National Australia Bank Ltd v Moore and Ors
[2002] VSC 221
•29 May 2002
| IN THE SUPREME COURT OF VICTORIA | Not Restricted | |
AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION
No. 5059 of 2000
| NATIONAL AUSTRALIA BANK LTD | Plaintiff |
| v | |
| MOORE AND ORS | Defendants |
---
JUDGE: | McDonald J | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 29 May 2002 | |
DATE OF JUDGMENT: | 29 May 2002 | |
CASE MAY BE CITED AS: | National Australia Bank Ltd v Moore and ors | |
MEDIUM NEUTRAL CITATION: | [2002] VSC 221 | |
---
Guarantee and indemnity, bank recovery, service of notices of demand, calculation of interest.
---
APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr T. Di Lallo | Russell Kennedy |
| For the Defendants | Mr A. Nolan | Abbott Stillman & Wilson |
HIS HONOUR:
These proceedings were commenced by writ filed on 13 April 2002. Pursuant to the statement of claim annexed to the writ, the plaintiff sought to recover against each of the defendants the sum of $543,472.17, together with interest accruing on that sum, at the rate of $219.62 per day from 1 October 1999. By its statement of claim, the plaintiff alleged that each of the defendants were indebted to it in these sums pursuant to the terms of the written guarantee and indemnity dated 11 May 1999, whereby the defendants guaranteed payment to the plaintiff of moneys owed to it by Empress Lane Pty Ltd in respect of moneys loaned, advanced, or provided by way of banking accommodation to it at the request of the defendants.
On 3 May 2000, the first and second defendants filed a defence to the plaintiff's statement of claim, denying liability to the plaintiff. By counterclaim, the first and second defendants sought, inter alia, a declaration they were entitled to rescind the guarantee, a declaration that the guarantee was void ab initio, rectification of the guarantee, relief pursuant to s.87 of the Trade Practices Act, and damages.
On 21 July 2000, there was filed on behalf of the third and fourth defendants, a defence to the plaintiff's statement of claim. They denied liability to the plaintiff. It is to be noted that by paragraph 4 of their defence, in part they admitted that they signed a guarantee dated 11 May 1999. On 14 May 2001, and pursuant to Rule 20.03, the solicitor then acting for the third and fourth defendants filed a notice, dated 10 May 2001, that they had ceased to act for the third and fourth defendants. The notice stated that the address of the third and fourth defendants known by the solicitors was the address set out in the notice. Thereafter, no notice was filed in the proceeding pursuant to Rule 20.02, with respect to the third and fourth defendants. On 4 September 2001, the Listing Master by order fixed the trial date of these proceedings for 24 May 2002. On 18 September 2001, there was filed on behalf of the plaintiff a notice of trial. On 21 May 2002, there was filed on behalf of the first and second defendants a summons seeking leave to amend their defence and counterclaim. That summons was returnable before a Master on 22 May 2002. On that day, the summons was referred by the Listing Master to a judge of the court and it came before me.
On hearing submissions from counsel for the first and second defendants and the plaintiff, I ordered that the further hearing of the summons be adjourned to 24 May 2002 at 10.30 o'clock. I gave directions as to the provision of a further draft of the proposed amended defence and counterclaim of the first and second defendants. On 24 May 2002 the trial of the proceedings was listed before the court. On the proceeding being called on that day, the plaintiff and the first and second defendants respectively appeared by counsel. On being called, neither of the third or fourth defendants appeared personally by a legal practitioner or by any other person. During the course of that day and before any order was made granting leave to the first and second defendants to amend their defence and counterclaim, those parties sought time and were given time to pursue negotiations in an endeavour to settle the plaintiff's action against them. By the afternoon of that day, no agreement had been reached between the plaintiff and the first and second defendant, and I adjourned the proceeding to 2.15 p.m. on 27 May 2002, to provide those parties further time to pursue their negotiations.
At 2.15 p.m. on 27 May 2002, the plaintiff and first and second defendants appeared by their respective counsel. On being called, the third and fourth defendants did not appear either personally, by a legal practitioner or otherwise. On that day I ordered that the proceedings be adjourned to this day at 9.30 a.m.
On the proceedings being called on again on this day, the plaintiff and the first and the second defendants appeared by counsel. On being called, neither the third or fourth defendants appeared personally, by a legal practitioner or otherwise. I was asked by counsel for the plaintiff to proceed and to hear the trial of the proceedings of the plaintiff against the third and fourth defendants, but not to hear at this time the trial of the proceedings of the plaintiff against the first and second defendants. I was informed by counsel for the plaintiff that the guarantee relied on by the plaintiff provided that liability of the four defendants under the same was joint and several and that it was provided by the same, that the liability and obligation of the guarantors under the guarantee was not affected by the plaintiff obtaining judgment against a co-surety under the guarantee. I was informed that whereas agreement had been reached between the plaintiffs and the first and second defendants, this was conditional upon the plaintiff obtaining judgment against the third and fourth defendants of the proceedings. In those circumstances, it was appropriate to hear the trial of the plaintiff against the third and fourth defendants, and this is what I proceeded to do.
