Nirvana Pty Ltd v Paul Williams

[1991] FCA 887

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JUDGMENT No. ... =.>.I..~J-

IN THE FEDER~~II COURT OF AUSTRALIA ) NO. QG 112 of 1991

QUEENSLAND DISTRICT REGISTRY	1
GENERAL DIVISION	)

BETWEEN:  NIRVANA PTY. LTD. (A.C.N. 050 416 576L

Applicant

AND :  PAUL WILLIAMS

Respondent

MINUTES OF ORDER

JUDGE MAKING ORDER:	PINCUS J.
DATE OF ORDER:	13
WHERE MADE:	BRISBANE
THE COURT ORDERS THAT:

1.    The application for summary judgment be dismissed.

2.    The applicant file an amended statement of claim by 20 September 1991.

3.    Defence and cross-claim be filed by 4 October 1991.

4.    Reply be filed by 11 October 1991.

5.    Discovery be given by 25 October 1991.

6.    Inspection be given by 8 November 1991.

m:	Settlement and entry of orders is dealt with in
Order 36 of the Federal Court Rules.

7.   The matter be adjourned for mention on Friday 15 November 1991 at 9.30 a.m.

8.   Insofar as the costs in today's proceedings relate to obtaining directions, the costs be costs in the proceedings.

9.   Insofar as they relate to the application for summary judgment, the applicant pay the respondent's costs, to be taxed.

IN THE FEDE& COURT OF AUSTRALIA 1 No. QG 112 of 1991

QUEENSLAND DISTRICT REGISTRY	)
GENERAL DIVISION	1

BETWEEN: NIRVANA PTY. LTD. (A.C.N. 050 416 576L

Applicant

AND:  PAUL WILLIAMS

Respondent

CORAM? PINCUS J.

PLACE: BRISBANE

m:  13 SEPTEMBER 1991

EX TEMPORE REASONS FOR JUDGMENT

This is an application for judgment in a suit, on the basis that the respondent has no defence, in reliance on Order 20 rule 1. The respondent, on 21 June 1991, executed a document expressed to be under seal, promising to give security for a debt and the applicant seeks specific performance of that promise. The document reads, so far as relevant, as follows:

"WHEREAS

A. Williams is the licensee of certain mining rights over tenements referred to in a certain agreement dated 21 June 1988 with Dario De Bias1 in respect of certain mining leases in or about the Kimberley region in the State of Western Australia ("the leases")

B. Nirvana has agreed to advance by loan for

the use of Williams a further $50,000, making a
total advance by loan of $725,000 ("the loan")

C. Williams has agreed to allow Nirvana to take security for the loan and any further advances over the rights of his licence.

NOW THIS AGREEMENT WITNESSETH

1. THAT in consideration of the loan already advanced and any further funds advanced Williams does hereby agree to provide the leases as security.

2.       THAT Williams will if called upon by

Nirvana execute whatever securitv documents
that may be required".

According to the evidence, the respondent has a licence granted on 21 June 1988 to mine certain lands held tinder lease in Western Australia. The lessees are Dario DerBiasi and Kimberley Colourstone Industry Pty. Limited.

The document of 21 June 1991 contains an undertaking on the part of the respondent to provide "the leases as security". Recital A appears to me to define the expression "the leases' which is used in clause 1 as being the rights in respect of which the licence is held; that is, the definition in Recital A does not seem to equate the expression "the

C uses the expression "the rights of his licence", that being	leases" with the licence held by the respondent. Then Recital
apparently intended to be the subject matter of the security. That language is departed from, however, in clause 1 under which the respondent agrees "to provide the leases as security". It would, of course, be possible for the respondent to provide the leases as security, either by inducing the proprietors of the leases to execute a mortgage over them in favour of the applicant, or by acquiring the leases himself and then mortgaging them. Nevertheless, one
would think it to be extremely likely, simply from the perusal of the document, that the use of the expression "the leases" in clause 1 was a mistake. Whether it is such a clear mistake as to enable the applicant to succeed on the point at the trial simply as a matter of construction, without going into any question of the availability of rectification, is another
point:  compare Fitzaerald v. Masters (1956) 95 C.L.R. 420.
It would, I think, be most unusual to give summary judgment on a contract treated as rectified.

A second question raised by the respondent's

counael, M r . Lilley, is that, according to the respondent's evidence, he signed the document of 21 June having been told that it "needed to be signed to enable Nirvana to raise the capital to complete the transaction". This was said by one Bundesen, so it is alleged, who apparently is agent for the applicant. It is unnecessary to explain in detail what was the transaction contemplated, except to say that it was a deal

relating to mining. Then, according to the respondent, less	than two months later, he was told by one Byrne, apparently as
agent for the applicant, that the applicant would not proceed with that deal. This part of the respondent's case involves the proposition that the document of 21 June 1991 was signed on the basis that it would be used only for the purpose stated
- i.e. to raise capital. It seems to me clear that this point
is enough, in itself, to raise an arguable defence, either on the basis that there was misleading conduct or, more simply, that there was a collateral obligation on the part of the applicant not to use the document of 21 June except for the purpose agreed.
Other issues have been raised by Mr. Lilley, but I find it unnecessary to discuss them. I merely add that there appear to me to be some incongruities in the document which was proffered for signature as a security by the applicant. The draftsman has, in some of the clauses, treated the respondent as if he were a company, not a natural person.
Counsel for the applicant has very fairly drawn my attention to the strictness of the tests which must be applied against an applicant or plaintiff seeking summary judgment on the basis that there is no arguable defence. It is my opinion that the applicant's claim does not satisfy those tests and the application for summary judgment must be dismissed. I will hear the parties on costs and also on the question of whether or not it is desired to obtain any further
directions.
The costs today were partly related to the application for summary judgment and partly related to the rest of it. Insofar as the costs relate to obtaining directions, they will be costs in the proceedings. Insofar as they relate to the application for summary judgment, the
respondent will have those cos t s . That i s , insofar as the
costs relate to the application for summary judgment, the applicant must pay the respondent's costs, to be taxed.

I certify that this and the

four preceding pages are a true copy of the reasons for judgment herein of his Honour Mr Justice Pincus

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Associate

Date 13 =ptetc.Wbv 175 l