Perpetual Corporate Trust Ltd v Silverlink Securities Pty Ltd (in Liquidation) in Its Own Right and as trustee for the Silverlink Property Trust NO. 1
[2023] WASC 429
•13 NOVEMBER 2023
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CIVIL
CITATION: PERPETUAL CORPORATE TRUST LTD -v- SILVERLINK SECURITIES PTY LTD (IN LIQUIDATION) IN ITS OWN RIGHT AND AS TRUSTEE FOR THE SILVERLINK PROPERTY TRUST NO. 1 [2023] WASC 429
CORAM: ACTING MASTER MCDONALD
HEARD: 4 MAY 2023 (FURTHER AFFIDAVITS FILED 13 JUNE 2023)
DELIVERED : 13 NOVEMBER 2023
FILE NO/S: CIV 2661 of 2019
BETWEEN: PERPETUAL CORPORATE TRUST LTD
Plaintiff
AND
SILVERLINK SECURITIES PTY LTD (IN LIQUIDATION) IN ITS OWN RIGHT AND AS TRUSTEE FOR THE SILVERLINK PROPERTY TRUST NO. 1
First Defendant
SIMON JASPER BELL
Second Defendant
BRIAN RUZICH
Third Defendant
FILE NO/S: CIV 2662 of 2019
BETWEEN: PERPETUAL CORPORATE TRUST LTD
Plaintiff
AND
SILVERLINK SECURITIES PTY LTD (IN LIQUIDATION) IN ITS OWN RIGHT AND AS TRUSTEE FOR THE SILVERLINK PROPERTY TRUST NO. 1
First Defendant
SIMON JASPER BELL
Second Defendant
BRIAN RUZICH
Third Defendant
Catchwords:
Application for summary judgment sought by plaintiff - Leave to apply out of time - Guarantee - No arguable defence - O 14 r 1 of the Rules of the Supreme Court 1971 (WA) - Leave to apply out of time and summary judgment granted - Turns on own facts
Legislation:
Rules of the Supreme Court 1971 (WA)
Result:
Leave to apply out of time granted
Summary judgment granted
Category: B
Representation:
CIV 2661 of 2019
Counsel:
| Plaintiff | : | CM Guy |
| First Defendant | : | No appearance |
| Second Defendant | : | No appearance |
| Third Defendant | : | No appearance |
Solicitors:
| Plaintiff | : | HWL Ebsworth Lawyers (Perth) |
| First Defendant | : | Tottle Partners |
| Second Defendant | : | In Person |
| Third Defendant | : | In Person |
CIV 2662 of 2019
Counsel:
| Plaintiff | : | CM Guy |
| First Defendant | : | No appearance |
| Second Defendant | : | No appearance |
| Third Defendant | : | No appearance |
Solicitors:
| Plaintiff | : | HWL Ebsworth Lawyers (Perth) |
| First Defendant | : | Tottle Partners |
| Second Defendant | : | In Person |
| Third Defendant | : | In Person |
Cases referred to in decision:
Ginbey v Commonwealth Bank of Australia [2021] WASCA 116
Sutton Investments Pty Ltd v Realistic Investments Pty Ltd [2017] WASCA 14
Westpac Banking Corporation v Anderson [2017] WASC 106
ACTING MASTER MCDONALD:
Introduction
The plaintiff has commenced two separate actions against the defendants. These actions involve the recovery of sums advanced to the first defendant by the plaintiff pursuant to two separate loan agreements secured by mortgages over properties owned by the first defendant.
In each action, the plaintiff has applied for summary judgment against the second defendant who signed a deed of indemnity and guarantee in respect of loans advanced by the plaintiff to the first defendant.
In each action the parties are identical, the pleadings and the evidence relied upon are substantially the same and the issues arising are common. The key differences between each action are the sums advanced pursuant to each loan agreement and the fact there are different secured properties in respect of those loan agreements. It is therefore convenient that I provide one set of reasons dealing with both applications for summary judgment.
The plaintiff also seeks leave to extend time to apply for summary judgment in each action.
For the reasons that follow, I am satisfied that leave be granted to extend time to apply for summary judgment and that the second defendant has no arguable defence to either action and summary judgment in each action should be granted.
The Applications
The applications for summary judgment are made by chamber summons pursuant to O 14 r 1 of the Rules of the Supreme Court 1971 (WA) (RSC) each filed on 18 April 2023 (the Applications).
