Newbound v Australia and New Zealand Banking Group Limited [No 2]
[2015] WADC 71
•12 JUNE 2015
NEWBOUND -v- AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED [No 2] [2015] WADC 71
| DISTRICT COURT OF WESTERN AUSTRALIA | Citation No: | [2015] WADC 71 | |
| Case No: | CIV:3300/2013 | 22 AUGUST 2014 | |
| Coram: | BRADDOCK DCJ | 12/06/15 | |
| PERTH | |||
| 17 | Judgment Part: | 1 of 1 | |
| Result: | Appeal of the appellant from O 14 judgment dismissed Application for leave to extend time for filing O 16 application dismissed Judgment for respondent | ||
| PDF Version |
| Parties: | PAUL NEWBOUND AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED |
Catchwords: | Summary judgment Order 14 Order 16 Appeal from registrar Security for loans Guarantee Construction Continuing obligations Extension of time |
Legislation: | Nil |
Case References: | Andar Transport Pty Ltd v Brambles Ltd (2004) 217 CLR 424; (2004) ALR 387 Ankar Pty Ltd v National Westminster Finance (Aust) Ltd (1987) 162 CLR 549 Bank of Queensland v Chartis Australia Insurance Ltd [2013] QCA 183 Commonwealth Bank of Australia v Carotino (2011) 111 SASR 573; [2011] SASCFC 110 Gardiner v Agricultural and Rural Finance Pty Ltd [2007] NSWCA 235; (2008) 238 CLR 570 Gumland Property Holdings Pty Ltd v Duffy Bros Fruit Market (Campbelltown) Pty Ltd Western Australian Bank v Royal Insurance Co (1908) 5 CLR 533 |
JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
- IN CIVIL
- Appellant (Defendant)
AND
AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED
Respondent (Plaintiff)
Catchwords:
Summary judgment - Order 14 - Order 16 - Appeal from registrar - Security for loans - Guarantee - Construction - Continuing obligations - Extension of time
Legislation:
Nil
Result:
Appeal of the appellant from O 14 judgment dismissed
Application for leave to extend time for filing O 16 application dismissed
Judgment for respondent
Representation:
Counsel:
Appellant (Defendant) : Mr N D C Dillon
Respondent (Plaintiff) : Mr J E Scovell
Solicitors:
Appellant (Defendant) : HHG Legal Group
Respondent (Plaintiff) : Gadens Lawyers
Case(s) referred to in judgment(s):
Andar Transport Pty Ltd v Brambles Ltd (2004) 217 CLR 424; (2004) ALR 387
Ankar Pty Ltd v National Westminster Finance (Aust) Ltd (1987) 162 CLR 549
Bank of Queensland v Chartis Australia Insurance Ltd [2013] QCA 183
Commonwealth Bank of Australia v Carotino (2011) 111 SASR 573; [2011] SASCFC 110
Gardiner v Agricultural and Rural Finance Pty Ltd [2007] NSWCA 235; (2008) 238 CLR 570
Gumland Property Holdings Pty Ltd v Duffy Bros Fruit Market (Campbelltown) Pty Ltd (2008) 244 ALR 1
Western Australian Bank v Royal Insurance Co (1908) 5 CLR 533
- BRADDOCK DCJ:
Introduction
1 Mr Paul Newbound (PN) is the second defendant in an action brought by Australia and New Zealand Bank Limited (ANZ) against him and his brother David Newbound (DN). ANZ is a bank who loaned money to NGMW Pty Ltd (NGMW), a company operated by DN. PN was a director of NGMW but had no active involvement in the business.
2 In October 2007, a manager of ANZ approached PN and asked him to sign a loan agreement between the bank and NGMW and a guarantee between ANZ and PN (the 2007 Guarantee). On 30 October 2007, PN signed those documents. The guarantee was for the loan of $285,000 of the same date and provided security over real property. It limited the extent of his liability to $285,000.
3 Later, in April 2011, DN approached PN and asked him to sign a document titled 'Letter of Offer' (the New Agreement). This, he was told, was for a further financial facility for NGMW. He signed it on 7 April 2011.
