Murray, L.o.a. v Macquarie Bank Ltd
[1992] FCA 229
•04 MARCH 1992
Re: LYNNE ORELLE ANGELA MURRAY and THE MACQUARIE BANK LIMITED
And: RAYMOND WILLIAM CARLE; THE MACQUARIE BANK LIMITED; LYNNE ORELLE ANGELA
MURRAY and JOHN ALEXANDER BAKER
No. Q G159 of 1990
FED No. 229
Practice and Procedure
COURT
IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY
GENERAL DIVISION
Spender J.(1)
CATCHWORDS
Practice and Procedure - application to strike out part of pleadings - whether claim vexatious or frivolous - issue to be determined in principal pleadings - Federal Court Rules O. 20 r. 2.
Federal Court Rules O. 11 r. 16
Federal Court Rules O. 20 r. 2
HEARING
BRISBANE
#DATE 4:3:1992
Counsel for the applicant: Mr P. McQuade
Instructed by: Bennett and Philp
Counsel for the respondent: Mr G. A. Thompson
Instructed by: Clarke and Kann
ORDER
The Court orders that:
The notice of motion be dismissed.
Costs of the motion to be the costs of the first respondent in the principal proceedings.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
JUDGE1
This is a notice of motion filed 28 February 1992 by the applicant in the principal proceedings, Ms Murray, against the Macquarie Bank Limited (`the bank'). The notice of motion seeks orders that paragraph 28A(c)(ii) of the bank's defence to the further amended statement of claim and amended cross-claim which was filed on 4 September 1991, be struck out pursuant to O. 20 r. 2 of the Federal Court Rules or, in the alternative, that that paragraph be struck out pursuant to O. 11 r. 16 of the Federal Court Rules.
Order 20 r. 2 provides:
" Where in any proceeding it appears to the Court that in relation
to the proceeding generally or in relation to any claim for relief in
the proceeding -
(a) no reasonable cause of action is disclosed;
(b) the proceeding is frivolous or vexatious; or
(c) the proceeding is an abuse of the process of the Court,
the Court may order that the proceeding be stayed or dismissed generally or in relation to any claim for relief in the proceeding. "
And sub-rule 2 provides:
" The Court may receive evidence on the hearing of an
application for an order under sub-rule (1). "
Order 11, r. 16 provides:
" Where a pleading -
(a) discloses no reasonable cause of action or defence or other case appropriate to the nature of the pleading;
(b) has a tendency to cause prejudice, embarrassment or delay in the proceeding; or
(c) is otherwise an abuse of the process of the Court, the Court may at any stage of the proceeding order that the whole or any part of the proceeding be struck out."
An application to strike out pleadings is, in a practical sense, concluded by an examination of the pleading itself and extraneous material is not admissible. On its face, the paragraph is not objectionable or embarrassing and a cause of action is disclosed, namely, that the amount claimed in that paragraph is due to the bank.
The paragraph in dispute concerns an admitted guarantee and indemnity executed by Ms Murray which document is before me. The whole paragraph, part of which is impugned, is as follows:
" 28A. Further:-
(a) As at July 8, 1991, the indebtedness of the Second Cross-Respondent to the Cross-Applicant, which is the subject of the Deed of Guarantee and Indemnity referred to in paragraph 28 of the Further Amended Statement of Claim, stood at $155,925.00;
(b) Notwithstanding the demand referred to in paragraph 30 of the Further Amended Statement of Claim, the First Cross-Respondent has failed, neglected and refused to pay to the Cross-Applicant the said sum or any part thereof; and
(c) The amounts for which the Second Cross-Respondent are now indebted to the Cross-Applicant (and in respect of which the First Cross-Respondent is liable pursuant to the terms of the said Deed of Guarantee and Indemnity) are:-
(i) pursuant to fully drawn advance account No. 3800-11866, the sum of $135,000.00 together with interest at the rate of 15.5% per annum from July 10, 1991; and
(ii) in respect of overdraft facility letter of offer account No. 3002-39159, the sum of $121,162.55 together with interest on $35,000.00 thereof at the rate of 15.5% per annum and interest on the balance thereof at the rate of 19.5% per annum from July 10, 1991. "
The second cross-respondent is Mr Baker and the cross-applicant is the bank. The first cross-respondent is Ms Murray.
