NAB v Arthur
[2009] VCC 1394
•30 October 2009
| IN THE COUNTY COURT OF VICTORIA | Revised from tape |
recording of proceeding
Not Restricted
AT MELBOURNE
CIVIL DIVISION
COMMERCIAL LIST – BANKING AND FINANCE DIVISION
Case No. CI-09-01188
| NATIONAL AUSTRALIA BANK LTD | Plaintiff |
| ABN 12 004 044 937 | |
| v | |
| SCOTT ALEXANDER ARTHUR | Defendant |
---
| JUDGE: | HER HONOUR JUDGE KENNEDY |
| WHERE HELD: | Melbourne |
| DATE OF HEARING: | 30 October 2009 |
| DATE OF JUDGMENT: | 30 October 2009 |
| CASE MAY BE CITED AS: | NAB v Arthur |
| MEDIUM NEUTRAL CITATION: | [2009] VCC 1394 |
REASONS FOR JUDGMENT
---
Catchwords: Application for summary judgment– Whether there is a question which ought to be tried by reason of non-enforcement of bank’s contractual rights– No question to be tried – Judgment given for the plaintiff
---
| APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr D. McWilliams | Thomson Playford Cutlers |
| For the Defendant | Ms K.E. Foley Lowe | Dunemann Sutherland Pty |
| HER HONOUR: |
Preliminary
1 This is the return of a summons for summary judgment dated 5 October issued by the National Australia Bank Ltd pursuant to rule 22.06(1)(b). There are three affidavits in support of that summons: of James Wallace Wyatt of 1 October 2009; Mary Gareski of 18 September 2009; and Craig Anthony Downes of 24 October 2009.
2 This proceeding concerns a guarantee and indemnity given by Mr Arthur of the obligations of a company, Lion Loans Pty Ltd, under a facility agreement with the bank. Mr Arthur is the sole director and secretary of Lion Loans.
3 There was only one substantive defence raised before me based on an alleged forbearance by the bank. This alleged forbearance is set out in paragraph 8 of the defence, as follows:
“[B]y an oral agreement made between the Defendant and Mr Craig Downes a manager of the Plaintiff Bank in or about June 2008 it was agreed between the Defendant and the Plaintiff that the Plaintiff would forebear from exercising any of its rights and remedies under the alleged loan and guarantee whilst the Company and/or the Defendant paid the sum of $5,000.00 per month to the Plaintiff on account of interest and principal reduction. The Defendant says that such payments have been made to the Plaintiff and that accordingly there is no failure, refusal or neglect on the part of the Defendant to pay any moneys owing to the Plaintiff pursuant to the alleged guarantee.” (emphasis added)
4 The defendant also relies on an affidavit dated 28 October 2009. Pursuant to paragraph 4 of that affidavit, Mr Arthur swears that he reached “an agreement” at the end of a meeting said to have occurred with the bank’s representatives in April 2008 and:
“[T]he outcome of the meeting was that Lion Loans Pty Ltd would repay the loan balance by monthly instalments of $5,000.00 each and which were to be applied firstly in payment of interest at the normal rate due under the loan agreement and then in reduction of the principal owing and that such payments would continue until the loan was repaid in full.”
5 The bank suggests that a different arangement was made, in that, inter alia, the loan was to be cleared by December 2008. This was in circumstances where Lion Loans was already obliged to pay the total amount owing on the facility on the expiry date of that facility on 31 August 2007 (clause 6.4).
6 The bank also says:
a) the defence is precluded by particular clauses of the guarantee and loan facility which I will cite in a moment; b) that there has been no honouring of any agreement made in 2008; and c) that various inconsistencies in the material which has been filed by Mr Arthur suggest his defence is “improbable.” 7 The clauses of the guarantee relied upon by the bank are clauses 26.2 and 26.3.
8 Clause 26.2 reads:
“If the Bank does not exercise a right, remedy or power at any
given time, this does not mean that:
(a) the Bank has given it up or waived it; or (b) the Bank cannot exercise it later.”
9 Clause 26.3 reads:
“The Bank cannot be considered to have given up or waived a right, remedy or power, or any demand or notice given under it, because the Bank has:
(a) started negotiations; or
(b) accepted interest or any other payment for any amounts which the customer owes the Bank or which are payable by you to the Bank.”
10 The bank also relies on 26(c) of the loan agreement as follows:
“If we do not exercise a right or remedy fully or at a given time, we
can still exercise it later.”