4 PN did not sign any further document of guarantee at that time or thereafter.
5 NGMW went into liquidation on 7 August 2013.
6 ANZ sued DN and PN claiming payment under the guarantees that they each personally signed. A notice of demand issued on 4 October 2013 for:
(a) $25,000 in relation to the 'guarantee facility';
(b) $10,721.57 in relation to 'business one' account; and
(c) $276.221.90 in relation to the 'overdraft facility'.
7 These sums are said to be the total amounts owing under the 2007 Guarantee, which NGMW had failed to pay.
8 In 2013, PN was working in the Central Highlands of Papua New Guinea. He was in that country from 26 November 2013 to 8 December 2013. He had minimal communications available to him in that period.
9 PN has admitted in his defence that he has not paid the monies claimed. He has pleaded that his 2007 Guarantee related exclusively to the facility provided to NGMW dated 30 October 2007 and had terminated upon entry into the New Agreement, by reason of its terms and that he had not entered into any further guarantee with ANZ. In the alternative, he pleaded that the notice of demand related to loans other than in relation to the overdraft facility and/or was in excess of the guarantee's limit of liability and was thereby defective.
10 ANZ brought an application for summary judgment under Rules of the Supreme Court 1971 (RSC) O 14 on 27 November 2013. On 12 December, PN brought an application for summary judgment under RSC O 16. The two applications were heard together on 20 March 2014. Registrar Kingsley made orders dismissing PN's O 16 application and allowing ANZ's O 14 application. He ordered that there be judgment for ANZ in the sum of $285,000, plus interest and charges in the sum of $69,491.57 calculated in the manner specified in the 2007 Guarantee incurred from the inception of the accounts to 6 June 2004.
Chronology
11 I set out here the major dates relevant in this dispute:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The appeal
54 PN lodged an appeal against the decision seeking orders that:
1. Judgment of registrar of 16 May 2014 be set aside.
2. Plaintiff's action against the second-named defendant be dismissed and judgment entered for the second defendant.
3. Plaintiff to pay the second-named defendant's costs of the proceedings, including any reserved costs, to be taxed if not agreed.
55 An appeal to this court from a decision of a registrar is a hearing de novo: District Court Rules 2005 (DCR) r 15. No specific error by the registrar needs to be demonstrated.
56 There is no dispute about the facts raised by either party in this action. Order 14 and O 16 RSC apply in this court: DCR r 6.
57 Order 14 principles are well settled. The power is not exercised unless it is clear that there is no real question to be tried.
58 An applicant for summary judgment under O 16 bears a heavy burden and such applications are approached with great caution. Leave is required for such an application after a period of 21 days from service of the writ: O 16 r 1.
The significant documents
59 The determination of the questions raised in this appeal require consideration of the documents under which the obligations of PN are said to arise, and the other documents relevant to the obligations between ANZ and PN.
60 It is common ground that the relevant documents are:
1. The 2007 Guarantee signed by PN (page 75 to Murrell's affidavit).
The 'details page' of the 2007 Guarantee expressly provides that the 'guaranteed arrangements' include the specified credit contract (dated 30 October 2007), as changed or replaced, that PN has agreed in writing will be covered by the guarantee.
Clause 2.1 ([79] of Murrell's affidavit).
2.1 What is the Guaranteed Money?
The Guaranteed Money means all money owing to ANZ for any reason under the Guaranteed Arrangements:
(a) by the Customer alone, or together with me or one or more others;
(b) now or in the future;
(c) actually or contingently (money is 'contingently' owed where the Customer has an obligation to pay ANZ if something happens or is discovered).
It includes amounts that would have been owed, and that would have been Guaranteed Money, but for some reason described in clause 3.
Clause 2.2(a) ([80] of Murrell's affidavit):
2.2 Is there a limit on my liability?
(a) If there is a dollar limit
The following applies to this Guarantee of the Details Page says so and there is a dollar amount specified there.
