Peldan v Romano - [2001] QSC 463

THE SUPREME COURT
[2001] QSC 463
OF QUEENSLAND
BRISBANE No S 7304 of 2001
BETWEEN:

MICHAEL PELDAN & RAJ KHATRI
Plaintiffs

AND:
BAPTIST JERRY ROMANO
Defendant

REASONS FOR JUDGMENT
B.W. Ambrose J.
Delivered the 5th day of December 2001

CATCHWORDS: PRACTICE – SUMMARY JUDGMENT – application for summary judgment – where contributory mortgage scheme – where defendant gave guarantee – where defendant admits to owing money and not paying instalments and interest – where defendant claims concluded agreement not to pursue guarantee until insurance claim settled – whether triable issue – whether summary judgment should be given

Legislation:Corporations Law ss 436C, 440(J), 440(J)(1), 482, 601ED(1) and 601ED(5)
Queensland Law Society Rules 1987 (Qld), R 87(7)
Uniform Civil Procedure Rules (Qld), R 292 and 298

Cases:Australia and New Zealand Banking Group Ltd v Barry [1992] 2 Qd R 12
BBC Hardware v GT Homes Pty Ltd (1997) 15 ACLC 431
Re Gordon Grant & Grant Pty Ltd [1983] 2 Qd R 314

Counsel:   R Bain & with him D Atkinson for the plaintiffs
  P McQuade for the defendant
Solicitors:  Thompson Hannan for the plaintiffs
  Burns Jameson for the defendant
Hearing Date:  19 November 2001

[1] This is an application by the plaintiffs as liquidators of a solicitor’s nominee company Lex Nominees Pty Ltd (“Lex”) which was part of a contributory mortgage business conducted by a solicitor Paul Triscott (“Triscott”) for summary judgment against the defendant (“Romano”) as guarantor of a debtor of Lex.

[2] By order of Chesterman J on 20 March 2001 it was declared that the scheme was an “unregistered managed investment scheme operating in contravention of sub section 601ED(5) of the Corporations Law”.

[3] On that ground the nominee company was wound up pursuant to s 601ED(1) of the Corporations Law and the plaintiffs were appointed as liquidators of the company. Lex was removed as trustee of monies contributed under the contributory mortgage scheme by a large number of lenders. The liquidators were then appointed as new trustees in substitution for Lex for the purpose of facilitating the winding up of Lex and the protection to the extent possible of the beneficial interests held by various lenders under the contributory mortgage scheme implemented by Triscott.

[4] One of the borrowers of a large sum of money from Lex under the scheme was Prebble Investments Pty Ltd (“Prebble”) which on 11 November 1999 borrowed $3.6 M.

[5] Prebble, was at all material times a $2 company of which Romano was the sole director and secretary. It owned land about 4km south-west of Maryborough much of which was unimproved but part of which did contain improvements of various sorts that had been added to or refurbished over the years with monies apparently borrowed by Prebble from Westpac Banking Corporation and secured by mortgage over the land and by the guarantee of Romano.

[6] In October 1999 Prebble agreed to refinance it’s borrowing from Westpac with Lex which took a transfer of the mortgage Westpac held over…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2001] QSC 463
Decision Date: 5 December 2001

CaseChat Overview and Summary

The plaintiffs, Michael Peldan and Raj Khatri, as liquidators of Lex Nominees Pty Ltd, are seeking summary judgment against Baptist Jerry Romano, the guarantor of a debtor of Lex. Romano had guaranteed the performance of Prebble Investments Pty Ltd's obligations under a loan facility made available by Lex. The primary legal issue before the court is whether Romano's defense, which raises the possibility of a concluded agreement with Triscott (the director of Lex) not to pursue the guarantee until Prebble's insurance claim is settled, demonstrates a real question to be tried, or if it merely serves to postpone judgment. The court must determine if there is any real prospect of Romano successfully defending the claim and if a trial of the claim is necessary.

The court found Romano's version of events to be factually improbable and unlikely to be established upon trial. However, the court acknowledged that theoretically, if Romano succeeds in proving the factual matters he raises, he may have a defense to the otherwise admitted claim by the plaintiffs. The court decided to ensure that the only matter raised by way of defense is determined as soon as possible to alleviate further loss and hardship suffered by the lenders to Triscott's contributory mortgage scheme. The court dismissed the plaintiffs' application for judgment and directed that the only issues on the pleadings raised in Romano's defense be determined upon trial forthwith. The court also directed that disclosure of documents relevant to the issues joined in the pleadings be made within fourteen days and that those matters in issue upon the pleadings be set down for trial forthwith.

Orders