National Mutual Funds Management Limited v Michael Wilson Kwok
[2011] NSWSC 885
•09 August 2011
Supreme Court
New South Wales
Medium Neutral Citation: National Mutual Funds Management Limited -v- Michael Wilson Kwok [2011] NSWSC 885 Hearing dates: 9 August 2011 Decision date: 09 August 2011 Jurisdiction: Equity Division - Corporations List Before: Hammerschlag J Decision: Summary judgment in favour of the plaintiff
Catchwords: GUARANTEE AND INDEMNITY - summary judgment claim under guarantee - where amount claimed less than pleaded - where no notice served on guarantor under s 57(2) Real Property Act 1900 (NSW) - where deed of loan executed prior to guarantee - summary judgment entered Legislation Cited: Real Property Act 1900 (NSW) Category: Principal judgment Parties: National Mutual Funds Management Limited ACN 006 787 720 - First Plaintiff
National Mutual Life Nominees Limited ACN 004 387 133 - Second Plaintiff
Michael Wilson Kwok (also known as Wai Hing Kwok) - DefendantRepresentation: Counsel:
L.D.R. Shipway - Plaintiffs
C.L. Lonergan - Defendant
Solicitors:
Gadens Lawyers - Plaintiffs
Jackson Lalic Lawyers - Defendant
File Number(s): 2010/145155
EX TEMPORE Judgment
His Honour: By Summons and accompanying Commercial List Statement issued on 4 May 2011, the first and second plaintiffs sued the defendant for $6,656,417.81 plus interest and costs.
On 6 June 2011 they filed a motion for summary judgment for the amount claimed in the Summons. Now, however, only the first plaintiff moves and for the reduced amount of $3,035,652.09 as at 28 July 2011 plus interest from that date and costs.
The first plaintiff claims on a guarantee embodied in a Deed of Guarantee dated 15 July 2007 ("the Guarantee") by the defendant and Blue Ridge Global Pty Ltd ("Blue Ridge") (together defined as the "Guarantor") under which they irrevocably and unconditionally guaranteed to the first plaintiff (defined as "the Lender") the due and punctual payment by Astute Ltd (BVI) (defined as "the Borrower") of the Debt to the Lender. The Borrower is apparently a British Virgin Island corporation.
Clause 14.1 of the Guarantee contains a wide definition of "Debt", comprehending all money which the Borrower whether directly or indirectly or contingently or otherwise at any time and from time to time is or becomes liable either alone or jointly or severally to pay to the Lender on any account.
Under the heading "Background", the Guarantee contains recitals, one of which (para B) is as follows:
"The Guarantor has before execution of this Guarantee inspected understood and approved the document specified in Item 2 ( Documents )."
On 23 July 2007 the first plaintiff as Lender entered into a Deed of Loan with the Borrower under which it agreed to lend the Borrower $5,950,000 as set out in an attached Letter of Offer.
The Deed of Loan provided for the provision of a Guarantee and Indemnity from the defendant and Blue Ridge, and a mortgage from Blue Ridge in favour of the second plaintiff (being the first plaintiff's security custodian) of the property known as Leura Gardens Resort, Fitzroy Street, Leura, New South Wales.
In support of its motion, the first plaintiff read three affidavits of Douglas Barrett, an employee of the plaintiffs', sworn 2 June 2011, 16 June 2011 and 28 July 2011 respectively.
In the first affidavit, Mr Barrett deposes to the fact that on or about 20 September 2010 the second plaintiff appointed receivers and managers to the property of Blue Ridge, including the resort, that the resort was sold on or about 2 February 2011 for $4.05M and that the second plaintiff received the sum of $3,615,000 from the sale. As at that date the sum outstanding by the Borrower and secured by the Guarantee was $2,997,954.09.
In the most recent affidavit, Mr Barrett deposes to the fact that the amount outstanding under the Guarantee as at 28 July 2011 was $3,035,652.09 and that interest continues to accrue on the debt at the rate of $677.82 per day.
It is not suggested that the affidavits do not comply with the formal requirements for summary judgment.
The defendant read no affidavit evidence. His evidence was limited to the tender of a letter from his solicitors to the plaintiffs' solicitors dated 2 August 2011 noting that the amount claimed in the Summons was excessive given that, as deposed to by Mr Barrett, the benefit of the proceeds of the sale of the resort had been received, reducing the debt.
On 8 August 2011 the defendant filed both a Commercial List Response and an Amended Commercial List Response. In that pleading, he identifies as issues he believes are likely to arise, whether he is liable under the Guarantee given that the Deed of Loan was executed some eight days after the Guarantee and whether the plaintiffs are entitled to allege that he was in default of the ongoing conditions and loan covenants with respect to the loan when no notice pursuant to s 57(2) of the Real Property Act 1900 (NSW) was served on him, his servants or agents in relation to the sale of the resort.
The defendant resists summary judgment on three bases each of which is, as is revealed below, manifestly unsustainable.
Firstly, he puts that the amount now claimed is less than that claimed in the Summons and Commercial List Statement and that no Amended Summons or Commercial List Statement has been filed and served. There is no issue that the resort has been sold and that the amount received inures to the benefit of the defendant by reducing the debt owed by the Borrower and accordingly the amount secured under the Guarantee. It is not put that there is any error in calculation. This amounts to no more than that there has been a payment since the commencement of the proceedings and the evidence establishes an entitlement to an amount less than that claimed in the pleadings. It is simply a case of a plus petitio.
Secondly, he raises the absence of service upon him of a notice under s 57(2) of the Real Property Act 1900 (NSW). The first plaintiff accepts for the purposes of this application that no such notice was served on him. The defendant's submission was not developed. Leaving aside that the defendant was not the Borrower, the statutory provision referred to imposes a requirement on a registered mortgagee, before exercising powers conferred upon it under that Act, to serve a notice on the mortgagor. The defendant was not the mortgagor of the resort.
Finally, he puts that, as a matter of construction, the Guarantee does not secure the obligations of the Borrower because the Deed of Loan was executed some days after the Guarantee. As I understand it, the proposition is that Recital B records that the Guarantor had, before execution of the Guarantee, inspected, understood and approved the documents in Item 2, which includes the Deed of Loan, whereas as at the date of the Guarantee, the Deed of Loan had not yet been executed. The recital, however, does not record that the Borrower has signed the documents, only that they have been inspected, understood and approved. Moreover, Item 2 itself refers to a Deed of Loan made "on or about the date of this Guarantee".
Even if it was a requirement for the Deed of Loan to have been executed before or contemporaneously with the Guarantee (which I do not think it was), the Borrower's obligations clearly fall under the Deed of Loan within the definition of Debt in cl 14 of the Guarantee. In any event, it is undoubtedly the case (and there was no evidence to suggest the contrary) that the Deed of Loan referred to in Item 2 of the Guarantee is the Deed of Loan in evidence.
It follows that the defendant has no defence to the first plaintiff's claim, as reduced and described above, and that the first plaintiff is accordingly entitled to summary judgment.
The second plaintiff is not entitled to any relief on the Notice of Motion. Its application is dismissed.
There will be summary judgment for the first plaintiff against the defendant in the sum of $3,043,785.93.
After submissions on costs, his Honour ruled that the defendant is to pay the first plaintiff's costs less the amount of $175, that the second plaintiff is not entitled to any costs and that the costs of the first plaintiff are to exclude any costs attributable exclusively to the second plaintiff's claim.
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Decision last updated: 16 August 2011
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