Despite clause 2.1, the maximum amount which I will be required to pay under this Guarantee will be the amount specified on the Details Page plus:
(i) to the extent this Guarantee relates to a Regulated Arrangement:
(A) all fees, charges, expenses, costs and government charges and duties of any kind payable under the Regulated Arrangement;
(B) Interest on the amount of my maximum principal liability in respect of that Regulated Arrangement and on all other amounts payable under that Regulated Arrangement calculated in accordance with that Regulated Arrangement; and
(C) Enforcement Expenses.
(ii) to the extent this Guarantee relates to an Unregulated Arrangement:
(A) all amounts payable under the Unregulated Arrangement which are not in the nature of principal including all interest, fees, costs, charges, expenses or amounts payable by way of indemnity; and
(B) all amounts payable under clause 15.
For this purpose principal includes but is not limited to amounts payable in respect of, or to indemnify against, a payment made by ANZ under or in relation to any of the following.
• A bill of exchange.
• A promissory note.
• A letter of credit.
• A bank guarantee.
8. Variation of Guaranteed Arrangements
ANZ and the Customer can enter into new arrangements with one another or change or replace the existing Guaranteed Arrangements at any time. They may do whatever business they wish with each other. Except as stated below, they do not have to get my consent to do these things.
This Guarantee applies to any new or replacement arrangements that I agree are to be Guaranteed Arrangements and covered by this Guarantee.
This Guarantee also applies to any Guaranteed Arrangements that re changed. My consent to a change is only required if:
(a) ANZ changes the Guaranteed Arrangements in a way which increases my liability; and
(b) the law or any relevant code of conduct says I will not be liable for the increased liability unless I consent to the increase.
In all other cases, ANZ does not need to get my consent.
Where I give my consent, or where any of the Guaranteed Arrangements are changed but my consent is not required, then this Guarantee will automatically apply to those changed Guaranteed Arrangements.
If:
(a) my obligations are limited under clause 2.2(a);
(b) I agree that a new or replacement arrangement is to be a Guaranteed Arrangement, or to a change to any existing Guaranteed Arrangement that increases my liability; and
(c) I also agree a new dollar amount for the purpose of clause 2.2(a),
then this Guarantee (and in particular clause 2.2) will be read as if that new dollar amount were inserted on the Details Page.
2. The letter of offer ([5 – 10] of Murrell's affidavit) dated 25 March 2014 offered new facilities to NGMW which, are listed as:
(1) Indemnity guarantee $ 25,000
(2) Indemnity guarantee $ 50,000
(3) ANZ Business One $ 10,000
(4) Overdraft facility $250,000
5. Condition precedent:
ANZ must agree with the terms of your application and you must execute all documents required by ANZ before you can use this facility.
7. Security:
Security for the facilities are as follows:
(a) Individual Guarantee and Indemnity from Paul Eric Newbound in favour of ANZ in respect of the obligations of NGMW Pty Ltd ACN 126 886 799 limited to $285,000.00 – To be lapsed;
(b) …
(c) Individual Guarantee and Indemnity from Paul Eric Newbound in favour of ANZ in respect of the obligations of NGMW Pty Ltd ACN 126 886 799 limited to $335,000.00 – To be taken.
(d) …
(e) …
8. Existing facilities:
Despite anything in the Finance Conditions of Use, the existing conditions of the Indemnity/Guarantee Facility, Indemnity/Guarantee Facility, Credit Card Facility continue to apply.
9. Conditions continue
Until you accept this offer (and have complied with all conditions precedent), the arrangements for the facilities that ANZ is making available to you, including the conditions on which those facilities are being made available, continue.
- 3. The ANZ Finance Conditions of Use (the Finance Conditions) (16 - onwards of Murrell's affidavit):
28. Waiver
The rights that ANZ has under the Transaction Documents cannot be waived except by ANZ giving you written notice waiving the particular right. In particular:
a) ANZ does not waive any right that ANZ has in connection with this Agreement merely because ANZ does not exercise it, or does not exercise it as soon as ANZ can; and
b) if ANZ exercises a right once or partly, it does not mean that ANZ cannot exercise that right again or other rights.