The trial of the proceeding against the third and fourth defendants proceeded to a point this morning when it was necessary to adjourn the trial until 4.15 p.m. this day. On the trial of the proceedings being called on at 4.15 p.m. this day counsel appeared for the plaintiff and also for the first and second defendants. Again on being called neither the third or fourth defendants appeared personally, by a legal practitioner or otherwise.
At 4.15 p.m. this day I was informed by counsel for the plaintiff and counsel for the first and second defendants that agreement had been reached in settlement of the plaintiff's claim against the first and second defendants and also of the first and second defendants' counter-claim against the plaintiff. The plaintiff and the first and second defendants sought orders by consent in respect of that claim and counter-claim which orders I made. The trial of the proceedings thereafter has continued on, being the trial of the plaintiff's claim against the third and fourth defendants.
The guarantee and indemnity relied on by the plaintiff was executed by each of the third and fourth defendants on 11 May 1999. Their respective signatures was witnessed by Ronald Klein, their solicitor at that time. Klein also certified by his signature, as affixed to the guarantee and indemnity, that he was employed by the third and fourth defendants, independently of the plaintiff, and that he had explained to each of them the effect of the guarantee and indemnity and that they appeared to understand the nature and effect of their obligations under the guarantee and indemnity. The guarantee and indemnity dated 11 May 1999 and executed by each of the third and fourth defendants was tendered and received in evidence.
Pursuant to the terms of the guarantee and indemnity the third and fourth defendants agreed that in consideration of the plaintiff giving or continuing to give to Empress Lane Pty Ltd (the customer), credit and banking facilities at their request whether alone or with any other person, they guaranteed, as provided by Clause 6.1 thereof, that:
"the customer will pay the Bank all the amount which the customer owes the bank at any time."
They also agreed:
"to pay the Bank any of those amounts in respect of which the customer at any time in default up to the basic liability as at the time that the bank demands that [they] pay them to the Bank."
It is further provided by Clause 6.3(a)(i) of the indemnity and guarantee:
"The amounts which the customer owes the Bank at any time are:
(a)all amounts which at the time the Bank has advanced or paid, or has become liable to advance or pay for any reason
(i)to or on behalf of the customer."
It was further provided, by the guarantee and indemnity, by Clause 5:
"The maximum amount for which you are at risk under this guarantee and indemnity is the total of:
(a) the amounts set out under basic liability in the Details; plus
(b)the amounts set out under additional liability in the Details."
Under the heading "Basic Liability" in that part of the guarantee and indemnity headed "Details of guarantee and indemnity" the liability of the second and third defendants under the guarantee of indemnity is fixed at $500,000 together with:
"interest accrued and not paid by the customer when the Bank serves a demand to pay on you up to the amount of interest payable for the 12 months ending on the date of its demand."
together with:
"Any bank fees, costs, charges, expenses and taxes accrued and not paid by the customer when the bank serves a demand to pay on you up to the amount payable for the 12 months ending on the date of its demand."
Under the heading "Additional Liability" the liability of the second and third defendants to the plaintiff in addition to the basic liability, as is relevant to this case, includes:
"5.Any costs, expenses, liabilities and taxes and bank fees and charges payable by you as set out in provision 7."
Together with:
"Any interest payable by you as set out in provision 8."
Clause 7.1 of the guarantee and indemnity provides:
"You must pay the bank on demand all costs, expenses and liabilities the bank incurs:
(a)in connection with this guarantee and indemnity or any other security or document related to it given to the bank by you or the customer; or
(b)in the actual or attempted exercise or enforcement by the bank of a power or remedy under this guarantee and indemnity or any of those other securities or documents.
These include administration costs and bank legal fees and expenses on a solicitor and client basis."
Clauses 8.1, 8.2 and 8.3(a) as is relevant provide:
"8.1.You must pay the bank interest on each amount which you are liable to pay the bank under 6, 7, 8, 9 and 10 from the date the bank makes the demand on you to pay to the date of payment.
8.2.The bank may determine the rate and intervals at which interest is calculated and may do so before or after the period for which interest is determined. For amounts payable by you in Australian currency the rate may not be more than one and a half times the bank benchmark rate…”
8.3. The bank may:
(a) charge interest on unpaid interest for any period."
Pursuant to Clauses 13.2(c)(i) and (e) of the guarantee and indemnity it is provided:
"Your obligation under this guarantee and indemnity are not affected by anything that might otherwise affect them under the law relating to sureties including:
(c)the fact that in relation to amounts which the customer owes the Bank or any security, guarantee or indemnity for the Bank:
(i)obtains a judgment against the customer or co-surety or any other person.
(e)the death, mental or physical disability or insolvency of the customer, a co-surety or any other person;”
This latter provision is relevant to the extent that it is alleged by the Statement of Claim that the “customer”, Empress Lane Pty Ltd, has had appointed an Administrator and Manager and an Administrator.
