to the existing trust fund known as the “Robertson Retirement Fund”. However, I consider that this explanation is unlikely and do not accept it, in view of the accurate description of that fund and its trustee in the first deed of loan, and the accurate recitation and inclusion of Spinitu Pty Ltd as a party in the termination deed, by reason of its designation as the Lender under the first loan.[28] In my opinion, the probable explanation for Mr Robertson’s extended description in the August 2007 documents is that, at the time that he agreed to make the second loan to assist Messrs Moran and Daniel’s Kiama project, the authors of the documents were informed that Mr Robertson was contemplating the possibility of a restructure of his retirement fund arrangements, perhaps as a result of accounting advice or other reasons. There is no direct evidence of this, but in cross-examination Mr Robertson accepted that he might have been discussing with his accountant at that time the establishment of a new superannuation fund.[29] That such a fund was known to be inchoate when the August 2007 deeds were made and completed in relation to the Lender’s obligations, might appear to be pointed to in the mysterious “of ______” in the description of Mr Robertson in the list of parties to the deed of termination.[30] More importantly, in my opinion the recitals to the contemporaneous deed of termination expressly explain Mr Robertson’s description and inclusion as a party to the documents, by showing that the parties intended Mr Robertson in his personal legal capacity to be recognised as both the principal lender under the first deed of loan, and also the principal lender under the second deed of loan, at least unless or until some other entity came into existence as the trustee for a trust fund which might be established in the future with the name “Alex Robertson Superannuation Fund”.[31] On this interpretation of the parties’ intention, the current and future existence of that fund was not a matter upon which the signatories to the deed intended to condition any of their obligations. The deed of loan agreement and guarantee was clearly intended to take effect immediately, by placing a personal obligation on Mr Robertson to effect the promised loan, and by giving him the immediate benefit of the borrower’s covenant for repayment and of the guarantors’ covenants to indemnify him personally in relation to default by the borrower. So construed, the reference to a possible future trustee capacity attaching to Mr Robertson’s rights under the deeds presents no present impediment to the enforcement of those rights by Mr Robertson in his personal capacity.[32] Such a construction is, in my opinion, entirely consistent with a recognised approach to the construction of commercial documents containing references to the possible future substitution of contracting parties or possible future changes to their capacities (cf Vickery v Woods (1952) 85 CLR 336 at 343, 348). On that construction of the parties’ intentions, I do not accept that there is any “uncertainty” under principles of contract law affecting the second deed of loan, which prevents its enforcement by Mr Robertson. I do not accept that the Court should not now recognise him in law as “the Lender” under its terms, and as a “creditor” in relation to the unrequited obligations of the guarantors. This is not a transaction where a “narrow or pedantic approach is warranted”, and the Court can, and should, discern the parties’ intention in relation to Mr Robertson’s rights and obligations on a construction of these commercial documents which prevents them being void for uncertainty of meaning (cf. Upper Hunter County District Council v Australian Chilling & Freezing Co Ltd (1968) 118 CLR 429 at 437).[33] The above construction is, in my opinion, confirmed by a consideration of the nature of the transaction and the surrounding “matrix of facts”. These include the undoubted contemporaneous facts: that such a trust fund had not been established; that the second loan agreement was intended by Messrs Robertson, Moran and Daniel to take immediate effect according to its terms; that it was of no concern to Messrs Moran and Daniel as to how Mr Robertson procured the promised funds; and that the loan was intended to be, and was, executed immediately by the promised funds being urgently transferred to the borrower upon execution of the documents.[34] I have above noted the absence of other contemporaneous evidence bearing on the construction of the description of Mr Robertson in the two deeds. Mr Robertson’s memories are now unreliable. Mr Moran gave no evidence directed at this issue, Mr Daniel gave no evidence whatsoever. Neither party called the lawyers involved in negotiating the terms of the documents.
Ratio Decidendi
Legal Principle Established
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