32. Existing Facilities
a) This clause only applies if ANZ is already making facilities available to you at the date of the new letter of offer.
b) The arrangements for the facilities that ANZ is making available to you at the date of the letter of offer, including the Conditions on which those facilities are being made available, (the 'existing arrangements') continue until both of the following things happen:
(i) you accept ANZ's new Offer; and
(ii) everything that must be done before ANZ will make the new facilities available in accordance with the letter of offer has been done to ANZ's satisfaction.
In particular, until both of the above things happen, ANZ is still able to exercise the rights that ANZ has under the existing arrangements, including the right to terminate, or vary the Conditions of, the existing facilities.
c) When both of the things referred to in sub-clause (b)(i) and (ii) have happened, the Conditions of the existing facilities will from that time onwards be those contained or referred to in this Agreement.
However:
(i) this Agreement does not replace any Security, guarantee, authority, power or indemnity in force at the date of the letter of offer (these documents and their provisions are not affected in any way); and
(ii) if the letter of offer says that some or all of the Conditions of an existing facility are not to be changed, those Conditions will not be replaced by the Conditions of this Agreement.
62 The salient questions in my view are:
1. What was PN's obligation to ANZ under the 2007 Guarantee before the New Agreement was signed on 7 April 2011?
2. What was the effect of the New Agreement on the existing obligations?
3. Was PN's obligation increased by reason of the New Agreement?
4. Did the 2007 Guarantee continue in force after the New Agreement was signed by PN?
Arguments of the parties
63 PN relied upon his construction of the New Agreement.
1. He argued that the 'Security' provisions in the New Agreement meant that the 2007 Guarantee terminated. He argued that he had entered into no new guarantee and thus has no obligation to indemnify ANZ against the debts of NGMW. PN had pleaded the security provision in his defence in terms that it 'would lapse' [Defence 2.2.2(a)].
PN argued that the 2007 Guarantee had 'lapsed' and that any ambiguity in the New Agreement was to be construed against ANZ.
2. He placed emphasis upon the strict interpretation of contracts of guarantee and indemnities: Western Australian Bank v Royal Insurance Co (1908) 5 CLR 533; Gardiner v Agricultural and Rural Finance Pty Ltd [2007] NSWCA 235; (2008) 238 CLR 570; Ankar Pty Ltd v National Westminster Finance (Aust) Ltd (1987) 162 CLR 549; Andar Transport Pty Ltd v Brambles Ltd (2004) 217 CLR 424; (2004) ALR 387.
3. He also argued that an agreement to provide a guarantee created no liability unless such a deed was executed: Commonwealth Bank of Australia v Carotino (2011) 111 SASR 573; [2011] SASCFC 110.
4. He referred to the pre-conditions in the New Agreement and argued that their proper construction was that, once accepted by the borrower and documents were executed, the previous facilities lapsed.
5. He argued that ANZ waived its right to take a new guarantee.
6. He asserted that cl 32 of the Finance Conditions was inconsistent with the New Agreement and that the terms of the latter prevailed to provide that the 2007 Guarantee had lapsed.
64 ANZ argued:
1. There was no reason to extend time for the O 16 application, no sound basis for delay having been made out.
2. PN was limited to the issues pleaded in his defence – and as unconscionable conduct was not pleaded, no references to any matter which could only be relevant to such an argument was material.
3. He argued that the terms of the New Agreement were not ambiguous or unclear and there was no basis to adopt any rule of construction other than the ordinary and natural meaning of the words.
4. As no new guarantee was executed nothing lapsed.
5. The New Agreement replaced the 2007 credit arrangements and was a 'guaranteed arrangement' under the 2007 Guarantee, which secured present and future borrowings.
6. 2007 Guarantee provided that it remained in place until the money was paid under the guarantee arrangements; simply entering a new agreement did not discharge the obligations under the guarantee: Gumland Property Holdings Pty Ltd v Duffy Bros Fruit Market (Campbelltown) Pty Ltd (2008) 244 ALR 1 [188].