Principles
11 Pursuant to Rule 22.06(1)(b) the Court may:
“ give such judgment for the plaintiff against the defendant on the claim or the part of the claim to which the application relates as is appropriate having regard to the nature of the relief or remedy claimed unless the defendant satisfies the Court that in respect of that claim or part a question ought to be tried or that there ought for some other reason be a trial of that claim or part.”
12 In AEP Belgium SA v Packaging House Aust Pty Ltd,[1] Habersberger J summarises the appropriate test for summary judgment.
[1] [2003] VSC 174 at [17]-[19]
13 His Honour refers to Australian Can Co Pty Ltd v Levin & Co Pty Ltd[2] a decision of the Full Court of Victoria, whereby the court noted that:
“[W]here there is a real case to be investigated either in fact or law,
leave to defend should be given.”[3][2] [1947] VLR 332.
[3] [1947] VLR 332 at 334-5 per Herring CJ and Lowe J
14 Pursuant to Fancourt v Mercantile Credits Ltd[4] (also cited by Habersberger J):
“The power to order summary or final judgment is one that should be exercised with great care and should never be exercised unless it is clear that there is no real question to be tried.”[5]
[4] (1983) 154 CLR 87.
[5] (1983) CLR 87 at 99 per Mason, Murphy, Wilson Deane and Dawson JJ
Whether there is a question which ought to be tried
15 Counsel who appeared for the defendant suggested that the real question to be tried is the legal effect and construction of the arrangement which was entered into in April 2008. The possibilities suggested were compromise, variation, and/or estoppel.
16 The problem with each of these various possibilities was that Counsel was unable to point to the provision of any consideration.
17 It was suggested that the agreement to make the payments as alleged somehow amounted to consideration because, as Mr Arthur admitted in his affidavit, he did “not believe that Lions Loans could repay the whole of the loan at that time.”
18 However, even accepting without challenge, that the matters in the affidavit are sustained, the entire loan had already fallen due for payment on the expiry date. It was not suggested that there was any agreement to provide something more than was already required under the existing contractual arrangements.
19 In these circumstances no consideration was provided for any alleged “agreement” and there cannot be a variation of the contract. This, notwithstanding there is some loose reference to “variations” in the affidavit of Mr Wyatt.
20 There is also nothing to suggest that the matters discussed in 2008 could amount to a compromise. There is no suggestion whatsoever of a renunciation of any right or of the settlement of any dispute.
21 There also cannot be an estoppel, because there is no detriment suggested on the evidence.
22 However, a possibility which was not raised by counsel, but which I have also considered, is whether or not there could be a waiver. In this respect, I note a passage from Cheshire and Fifoot’s Law of Contract as follows:
“Estoppel should be distinguished from waiver in connection with contract variation. It is commonly assumed that if a party does not assert its rights when a breach of contract has occurred, it has waived the right to performance (to be distinguished from waiving the right to terminate). The commonly-used ‘no waiver’ clause in standard agreements appears to make this assumption. As with any promise, there are only three ways in which it can be legally enforceable: by contract, deed or estoppel. Therefore it is incorrect to assert that, by itself, non-enforcement of a contractual right, or even a positive promise not to enforce a right, amounts to a waiver in the sense of being precluded from enforcing that right.”[6] (emphasis added)
[6] N C Seddon & M P Ellinghaus, ‘Cheshire and Fifoot’s Law of Contract’, 9th Australian Edition, at pp 90-91
23 In the current case the material did not support the existence of a “contract, deed or estoppel”. Rather, the only construction available is that the bank has not enforced its contractual rights. However, such forbearance can not preclude the bank from later enforcing those rights.
24 If there is any doubt that the bank is not precluded from enforcing its rights, this result is made clear by the actual terms of the contracts which were cited by the bank, in particular pursuant to clause 26.2 of the guarantee and clause 26(c) of the loan.
25 I am therefore not satisfied that there is any real case to be investigated on the material before me. More particularly, I am not satisfied that there is a question to be tried in terms of the alleged conduct of the bank in 2008 relied on in paragraph 4 of Mr Arthur’s affidavit.
26 It is unnecessary in those circumstances to consider the bank’s other submissions concerning the dishonouring of the alleged arrangement and concerning alleged inconsistencies in the material.
Conclusion
27 The bank will be entitled to a judgment based on the certificate of moneys owed dated 28 October 2009.
28 The order of the Court will be as follows:
1. The defendant pay to the plaintiff the sum of $205,281.46 together with interest of $12,373.13. 2. The defendant pay the plaintiff’s costs of this proceeding, including the costs of this application and any reserved costs, on a party/party basis to be taxed on Scale D in default of agreement. 3. Certify for plaintiff’s counsel’s fees fixed at $1500.
0
2
0