It is apparent from that paragraph that the bank claims that Ms Murray has guaranteed the sum of the two amounts referred to in 28A(c)(i) and (ii). In paragraph 29(c), the bank claims there is now due and owing by Ms Murray to the bank:
" ...
(c) Pursuant to the Deed of Guarantee and Indemnity, the sums referred to in sub-paragraph 28A(c) hereof."
The primary thrust of the notice of motion is based on O. 20 r. 2(b), that the claim specified in paragraph 29(c) is vexatious or frivolous and that that claim for relief should be dismissed. It is said by Mr McQuade, counsel for Ms Murray, that on a proper construction of the deed of guarantee and indemnity, the liability of Ms Murray is limited and does not extend to the sum of the two amounts claimed in paragraph 28A(c)(i) and (ii).
It is necessary to refer in some detail to the terms of the document, but, shortly put, my view is that, while there is a lot to be said for the construction urged by Mr McQuade, it is not transparently clear that that construction will be the one arrived at by a trial judge. However, the document contains a number of difficulties in construction and it seems to me that the bank does face some serious difficulties in relation to its contention that the guarantee is an "all moneys" guarantee.
The document is headed 'DEED OF GUARANTEE AND INDEMNITY', addressed 'TO : MACQUARIE BANK LIMITED', and the customer is identified as John Alexander Baker. The guarantor is referred to as Lynne Orrelle (sic) Baker and Item 3 in the Schedule with which the deed of guarantee and indemnity commences says:
" Basic liability
Amount in words : $135,000.00 " Clause 1 provides:
" 1. CONSIDERATION
1.1 The Guarantor executes this Guarantee and Indemnity in consideration of the Bank :- 1.1.1 Lending, advancing, paying or making available or agreeing to lend, advance, pay or make available moneys or financial accommodation which will form part of the Secured Moneys; or 1.1.2 Refraining from demanding or suing for payment of moneys which fall within the description of the Secured Moneys and are presently payable by the Customer to the Bank;
at the request of the Guarantor. " Clause 2 provides:
" 2. GUARANTEE
2.1 The Guarantor guarantees payment of the Secured Moneys by the Customer to the Bank when they are due and undertakes to pay the Secured Moneys to the Bank on demand if they are not so paid by the Customer. "
and clause 3.1 provides:
" 3.1 The Guarantor, as a separate and additional liability, indemnifies the Bank against any loss the Bank may suffer by reason of :-
3.1.1 The liability of the Customer to pay the Secured Moneys to the Bank being unenforceable in whole or in part as a result of any lack of capacity, power or authority or any improper exercise of power or authority on the part of the Customer; or 3.1.2 The Customer becoming insolvent including :- 3.1.2.1 The amount of any payment made to the Bank which is void or voidable against any person; and 3.1.2.2 The amount of any interest (including capitalised interest) which does not accrue from the date of insolvency or is not recoverable by reason of the insolvency, and which would otherwise have been recoverable from the Guarantor under this Guarantee; or 3.1.3 The Secured Moneys or any of them being not recoverable from the Customer and not recoverable from
the Guarantor under the guarantee in Clause 2 by reason of any other fact or circumstance whatsoever whether the transactions or any of them relating to such moneys have been void, voidable or illegal or have been subsequently avoided and whether or not any of the matters or facts relating to those transactions have been or ought to have been within the knowledge of the Bank -
and the Guarantor, as principal debtor, agrees to pay a sum equal to the amount of such loss to the Bank on demand in writing. " Clause 4 is headed "SECURED MONEYS" and provides: " The Secured Moneys are all amounts now or at any time in the future falling within any of the following categories:- "
and there is then set out a number of items which includes all moneys which are owing and payable by Mr Baker to the bank, and all moneys which are owing by him but not presently payable, and all moneys which are contingently owing by him to the bank.