In action CIV 2661 of 2019 the plaintiff has filed the following affidavits:
(a)the affidavit of Helen Troughton, Mortgage Help Senior Officer - Loss Recovery at La Trobe Financial Services Pty Ltd, in support of the application for summary judgment sworn 18 April 2023 (Troughton Affidavit CIV 2661/2019);
(b)the affidavit of Cassandra Michelle Guy, solicitor employed by HWL Ebsworth, as to delay sworn 18 April 2023 (First Guy Affidavit CIV 2661/2019);
(c)the affidavit of James Bruce McTernan, process server, as to service of application affirmed 1 May 2023 (McTernan Affidavit CIV 2661/2019);
(d)the affidavit of Cassandra Michelle Guy sworn 4 May 2023 (Second Guy Affidavit CIV 2661/2019); and
(e)the affidavit of Cassandra Michelle Guy as to discharged bankrupt sworn 13 June 2023 (Third Guy Affidavit CIV 2661/2019).
In action CIV 2662 of 2019 the plaintiff has filed the following affidavits:
(a)the affidavit of Helen Troughton in support of an application to remove the matter from the Inactive Cases List sworn 22 February 2023 (First Troughton Affidavit CIV 2662/2019);
(b)the affidavit of Helen Troughton in support of the application for summary judgment sworn 18 April 2023 (Second Troughton Affidavit CIV 2662/2019);
(c)the affidavit of Cassandra Michelle Guy as to delay sworn 18 April 2023 (First Guy Affidavit CIV 2662/2019);
(d)the affidavit of James Bruce McTernan as to service of application affirmed 1 May 2023 (McTernan Affidavit CIV 2662/2019);
(e)the affidavit of Cassandra Michelle Guy sworn 4 May 2023 (Second Guy Affidavit CIV 2662/2029); and
(f)the affidavit of Cassandra Michelle Guy as to discharged bankrupt sworn 13 June 2023 (Third Guy Affidavit CIV 2662/2019).
Overview of the plaintiff's claims
In each action, the plaintiff filed a writ of summons on 19 September 2019 and a Statement of Claim on 20 September 2019.
The plaintiff in this matter is an incorporated company that carries out the business of a credit provider.
The first defendant was one of the companies that formed the Sterling Group and Sterling Income Trust. The Sterling Group was established in 2010 and sourced and aggregated rent rolls and provided property management services. In 2017 the first defendant was incorporated and offered investments by way of preference shares in the first defendant. Under the scheme, retirees would invest capital (sometimes including their residential homes) and their investment would be either in the Sterling Income Trust or in preference shares in the first defendant.[1]
[1] Troughton Affidavit CIV 2661/2019 [16] - [18]; First Troughton Affidavit CIV 2662/2019 [11] - [13].
In May 2019 voluntary administrators were appointed to the Sterling Group and in June 2019 the Sterling Group and related entities went into liquidation.[2]
[2] Troughton Affidavit CIV 2661/2019 [19]; First Troughton Affidavit CIV 2662/2019 [14].
It is pleaded in action CIV 2661 of 2019 the plaintiff advanced the sum of $384,000 to the first defendant pursuant to a loan agreement dated 5 December 2018. The amount payable under the loan agreement was secured by a first registered mortgage O064097 over a property known as Unit 6, 8 Observation Road, Craigie, Western Australia being Lot 6 on Strata Plan 65813 being the land in Certificate of Title Volume 2952 Folio 345 (the Craigie Property). The first defendant was the registered proprietor of the Craigie Property.
It is pleaded in action CIV 2662 of 2019 the plaintiff advanced the sum of $231,000 to the first defendant pursuant to a loan agreement dated 19 October 2018. The amount payable under the loan agreement was secured by a first registered mortgage O029174 over a property known as 7/22 Kwella Entrance, Greenfields, Western Australia being Lot 11 on Survey-Strata Plan 69231 being the land in Certificate of Title Volume 2889 Folio 938 (the Greenfields property). The first defendant was the registered proprietor of the Greenfields property.
