Murphy Lending Co P/L and Anor v DGM Enterprises (No 2) P/L and Ors

[2004] QCA 278

SUPREME COURT OF QUEENSLAND

CITATION:	Murphy Lending Co P/L & Anor v DGM Enterprises (No 2) P/L & Ors [2004] QCA 278
PARTIES:	MURPHY LENDING COMPANY PTY LTD ACN 086 468 920 (first plaintiff/first respondent) MICHAEL ALVIN PROBERTS (second plaintiff/second respondent) v DGM ENTERPRISES (NO 2) PTY LTD ACN 097 725 758 (first defendant) DGM ENTERPRISES (NO 3) PTY LTD ACN 097 725 785 (second defendant) DAVID WALLACE HAYMAN (third defendant/applicant/appellant) OTTO PAUL WURTH (fourth defendant) MELANIE-JANE MADDOX (fifth defendant)
FILE NO/S:	Appeal No 1668 of 2004 DC No 1091 of 2003
DIVISION:	Court of Appeal
PROCEEDING:	Miscellaneous Application - Civil General Civil Appeal
ORIGINATING COURT:	District Court at Brisbane
DELIVERED ON:	6 August 2004
DELIVERED AT:	Brisbane
HEARING DATE:	7 July 2004
JUDGES:	Davies, Williams and Jerrard JJA Separate reasons for judgment of each member of the Court, each concurring as to the orders made
ORDER:	1.    Grant the application for leave to amend the notice of appeal to add a further ground that the appellant did not guarantee the principal sum 2.    Grant leave to the appellant to withdraw the admission made in paragraph 3 of his amended defence that he guaranteed the principal sum and to further amend the amended defence to deny that part of the allegation contained in paragraph 2(b) of the respondents' statement of claim in which it is alleged that the appellant guaranteed the repayment by the principal of the sum of $100,000 3.    Allow the appeal, set aside the judgment of the District Court of 22 January 2004 (but not the order for costs made therein) and, in lieu, dismiss the application dated 15 December 2003
CATCHWORDS:	APPEAL AND NEW TRIAL - APPEAL - PRACTICE AND PROCEDURE - QUEENSLAND - POWERS OF COURT - AMENDMENT - where a deed was in existence in which the appellant signed "as guarantor" - where the appellant previously admitted in his defence that he had guaranteed the sum in the deed - where the appellant had prepared the defence without legal advice - where summary judgment was granted against the appellant in the District Court - whether the judgment of the District Court should be set aside - whether the admission made in the defence can be withdrawn
COUNSEL:	M D Martin for the applicant/appellant P W Hackett for the respondents
SOLICITORS:	Crowther Lawyers (Southport) for the applicant/appellant Tucker & Cowen for the respondents

1. DAVIES JA:  There are two matters before this Court.  The first in time is an appeal to this Court against a summary judgment in the District Court on 22 January 2004.  The second is an application to withdraw an admission made in the amended defence of the appellant and to have, in consequence, leave to amend his notice of appeal.  The relevant facts which give rise to this appeal and application are as follows.

1. The parties to this appeal were parties to a deed dated 18 October 2001.  In it the respondents are described as the mortgagees, DGM Enterprises (No 2) Pty Ltd and DGM Enterprises (No 3) Pty Ltd were described as the principal and the appellant and two others were described as guarantors.  The document on its face appears to be a deed of loan in which those companies described as the principal promised to pay to the respondents, on or before a specified date, a specific sum described as the principal sum.  Clause 7 of the deed provided:

"As security for the repayment of the Principal Sum by the Principal in accordance with this deed, the Principal shall cause the Guarantors to personally guarantee in favour of the Mortgagees the performance by the Principal of its obligations pursuant to this deed."

On its face that clause appears to envisage that the principal will cause the execution by the guarantors of a guarantee.  It does not appear that any further document was executed by the guarantors.

1. Nevertheless the respondents sued the appellant, amongst others, in the District Court alleging that, by the deed to which I have referred, the appellant guaranteed the repayment of the principal sum by the principal and, the principal having failed to pay that sum, claimed that sum from the appellant.  In his defence, which he prepared himself, the appellant admitted that, by the deed, he guaranteed payment of that sum.