The central clause on the notice of motion is clause 5 which provides:
" 5. LIMIT
5.1 This Guarantee and Indemnity is to be a security for the whole of the Secured Moneys; but if any amount is specified in Item 3 of the Schedule as the basic liability, the total amount for which the Guarantor shall be liable under Clauses 2 and 3 in respect of the period up to the time when demand is made on the Guarantor for payment of the Secured Moneys ("the time of demand") shall be limited to a sum equal to the aggregate of :- 5.1.1 The basic liability;
5.1.2 A sum equal to one year's interest on the basic liability at the highest rate payable (or which would have been payable but for the Customer's insolvency) by the Customer to the Bank at the time of demand; and
5.1.3 A sum equal to all bank charges and any other charges costs and expenses which have become payable during the period of one year immediately preceding the time of demand. "
The document specifies an amount in Item 3 of the schedule, and pursuant to that clause the total amount for which Ms Murray is liable under clauses 2 and 3 up to the time when demand is made is limited to a sum equal to the aggregate of $135,000 plus the items referred to in 5.1.2 and 5.1.3.
Clause 6, however, provides:
" 6. ADDITIONAL PAYMENTS
6.1 If the Guarantor does not pay the Secured Moneys immediately upon receiving a demand for payment :- 6.1.1 Then in addition to its liabilities under Clauses 2 and 3, the Guarantor shall pay to the Bank on demand:-" 6.1.1.1 All bank charges and any other charges, costs and expenses of the type included in the secured Moneys, incurred during the period between the time of demand and the date of payment; 6.1.1.2 Interest on each amount referred to in paragraph 6.1.1 from the date when it is incurred to the date of payment; and
6.1.1.3 Interest on the total amount for which the Guarantor is liable under Clauses 2 and 3 (as limited by Clause 5) from the time of demand to the date of payment.
6.1.2 Interest payable under this Clause :- 6.1.2.1 Will be at the Bank's Base Lending Rate or, if the Bank has notified the Guarantor that some other rate will apply, that other rate; 6.1.2.2 May be calculated, compounded and turned into principal in any manner considered appropriate by the Bank in the reasonable exercise of its discretion; and
6.1.2.3 Will be payable after as well as before the Bank recovers any judgment for the interest or the amounts on which it is payable. "
The contention by the bank is that notwithstanding the provisions of clause 5, if Ms Murray, on demand, did not pay in accordance with the demand or, perhaps, the amount as limited by clause 5.1, then the effect of clause 6 is to make her liable for all moneys covered by the term "secured moneys." There are obvious difficulties in the way of accepting this construction, particularly as it seems to me such a construction makes the effect of the limitation referred to in clause 5.1 meaningless.
The tension is between that part of clause 5.1 which provides that:
" ...the total amount for which the Guarantor shall be liable under Clauses 2 and 3 in respect of the period up to the time when demand is made on the Guarantor for payment of the Secured Moneys ("the time of demand") shall be limited to a sum equal to the aggregate of :-
and the provision in clause 6.1:
" If the Guarantor does not pay the Secured Moneys immediately upon receiving a demand for payment:- "
By clause 5.1 it seems to me that the amount of the liability is at the time of demand fixed at the limited amount, but clause 6.1 proceeds in the event that the guarantor does not pay all the secured moneys.
Notwithstanding the very real difficulties that the document throws up for the bank, I am not prepared to say that the claim is properly to be characterised as frivolous or vexatious. In particular, since the question really is one of what precisely is the sum properly owing under the guarantee and indemnity, it is a matter which in my view I ought not to terminate summarily. That conclusion is reinforced by the difficulty of formulating precisely the order to be made if I were to accede to the application by Ms Murray.
That aspect of the matter confirms my view that what properly is the amount owing pursuant to the guarantee should be the subject of evidence and calculation. On the present state of the pleadings, and since the precise contention by Ms Murray is unclear, I think it best to permit the matter to be pleaded and be the subject of evidence.
I think in the circumstances the costs of the motion should be the costs of the first respondent in the principal proceedings.
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