The loan agreements were entered with La Trobe Financial Services Pty Ltd as an agent for the plaintiff. It is pleaded that the loan agreements in each action contained the following express terms:
(a)the term of the loan agreement was 30 years;
(b)payments were to be made by the first defendant to the plaintiff on or before the 20th day of each month during the term of the loan agreement;
(c)variable interest would be charged on the principal sum and in the event of default, additional interest of 5% per annum on the outstanding loan balance would be payable by the first defendant; and
(d)in the event of default, the first defendant must pay to the plaintiff enforcement expenses incurred by the plaintiff in connection with the exercise or non-exercise of rights arising from any default including:
(i)legal costs and expenses on a full indemnity basis or a solicitor and own client basis, whichever is higher; and
(ii)the plaintiff's internal costs.
The first defendant secured payments of all monies payable under the loan agreements by granting first registered mortgages over the Craigie property and the Greenfields property respectively, (the Mortgages).
The Memorandum of Provisions to the Mortgages provided that the first defendant would be in default of each of the Mortgages if the first defendant did not pay any of the amounts owing under each of the loan agreements.
The second and third defendants entered into deeds of guarantee and indemnity with the plaintiff dated 29 November 2018 in respect of action CIV 2661 of 2019 and 19 November 2018 in respect of action CIV 2662 of 2019 (the Guarantees). The Guarantees the subject of each action are in identical terms save for the amounts advanced and the description of the secured property, pursuant to which the second and third defendants guaranteed and indemnified the plaintiff in the event of a default under the loan agreements or the Mortgages.
The first defendant defaulted under the terms of the loan agreements in that payments due to the plaintiff were not paid and that by that failure the first defendant was in default under the Mortgages and the second and third defendants were in default under the Guarantees.
The plaintiff served default notices on the defendants, both dated 29 May 2019, advising that the defendants were in default and that if the default was not rectified within a specified time all monies owed under the loan agreements and secured by the Mortgages and the Guarantees would become immediately due and payable.[3] The defendants failed to remedy their default within the time specified in the default notices and the whole of the amount owing under the loan agreements and Guarantees became due and payable.[4]
[3] Troughton Affidavit CIV 2661/2019 [10], 'HT-14'; Second Troughton Affidavit CIV 2662/2019 [9], 'C'.
[4] Troughton Affidavit CIV 2661/2019 [11]; Second Troughton Affidavit CIV 2662/2019 [10].
Procedural history
These actions were commenced by the plaintiff on 19 September 2019 against the first, second and third defendants. The first defendant filed appearances in each action on 2 October 2019. No appearance was entered on behalf of the second or third defendant at this stage of the proceedings.
In each action, judgment was entered against the third defendant on 8 November 2019 in default of his appearance, as a guarantor for the first defendant. The third defendant was ordered to pay the amounts due with interest until payment in full in accordance with the terms of the Mortgages.
On 13 November 2019 judgment was entered by consent in each action between the plaintiff and first defendant with orders for the first defendant to deliver to the plaintiff vacant possession of the Craigie Property and the Greenfields Property.
In a letter to the court dated and filed on 13 November 2019 in both proceedings the plaintiff advised that the second defendant was bankrupt and that the plaintiff did not seek any additional orders at that time.
A year later the court wrote to the plaintiff by way of emails dated 17 November 2020, 7 December 2020 and 23 December 2020 in action CIV 2661 of 2019, seeking an update with regards to the status of the second defendant and what the plaintiff intended to do with the outstanding action.
Action CIV 2661 of 2019 was listed for case management on 4 February 2021. For reasons related to Covid-19, the case management conference was adjourned to 15 April 2021 at which time the proceeding was adjourned sine die.
The second defendant filed a Memorandum of Appearance on 14 May 2021 and 17 May 2021 in actions CIV 2661 of 2019 and CIV 2662 of 2019, respectively.
On 1 September 2022, action CIV 2662 of 2019 was placed on the Inactive Cases List as no procedural step had been taken for over 12 months.
On application by the plaintiff, action CIV 2662 of 2019 was later removed from the Inactive Cases List on 27 February 2023 by order of Justice Forrester. The plaintiff was also ordered to file any summary judgment application pursuant to O 14 r 1 of the RSC by 1 April 2023.
On 15 February 2023 the plaintiff filed a Notice of Intention to Proceed in action CIV 2661 of 2019 and served it on the second defendant pursuant to RSC O 3 r 7, which provides that where a year or more has elapsed since the last proceeding in an action, the party who desires to proceed must give to every other party not less than one month's notice of his intention to proceed.
The Applications were filed on 18 April 2023 and served on the second defendant on 19 April 2023.[5]
[5] McTernan Affidavit CIV 2661/2019 [2]; McTernan Affidavit CIV 2662/2019 [2].