7. In the alternative, ANZ argued that if there were any ambiguity in the terms of the New Agreement, resort should not be had to the 'contra proferentem' rule unless there was no other construction which would avoid consequences which were unreasonable or unjust: the appropriate construction should accord in the common-sense: Bank of Queensland v Chartis Australia Insurance Ltd [2013] QCA 183. It was unreasonable to interpret the New Agreement to be unsecured, where there was in existence an executed (2007) Guarantee.
8. There was no basis for any claim of waiver of the right to a new guarantee.
Discussion
65 PN's argument relies principally upon his construction of the 'security provisions' in the New Agreement. He asserted that the taking of a new guarantee was a future event that did not occur. At the same time, he argued that the other provision relevant to his liability under the same 'security' section should be construed to mean that the 2007 Guarantee had expired, because it was 'to be lapsed'.
66 PN did not argue that the New Agreement had not replaced the original 2007 credit contract.
67 There is an inconsistency in PN's argument. Logically, as the wording corresponds in grammatical form in each of the provisions, either they are both events which were to occur in the future or neither were. They are linked by appearing together under the heading 'Security'. The clause also includes identical provisions referring to DN's equivalent obligations, as well as a fixed and floating charge over the assets of NGMW.
68 The word 'lapse' is not a precise legal term in this context, although it has a distinct meaning in the law of wills. Neither is it defined in the relevant documents for these purposes. It is an intransitive verb and would not usually take a direct object. The word 'lapse', as a verb, has a wide dictionary definition: to become invalid, or void because of lack of use, or lack of claim or renewal; to expire; to fail to be maintained; to come to an end, to fall into disuse or to cease being in force (Oxford English Dictionary). It would normally be used in as in the phrase 'his membership lapsed'. It would not be correct to say: 'he lapsed his membership'.
69 Thus the phrase, in par 7(a) of the New Agreement, 'individual guarantee … limited to $285,000 – to be lapsed' is grammatically incorrect and awkward. However, its meaning, in my view, is clear: it conveys that guarantee was to fall away or cease to be in force. It equally clearly conveys that this was something that was to be done to the guarantee or brought about in some way.
70 The phrases 'to be lapsed' and 'to be taken' are both grammatically indicative of something to be done in the future, or future events. They do not signify something that has been done at the time of writing/speaking. In my view, there is nothing ambiguous about these terms in 'security provision'. It indicates that the 2007 Guarantee would be brought to an end, and a new guarantee would be executed: clearly future events, without any timeframe being specified.
71 The New Agreement also provides, as a condition precedent, that 'ANZ must agree with the terms of your application and you must execute all documents required by ANZ before you can use this facility' and that 'despite anything in the finance conditions of use, the existing conditions of the indemnity guarantee facility continue to apply'. This is a clear indication of continuing obligations under the then existing facilities of credit.
72 Further, under the heading 'conditions continue' it is provided that
until you accept this offer (and have complied with all conditions precedent) the arrangements for the facilities that ANZ is making available to you, including the conditions in which those facilities are being made available, continue.
73 PN's personal obligations at the time he signed the New Agreement were those under the 2007 Guarantee. He indemnified ANZ against the default of NGMW, up to the sum of $285,000 plus specified charges, interest and fees.
74 The 2007 Guarantee provided for its termination in specific circumstances, none of which were suggested to be applicable in this situation. Clause 8 of the terms and conditions (cl 8) provides for variation of the 'guaranteed arrangements'. The guarantor's consent is required if ANZ changes the arrangements in a way which increases liability. Where consent is given, or if the arrangements are changed in a situation where consent is not required, the guarantee is said to automatically apply to the changed 'guaranteed arrangements'.
75 By signing the New Agreement, PN expressly agreed to the new credit arrangement between ANZ and NGMW. Therefore the new credit facilities were covered by the 2007 Guarantee.
76 There is no increase in PN's liability because that could only occur if the guarantor's obligations are limited under cl 2.2(a), and the guarantor agrees that a new or replacement arrangement is to be a guaranteed arrangement or to a change in any existing arrangement which increases his liability, and he also agrees a new dollar amount for the purposes of cl 2.2(a), then the guarantee and cl 2.2 will be read as if that new dollar amount were inserted on the details page.