1. The respondents brought summary judgment proceedings against the appellant which was opposed.  The appellant raised certain arguments against the summary judgment which were rejected by the learned primary judge.  He did not attempt to withdraw his admission.  On the contrary he swore that, by the deed, he had guaranteed the loan.  The learned primary judge rejected the arguments advanced by the appellant and gave summary judgment.  It is not necessary in these proceedings to consider either the correctness of his Honour's judgment on the admitted facts or his reasons for that judgment.

1. After seeking legal advice the appellant now wishes to withdraw his admission that, by the deed, he guaranteed payment of the principal sum and to amend his notice of appeal to include an argument that the deed did not constitute a guarantee by him.  That is the application to which I referred earlier.

1. There is no doubt, in my opinion, that it is reasonably arguable that the deed did not constitute a guarantee by the appellant and that the appellant would have had a real prospect of successfully defending the respondents' claim on that ground.

1. On the hearing of the appeal and application this Court invited the parties to consider whether this Court should decide the central question whether the deed constituted such a guarantee, on the basis that that was the only question in issue in the dispute.  However the respondents, understandably, wish to investigate whether there was some extrinsic evidence relevant to that question and whether they should, in the event that the application were allowed and the summary judgment set aside, seek rectification of the deed.  In those circumstances this Court can do no more than determine the application and determine whether, if the application is granted, the summary judgment should now be set aside.

1. I have already said that there is no doubt that the contention that the deed is not a guarantee by the appellant is reasonably arguable.  Moreover the admission was made by the appellant without the benefit of legal advice.  In those circumstances, on the facts I have described, the interests of justice require that leave should be granted to the appellant to withdraw his admission and to argue in this appeal that he would have a real prospect of successfully defending the claim against him on the ground that the deed did not constitute a guarantee.  The only disadvantage accruing to the respondents from that course would be by way of costs, against which they can be adequately protected.

1. Accordingly I would grant leave to the appellant to withdraw the admission made in paragraph 3 of the amended defence that he guaranteed the principal sum and also grant him leave to amend his defence to deny that part of the allegation contained in paragraph 2(b) of the respondents' statement of claim in which it alleged that the appellant guaranteed to the respondents repayment of the sum of $100,000.  And it follows from what I have already said that I would, in consequence, allow the appeal, set aside the judgment of 22 January 2004 and, in lieu, dismiss the application for summary judgment dated 15 December 2003.

1. It also follows from what I have said that I would not, however, disturb the order for costs made by the learned primary judge in favour of the respondents and Mr Martin who appears for the appellant does not contend to the contrary.  There is already an order for costs in this Court in respect of the first hearing of this appeal.  As to the costs of the appeal of 7 July 2004 Mr Martin, for the appellant, submits that, because it was clear from 16 June 2004, the date of the earlier hearing in this Court, that his client intended to make the applications which he did, it should also have been obvious to the respondents that, in the interests of justice, those applications would be granted.  There is some merit in those submissions.  On the other hand, however, Mr Hackett points out some unsatisfactory aspects of the evidence in support of the appellant's application and that he received only on 6 July 2004 the appellant's amended outline, application and affidavit.  In the light of the argument on both sides I would not be inclined to make any order with respect to the costs of the appeal of 7 July 2004.

Orders

1.          Grant the application for leave to amend the notice of appeal to add a further ground that the appellant did not guarantee the principal sum.

2.          Grant leave to the appellant to withdraw the admission made in paragraph 3 of his amended defence that he guaranteed the principal sum and to further amend the amended defence to deny that part of the allegation contained in paragraph 2(b) of the respondents' statement of claim in which it is alleged that the appellant guaranteed the repayment by the principal of the sum of $100,000.

3.          Allow the appeal, set aside the judgment of the District Court of 22 January 2004 (but not the order for costs made therein) and, in lieu, dismiss the application dated 15 December 2003.

1. WILLIAMS JA:  I have had the advantage of reading the reasons for judgment of Davies JA and there is nothing I wish to add thereto.  I agree with the orders proposed.

1. JERRARD JA:  In this appeal and application I have read and respectfully agree with the reasons for judgment and orders proposed by Davies JA.