There was a significant delay between the appearances of the second defendant in the actions in May 2021 and these Applications being filed some 23 months later. The reasons for this delay are canvassed later in these reasons.
The Applications were listed in the Master's List on 4 May 2023. There was no appearance by the second defendant. Counsel for the plaintiff advised she had spoken to the second defendant who advised her that he was aware of the listing. Ms Guy also deposed to a conversation she had had with the second defendant asking if he opposed the Applications to which she says he advised that he had no defence and that he had no resources to satisfy the debt claimed.[6] Counsel for the plaintiff relied on the affidavits filed, advised she had nothing to add to the papers and sought orders in terms of the chamber summonses. I indicated that I would determine the Applications on the papers.
[6] First Guy Affidavit CIV 2661/2019 [7]; First Guy Affidavit CIV 2662/2019 [6].
On 12 June 2023 the court wrote to the parties noting that by letter dated 13 November 2019 the plaintiff's former solicitors advised the court that the second defendant was bankrupt. The plaintiff's solicitors were asked to address s 58 of the Bankruptcy Act 1966 (Cth) and whether the debt alleged was capable of being pursued.
Ms Guy deposes that on 13 June 2023 she conducted bankruptcy searches of each of the second and third defendants and a search of the Federal Court of Australia.[7] The results of her searches were:
(a) two petitions had been lodged against the second defendant;[8]
(b) the first petition lodged as against the second defendant had been dismissed in the Melbourne Federal Magistrates Court;[9]
(c) the second defendant lodged a debtor's petition and became bankrupt on 16 February 2011 and was subsequently discharged on 18 February 2014;[10] and
(d) the third defendant was not the subject of any bankruptcy notice or petition.[11]
[7] Third Guy Affidavit CIV 2661/2019 [2]; Third Guy Affidavit 2662/2019 [2].
[8] Third Guy Affidavit CIV 2661/2019 'CMG4'; Third Guy Affidavit CIV 2662/2019 'CMG4'.
[9] Third Guy Affidavit CIV 2661/2019 'CMG5'; Third Guy Affidavit CIV 2662/2019 'CMG5'.
[10] Third Guy Affidavit CIV 2661/2019 'CMG6'; Third Guy Affidavit CIV 2662/2019 'CMG6'.
[11] Third Guy Affidavit CIV 2661/2019 'CMG7'; Third Guy Affidavit CIV 2662/2019 'CMG7'.
Legal principles
Order 14 r 1(1) of the RSC provides that where a statement of claim has been served on a defendant and that defendant has entered an appearance, the plaintiff may, on the ground that the defendant has no defence to a claim included in the writ, or to a particular part of such claim, or has no defence to such a claim or part except as to the amount of any damages claimed, within 21 days after the appearance or at any later time by leave of the court, apply for judgment against that defendant.
Order 14 r 3(1) of the RSC provides that on the hearing of a summary judgment application, unless the court dismisses the application, or the defendant satisfies the court with respect to the claim, or the part of the claim to which the application relates, that there is an issue or question in dispute which ought to be tried, or that there ought for some other reason to be a trial of that claim or part, the court may give such judgment for the plaintiff against the defendant on that claim or part thereof as may be just, having regard to the nature of the remedy or relief claimed.
The principles applicable to an application for summary judgment are not in dispute. As the Court of Appeal said in Sutton Investments Pty Ltd v Realistic Investments Pty Ltd[2017] WASCA 14:
Summary judgment will be granted only when there is no real question to be tried. The power to order summary judgment is one that should be exercised with great care: Fancourt v Mercantile Credits Ltd [1983] HCA 25; (1983) 154 CLR 87, 99. It is only in the clearest of cases, when there is a high degree of certainty about the ultimate outcome of the proceedings if it went to trial, that summary judgment ought properly be granted: Agar v Hyde [2000] HCA 41; (2000) 201 CLR 552 [57]; Batistatos v Roads and Traffic Authority of New South Wales [2006] HCA 27; (2006) 226 CLR 256 [46]; Spencer v The Commonwealth of Australia [2010] HCA 28; (2010) 241 CLR 118 [24], [53] - [55].[12]
[12] Sutton Investments Pty Ltd v Realistic Investments Pty Ltd [24].
