Onesteel Reinforcing Pty Ltd v Brands

[2004] QDC 568

[2004] QDC 568

DISTRICT COURT

CIVIL JURISDICTION

JUDGE ROBIN QC

No BD2803 of 2004

ONESTEEL REINFORCING PTY LTD ACN 004 148 289	Plaintiff
and
FREDERICK EMILE BRANDS	Defendant

BRISBANE

..DATE 27/09/2004

ORDER

Catchwords

:  Indemnity costs under r 704 awarded against guarantor on basis of promise in guarantee to "indemnify" and principal debtor's obligation to pay legal expenses on a "solicitor-client basis".

HIS HONOUR:  This default judgment application comes to the Court rather than going to the Registrar under rule 283 because, in one aspect, the rules require it to come before the Court.  I refer to rule 288. 

The defendant has failed to take any step to protect his interests in respect of the claim and statement of claim which was served on him on 10 August 2004 according to Mr D J Ritchie's affidavit.  He was the guarantor of the indebtedness which might arise from trading by a company in which he was interested with the plaintiff.

The rule 283 aspect concerns the monetary side and is straightforward enough.  It might be noted that there have been changes in the plaintiff's name, and in its terms of trading, the latter of which (at any rate) were allowed for by the agreements the parties made at the outset. 

The rule 288 aspect concerns a provision in the guarantee document whereby,

"(k)(i) The guarantors hereby charge and agree to charge in favour of BHP all beneficial interests (freehold and leasehold) in real estate held now or in the future by them as security for payment of all and any moneys payable by the guarantor to BHP pursuant to this guarantee;
    (ii) The guarantors agree that if demand is made upon them by BHP they will immediately execute a mortgage or other instrument of security or consent to a caveat as required by BHP", et cetera, et cetera."

Searches have revealed that the defendant is a co-owner of a property in the Crows Nest area which has been identified in a title search.  There are numerous caveats recorded in respect of that property which appear to have been lodged by others who may assert a charge on a similar basis.

I recall perhaps dimly cases in which I was involved at the Bar which established the validity of charges of this kind which, of course, do not identify the perhaps changing real estate to which they may actually or potentially relate.  Mr Robinson has told me of a recent matter involving such a charge which was before Justices Muir and Mullins successively in the Supreme Court. 

On that basis, and particularly given that Mr Brands has taken no interest in the matter, I am prepared to make the declaration which is sought to the effect that the defendant granted a charge and/or the equitable mortgage to the plaintiff in respect of the property.  Mr Robinson has, for the moment, not pursued further relief to facilitate a sale of the property of the kind which he informs me Mullins J ordered.  The co-ownership situation will import certain complications.

There is a subsidiary declaration sought that the charge and/or the equitable mortgage charges the defendant's interest in the property with the payment of moneys due under the guarantee.  I see no problems with that.

I will mark Exhibit 1 the two-page submission that Mr Robinson prepared because it contains a calculation of the interest which is sought on which the Court acts today.

ADMITTED AND MARKED "EXHIBIT 1"

HIS HONOUR:  The last aspect which deserves notice is that indemnity costs are sought.  Nowadays, that is taken as a reference to rule 704.  The relevant provisions here include the promise in the guarantee by the defendant to "indemnify BHP against any monetary loss or damage that BHP may sustain or incur as the result of any default by the customer." 

And also in the plaintiff's revised "Standard Terms and Conditions of Sale effective 1 July 2003" in item 17 "Costs" is the following provision:

"The customer must pay Onesteel all costs and expenses incurred by Onesteel in connection with the contract (including legal expenses on a solicitor-client basis), stamp duty and costs incurred in the recovery of moneys owing by the customer to Onesteel or in otherwise enforcing Onesteel's rights against the customer under the contract."

I am aware of discussions that have occurred in various place regarding the significance of reference to solicitor-client costs as opposed to solicitor and own client costs but do not think there is any good reason for failing to apply rule 704 in the present circumstances.

I felt it necessary to approach Mr Robinson's submissions with a certain amount of care and circumspection since, as I revealed at the callover, I have a miniscule financial interest in the holding company of the plaintiff which flows from my long-term position as a miniscule shareholder in what was once the Broken Hill Proprietary company.

There will be an order in terms of the initialled draft.

...

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