77 Clause 2.2(a) limits liability to the sum of $285,000, plus certain additional amounts. Nothing in the New Agreement refers to cl 2.2(a) or an increase in the liability under that clause, rather the 'security provision' is to be taken by way of new guarantees.
78 It is not in dispute that ANZ did not seek the execution of any new guarantees, for whatever reason. Neither did ANZ waive its right to do so under cl 28 of the Finance Conditions; such waiver is required to be in writing; there is no such document. Thus, one of the conditions precedent remained unfulfilled.
79 In summary, it is clear that the New Agreement replaced the agreement of 30 October 2007 for the provision of credit. The New Agreement had PN's consent. The credit increase was to be $50,000 by way of a rental bond. The New Agreement was guaranteed, by the 2007 Guarantee, in its existing terms. There was no term which removed or increased the limit of liability, in cl 2.2(a). As a result PN's liability could not increase.
80 The 2007 Guarantee was not terminated. The 'lapse' contemplated would presumably have been achieved as a term of a new guarantee, by way of a release. Nothing else was done which might have released PN from his obligations under the 2007 Guarantee.
81 There is no defence pleaded by PN on the undisputed facts arguable to resist ANZ's claim under the 2007 Guarantee. PN cannot avoid judgment for ANZ in the sum of $285,000 plus such additional sums as are provided in the 2007 Guarantee.
Extension of time
82 PN's application pursuant to O 16 was filed two months after the Writ and two weeks after ANZ's O 14 application. An application may be brought within 21 days of an appearance or at any later time with leave: O 16 r 1. PN needed leave for his O 16 application for summary judgment. ANZ objects to PN being granted leave.
83 PN's initial affidavit addressed his O 16 application, opposed the O 14 application of ANZ, but did not explain the delay in bringing the O 16 application within time. The Writ was served on 15 October 2013. PN's second affidavit deals with his absence in Papua New Guinea between 25 November 2013 and 8 December 2013. He deposes to speaking to his solicitor the day following his return and giving instructions. He does not state when he became aware of the action or whether it was only the O 14 application he was advised about upon his return. Neither does he set out why it took until 10 January 2014 to file the second affidavit, or what facts he relied upon for the late filing of the O 16 application on 12 December 2013.
84 The rules provide time limits for good reason; amongst other things, for the efficient administration of the courts and the fair use of time, together with proper notice to all concerned and an ability to rely upon the framework for litigation. An extension of time is not to be given lightly. The registrar did not determine this issue when he heard the applications, but referred it to the court for hearing upon the appeal.
85 Clearly, the issues to be dealt with on both the O 14 and O 16 applications were linked. ANZ does not point to any prejudice resulting from the delay. I accept that PN's employment made the giving of instructions more difficult than it would have been if he had been continually in Western Australia for the relevant period.
86 On the other hand, PN was aware of ANZ's claim from the day that demand was served upon his solicitors. He advised ANZ that he would make an application for summary judgment, if ANZ did not discontinue the action against him by 22 October 2013. The action was not discontinued. The O 16 application was not then filed, but only after the O 14 application has been filed.
87 Registrar Kingsley made orders on 15 November 2013, extending time to the parties to file applications for summary judgment to 29 November 2013. PN gives no explanation why his application was not filed after 22 October 2013 and before he went to Papua New Guinea. The application and first affidavit were filed the day before the first return on the O 14 summons.
88 The second affidavit, which apparently was intended to explain the delay, was not filed with the application, but significantly later. An explanation of PN's delay would involve significantly more than the second affidavit covers, for reasons set out above. The affidavit deals only with his absence in Papua New Guinea between 26 November and 8 December. This might explain a late response to ANZ's O 14 summons, but not the failure to comply with Registrar Kingsley's order before his departure to Papua New Guinea. It might be thought that the O 16 application looks like the response to the O 14 application of ANZ.
89 In those circumstances, I am not persuaded it is just to extend time to PN for the filing of the O 16 application. Leave is refused and the application is dismissed.
Result
90 Appeal from registrar's decision dismissed. There will be judgment for ANZ in terms of orders made by the registrar.
0
10
1