The reason behind the 21-day time limit was considered by Pritchard J in Westpac Banking Corporation v Anderson [2017] WASC 106:
The 21 day limit for applications for summary judgment clearly reflects a policy view that such applications should be brought at an early stage in the proceedings, and before too much expense has been incurred. If there is a delay, it must be explained, and it is up to the applicant to show that the delay in bringing the application was justifiable in the circumstances. However, the Court clearly has a broad discretion as to whether to grant leave to apply out of time. Clearly the prospects of the application will be relevant. To proceed to trial, with the expense that that may incur, when there is no defence to an action, or where an action pursued by counterclaim has no prospect of succeeding, would of itself be contrary to modern principles of case management. Prejudice to the other party, occasioned by the delay in bringing the application, will clearly be relevant.[13] (footnotes omitted)
[13] Westpac Banking Corporation v Anderson [38].
The discretion to grant leave to bring an application out of time is conferred for the purpose of avoiding injustice to a plaintiff which would result from requiring strict compliance with the time limit in the rule. In determining whether to grant an application for leave to bring the application out of time, the court will have regard to the merits of the application, the history of the proceedings, the conduct of the parties and the reason an extension is required, the nature of the litigation and the consequences for the grant or refusal of the extension application.[14]
[14] Ginbey v Commonwealth Bank of Australia [2021] WASCA 116 [66].
Leave to apply out of time
The plaintiff requires leave to enter summary judgment. An application for summary judgment must be brought within 21 days of the appearance or any later time by leave of the court.[15] The second defendant filed his appearances in each action on 14 May 2021 and 17 May 2021, respectively. The Applications were filed on 18 April 2023, just short of two years since the appearances were filed. On any assessment that is an extraordinarily lengthy delay.
[15] RSC O 14 r 1(1).
The reasons for the lengthy delay and unique background to these applications are explained in the affidavits of Ms Troughton and Ms Guy.
Senate Inquiry and instructions to defer
Ms Troughton deposes that on or about 6 May 2019 the plaintiff received notification by letter from Ferrier Hodgson that a liquidator had been appointed to the first defendant. Upon receipt of that notification, the plaintiff became aware that the first defendant was part of about 50 companies and trusts that formed the 'Sterling Group' and the 'Sterling Income Trust'.[16]
[16] Troughton Affidavit CIV 2661/2019 [16], 'HT3'; First Troughton Affidavit 2662/2019 [11], 'HT1'.
On 20 October 2021 the Senate passed a motion referring matters relating to the Sterling Income Trust to the Senate Economics References Committee for inquiry and report (Senate Inquiry). Separately, the Australian Federal Treasurer introduced a package of three Bills to establish and fund the 'Compensation Scheme of Last Resort', a proposed scheme that will provide compensation to eligible victims of financial misconduct. The Senate Inquiry issued its report on the Sterling Group in February 2022, recommending that the Australian Government take all necessary action to support investors in the Sterling Group of companies, including those who invested in the Sterling Income Trust and Silverlink Preference Shares, being able to access the Compensation Scheme of Last Resort, as currently the scheme proposes to exclude victims of managed investment schemes such as the victims of the Sterling Group collapse.[17]
[17] Troughton Affidavit CIV 2661/2019 [20] - [22], 'HT4'; First Troughton Affidavit 2662/2019 [15] - [17] 'HT2'.
Ms Troughton deposes that given the sensitivities of the Sterling Group and the effect the scheme had on its investors, the plaintiff was reluctant to progress this proceeding while the Senate Inquiry was in progress and gave express instructions to its former lawyers, GV Lawyers, on 17 November 2021 to defer further steps in the action pending the outcome of the inquiry.[18]
[18] Troughton Affidavit CIV 2661/2019 [23]; First Troughton Affidavit CIV 2662/2019 [18].
Ms Troughton further deposes that during this period the plaintiff's solicitors were in negotiations with a third party in relation to the sale of the Craigie Property and the Greenfields Property. On 21 June 2021 the plaintiff's former lawyers received an offer to purchase both properties from RCCG Pty Ltd. On 26 July 2021, the plaintiff's former lawyers were contacted by solicitors who acted for the occupants of the properties. Ms Troughton deposes that pending the outcome of the Senate Inquiry the plaintiff was considering how to progress the recovery actions while minimising the distress to the occupants of the properties.[19]
[19] Troughton Affidavit CIV 2661/2019 [27] - [30]; First Troughton Affidavit CIV 2662/2019 [22] - [26].