Clause 23.4(a) and Clause 23.5(a) and (b) of the guarantee and indemnity provides:
"Notices, certificates and demands from the bank may be signed by:
(a)one of the bank's directors, secretaries, managers, accountants or corporate lawyers."
They may be:
(a) handed to you personally, or
(b)left at or posted by pre-paid mail to your address shown in the details."
The address of the third and fourth defendants as shown in the details is 32 Letchworth Avenue East Brighton in the State of Victoria.
Evidence has been given before me by Mr Aldous, a manager of the plaintiff bank, that on 1 October 1999 he signed, in the name of and for the plaintiff bank, a demand addressed to Ashok Reddy demanding from him payment pursuant to the guarantee and indemnity in the sum of $500,000 together with interest and bank charges, the details of which were available on application from the Dandenong branch of the plaintiff bank. He also gave evidence that on that day he signed a similar notice and demand directed to Melvina Reddy. Each of the demands were addressed to them at their address at 32 Letchworth Avenue, East Brighton in the State of Victoria.
I am satisfied on the evidence of Mr Aldous that, as a manager of the bank and pursuant to the terms of the guarantee and indemnity, he was able to sign those demands directed to the third and fourth defendants, which demands were directed to them at their address as shown in the “Details”.
Evidence was given by Ms Giuliano that, on 15 October 1999, as an officer of the plaintiff bank, she posted each of those demands, addressed to the third and fourth defendants respectively at the address shown on the demands, by pre-paid post from a Post Office in Melbourne. It is to be accepted that those demands would have been received by the third and fourth defendants at a time when mail, in the ordinary course of events, would be delivered to that address.
Evidence was also given by Paul Legge, a bank manager employed by the plaintiff. In that capacity he was directly concerned with the matters concerning this guarantee and indemnity. He was the bank manager who arranged for the guarantee and indemnity to be given by the guarantors, guaranteeing the payment of the debt of Empress Lane Pty Ltd to the bank to the limit of the guarantee. He was the manager of the relevant branch of the plaintiff bank at which Empress Lane Pty Ltd held its account.
He gave evidence that on 6 August 1999, Empress Lane Pty Ltd was indebted to the bank in the sum of $1,026,634.41. He gave evidence that as at 1 October 1999, the customer, Empress Lane Pty Ltd was indebted to the bank in a sum in excess of $500,000. He gave evidence that as at 1 October 1999, that is the date of the demands as executed by Aldous, there was owing to the bank by way of interest and charges and expenses, the total sum of $43,472.17, which was to be calculated as interest and charges accruing on the sum of $500,000 during the period of 12 months to 1 October 1999.
I am satisfied that as at 1 October 1999, pursuant to the terms of the guarantee, the third and fourth defendants, Ashok Reddy and Melvina Reddy, were each indebted to the plaintiff bank in the sum of $543,472.17.
I am satisfied that the demands as served on each of the third and fourth defendants, by the demands being posted to them as in the circumstances to which I have referred, constitutes a demand on each of them respectively for payment of the amount due and owing by the third and fourth defendants to the plaintiffs, being the sum of $500,000 together with such amounts of interest and bank charges which total the sum of $43,472.17.
Mr Legge further gave evidence, which I accept, that since service of the demands neither the customer, Empress Lane Pty Ltd, nor either of the third or fourth defendants, has discharged any of the debt owed by the customer to the bank.
Mr Legge further gave evidence, which I accept, that taking into account interest calculated on the sum of $543,472.17 at a flat rate, that is, by way of simple interest and not as may be charged under the guarantee by way of compound interest, and at the rate being the bank benchmark rate together with the percentage increases that are able to be charged under the guarantee, that to 13 May 2002, the total amount owing by the third and fourth defendants to the bank including the sum of $543,472.17 amounted to $756,503.57. To that amount there needs to be a further calculated interest from 13 May 2002 to this day. Mr Legge has given further evidence that he has calculated interest on the amount owed at a flat rate of interest at 14.75 percent per annum and not taking into account the variables of the bank's benchmark rate of interest, from 1 October 1999 to this day on making such calculation and applying such flat rate by way of simple interest, the amount owing under the guarantee and indemnity by the third and fourth defendants totals $754,526.99. That sum is made up of the $500,000 to which I have referred, the $43,472.17 to which I have referred and interest from 1 October 1999 on the basis to which I have referred. It is in respect of that sum that counsel on behalf of the plaintiff seeks judgment against the third and fourth defendants. As that sum is a sum less than it would be if it was calculated at the variable rates of the bank benchmark rates of interest, it seems to me to be appropriate to accept the submission of counsel for the plaintiff in this case.
I am satisfied that pursuant to the terms of the guarantee and indemnity that each of the third and fourth defendants are indebted to the plaintiff bank in the sum of $754,526.99. Accordingly, there will be judgment for the plaintiff against each of the third and fourth defendants in the sum of $754,526.99 and it is ordered that each of the third and fourth defendants pay to the plaintiff the sum of $754,526.99.
---
0
0
0