Following the release of the Senate Inquiry Report dated 22 February 2022, the plaintiff's former solicitors reconsidered the proposal from RCCG Pty Ltd and obtained valuations of the two properties. The valuations were received in late March/early April 2022. Between May 2022 and December 2022, the plaintiff's solicitors and RCCG Pty Ltd exchanged various offers and counter offers.[20]
Change of representation and preparation of summary judgment applications
[20] Troughton Affidavit CIV 2661/2019 [31] - [39]; First Troughton Affidavit CIV 2662/2019 [27] - [35].
On 30 January 2023 Ms Troughton instructed the plaintiff's then solicitors to transfer their file to its current solicitors.[21] Ms Guy deposes that on 9 February 2023 HWL Ebsworth Lawyers were instructed to act for the plaintiff and to file a Notice of Change of Lawyers in both proceedings. The Notices were filed on 10 February 2023 and served on the second defendant and GV Lawyers by email on 14 February 2023.[22]
[21] Troughton Affidavit CIV 2661/2019 [40]; First Troughton Affidavit CIV 2662/2019 [36].
[22] Troughton Affidavit CIV 2661/2019 [41(b)]; First Troughton Affidavit CIV 2662/2019 [37(b)].
On 15 February 2023 Ms Guy filed and served on the second defendant by email a Notice of Intention to Proceed in action CIV 2661 of 2019,[23] and sought to confer with the second defendant in relation to removing action CIV 2662 of 2019 from the Inactive Cases List. This culminated in an application to the court and the orders for the removal of this action from the Inactive Cases List on 27 February 2023.[24]
[23] First Guy Affidavit CIV 2661/2019 [4], 'CMG1'.
[24] Troughton Affidavit CIV 2661/2019 [41]; First Troughton Affidavit CIV 2662/2019 [37].
Ms Guy deposes that she received instructions from the plaintiff to prepare applications for summary judgment against the second defendant on 17 March 2023 and on 20 March 2023 HWL Ebsworth Lawyers received a copy of the GV Lawyer's file for both proceedings.[25]
[25] First Guy Affidavit CIV 2661/2019 [5] - [6]; First Guy Affidavit CIV 2662/2019 [4] - [5].
In addition, Ms Troughton deposes to there having been ongoing and without prejudice negotiations between the plaintiff and RCCG Pty Ltd during March 2023.[26]
[26] Troughton Affidavit CIV 2661/2019 [47] - [49].
The First Guy Affidavits explain the various communications as between the plaintiff and the second defendant between 21 March 2023 and 18 April 2023.[27]
[27] First Guy Affidavit CIV 2661/2019 [7] - [10], [16]; First Guy Affidavit CIV 2662/2019 [6] - [9], [15].
The First Guy Affidavits further explain that there were further delays in preparing Ms Troughton's Affidavits in support of the Applications due to the unavailability of Ms Troughton and Ms Guy in April of 2023.[28]
Disposition - leave to apply out of time
[28] First Guy Affidavit CIV 2661/2019 [11] - [13]; First Guy Affidavit CIV 2662/2019 [10] - [12].
The length of the delay would normally militate against leave being granted. However, I do not think that it was unreasonable that the plaintiff decided to await the outcome of the Senate Inquiry before proceeding with its actions against the second defendant. The terms of reference of the Senate Inquiry included inquiring into the redress for the victims of the Sterling Income Trust Collapse. It is clear from the correspondence exchanged in the various negotiations that there were occupants who were victims of the scheme residing in the Craigie Property and Greenfield Property. During and following the period of the Senate Inquiry, the plaintiff engaged in ways to attempt to resolve the matter between the parties and tenants of the properties.
Once the Senate Report Inquiry had been delivered in February 2022, the plaintiff continued to attempt to resolve the matter without the need for further litigation. It became evident by December 2022 that those efforts were not successful. As is not unusual for lenders, the plaintiff imposed and abided by a moratorium on recovery actions over the festive season in 2022 until mid‑January 2023.
The plaintiff changed solicitors in February 2023, and once that occurred I am satisfied the actions progressed with appropriate speed.
I am of the view that despite the lengthy delay I would grant leave to bring the Applications. Although the actions were commenced in 2019 they have not progressed beyond a statement of claim. The second defendant in each action has not filed any documents since his appearances filed in May 2021. There have been no further steps taken by the second defendant. It is not the case that the actions have progressed to such an extent that if summary judgments were granted there would be extensive costs incurred unnecessarily.
In addition, for the reasons that follow, I find that the summary judgment applications have merit. I find on the evidence before me that the delay in making the applications for summary judgment was justifiable in the circumstances as deposed by Ms Troughton and Ms Guy.
Summary judgment
The loan agreements and the Guarantees
Copies of both the loan agreements and the Guarantees were annexed to the affidavits filed in the actions.[29]
[29] Troughton Affidavit CIV 2661/2019 'HT1', 'HT2'; Second Troughton Affidavit CIV 2662/2019 'A', 'B'.
Pursuant to the terms of the loan agreements the first defendant borrowed from the plaintiff the sum of $384,000 in action CIV 2661 of 2019[30] and the sum of $231,000 in action CIV 2662 of 2019[31] (the Loan Amounts);
(a)interest would accrue on the Loan Amounts at the rate of 6.19% that could be varied at any time by La Trobe Financial Pty Ltd acting reasonably;[32]
(b)additional interest of 5% per annum would be payable by the first defendant to the plaintiff in the event of default;[33]
(c)the first defendant agreed to repay to the plaintiff the Loan Amounts plus accrued interest over a period of 30 years by monthly interest only payments for the first five years and by monthly principal and interest repayments for the remaining 25 years on the 20th day of each month;[34]
(d)the first defendant would be in default of the loan agreements if it failed to repay the Loan Amounts in accordance with the terms of the loan agreements;[35] and
(e)if the first defendant was in default, the plaintiff would issue a notice to the first defendant requiring the default to be rectified by the time stated in the notice (minimum 30 days).[36]
[30] Troughton Affidavit CIV 2661/2019 [7(a)], 'HT1' (10).
[31] Second Troughton Affidavit CIV 2662/2019 [6(a)], 'A' (5).
[32] Troughton Affidavit CIV 2661/2019 [7(b)], 'HT1' (10); Second Troughton Affidavit CIV 2662/2019 [6(b)], 'A' (5).
[33] Troughton Affidavit CIV 2661/2019 [7(c)], 'HT1' (10); Second Troughton Affidavit CIV 2662/2019 [6(c)], 'A' (5).
[34] Troughton Affidavit CIV 2661/2019 [7(d)], 'HT1' (10), cl 17: Second Troughton Affidavit CIV 2662/2019 [6(d)], 'A' (5), cl 17.
[35] Troughton Affidavit CIV 2661/2019 [7(e)], 'HT1' cl 33; Second Troughton Affidavit CIV 2662/2019 [6(e)], 'A' (5), cl 33.
[36] Troughton Affidavit CIV 2661/2019 [7(f)] 'HT1' cl 34(a); Second Troughton Affidavit CIV 2662/2019 [6(f)], 'A' cl 34(a).
Ms Troughton deposes that the plaintiff advanced the Loan Amounts to the first defendant on or about 3 January 2019.[37]
[37] Troughton Affidavit CIV 2661/2019 [7(g)]; Second Troughton Affidavit CIV 2662/2019 [6(g)].
Pursuant to the terms of the Guarantees:
(a)the second defendant unconditionally and irrevocably guarantees to the plaintiff the due and punctual repayment of all money owing under the loan agreements, and will, on demand by the plaintiff, make good any default and pay all sums which may be payable as if the second defendant were expressed to be the primary obliger;[38]
(b)the second defendant agreed to pay any costs and expenses incurred by the plaintiff in enforcing its rights under the Guarantees on a solicitor client basis;[39] and
(c)the second defendant agreed to pay interest on the total amount for which they are liable under the Guarantees and that interest will be payable after as well as before the plaintiff recovers any judgment for the interest of the amounts on which it is payable.[40]
Default
[38] Troughton Affidavit CIV 2661/2019 [8(a)] - [8(b)], 'HT2' cl 1; Second Troughton Affidavit CIV 2662/2019 [7(a)] - [7(b)], 'B' cl 1.
[39] Troughton Affidavit CIV 2661/2019 [8(c)], 'HT2' cl 3.1.1, cl 20.5; Second Troughton Affidavit CIV 2662/2019 [7(c)], 'B' cl 3.1.1, cl 20.5.
[40] Troughton Affidavit CIV 2661/2019 [8(d)], 'HT2' cl 3.1.3, cl 3.2.3; Second Troughton Affidavit CIV 2662/2019 [7(d)], 'B' cl 3.1.3, cl 3.2.3.
The first defendant failed to make the repayments that were due to the plaintiff and, by that failure, the first defendant was in default under the loan agreements and the Mortgages and the second defendant became liable for these sums pursuant to the Guarantees.[41]
[41] Troughton Affidavit CIV 2661/2019 [9]; Second Troughton Affidavit CIV 2662/2019 [8].
On 29 May 2019 the plaintiff issued written Notices of Demand to the first defendant and second defendant as guarantor that overdue amounts of $2,010.80 and $1,221.58 had not been paid and an event of default had therefore occurred under the loan agreements and Mortgages. The notices stated that the overdue amounts, together with enforcement expenses, were to be paid to the plaintiff no later than 31 days from the date of service of the notices.[42]
[42] Troughton Affidavit CIV 2661/2019 [10], 'HT14'; Second Troughton Affidavit CIV 2662/2019 [9], 'C'.
I find the first and second defendant failed to rectify the defaults within the time specified in the Notices of Demand or at all and the whole amount owing under the loan agreements and Guarantees became due and payable.[43]
[43] Troughton Affidavit CIV 2661/2019 [11]; Second Troughton Affidavit CIV 2662/2019 [10].
I find in favour of there being a prima facie right to judgment against the second defendant arising from default of the loan agreements. The onus is now on the second defendant to show that there is an arguable defence.
Arguable defence
The second defendant did not appear at the return date listed for hearing the chambers summonses. Ms Guy deposes that during a telephone call between herself and the second defendant on 21 March 2023, the second defendant advised her that he had no defence to the actions other than that he had no funds or resources to satisfy the debts claimed.[44]
[44] First Guy Affidavit CIV 2661/2019 [7]; First Guy Affidavit CIV 2662/2019 [6].
Ms Guy deposes that the plaintiff sent a letter dated 21 March 2023 to the second defendant confirming his advice that he had no defence to action CIV 2661 of 2019 and querying if the second defendant would be willing to consent to judgment and avoid the need for the application.[45] At the time of drafting the First Guy Affidavit, the second defendant had not provided the plaintiff with a response to this query.[46]
[45] First Guy Affidavit CIV 2661/2019 [8], 'CMG2'; First Guy Affidavit CIV 2662/2019 [7], 'CMG1'.
[46] First Guy Affidavit CIV 2661/2019 [10]; First Guy Affidavit CIV 2662/2019 [9].
The second defendant has been given opportunity to demonstrate that there is an arguable defence or any other reason that the proceedings should progress to trial. The second defendant has not filed any defence in either action or adduced any evidence in response to the Applications. I am satisfied that he had notice of the court listing and did not appear.
Based on the affidavits filed, I find that there is no real question to be tried and there is a high degree of certainty that the judgment would be entered in favour of the plaintiff in each action were the proceedings to progress to trial.
Costs
Pursuant to clauses 3.1.1 and 20.5 of the Guarantees the guarantors agreed to pay any costs and expenses incurred by the plaintiff in enforcing its rights under the guarantee on a solicitor client basis.
Conclusion
I am satisfied that the plaintiff is entitled to leave to apply for summary judgment out of time and summary judgment be granted against the second defendant in each action.
In action CIV 2661/2019 Ms Guy deposes that as at 2 May 2023, the total balance owing was $667,193.35 and interest accrued on the account at a daily rate of $257.39.[47]
[47] Second Guy Affidavit CIV 2661/2019 [2].
In action CIV 2662 of 2019 Ms Guy deposes that as at 2 May 2023, the total balance owing was $417,205.07 and interest accrued on the account at a daily rate of $160.95.[48]
[48] Second Guy Affidavit CIV 2662/2019 [2].
I will make orders in the following terms:
CIV 2661 of 2019
1.The plaintiff have leave to extend the time for filing the summary judgment application pursuant to Rules of the Supreme Court 1971 (WA) Order 14 Rule 1.
2.The second defendant pay to the plaintiff the sum of $667,193.35 being the amount outstanding under the Guarantee and Indemnity dated 29 November 2018 (Guarantee) together with interest continuing after judgment at the rate of $257.39 per day from 2 May 2023 until payment in full.
3.The second defendant pay the plaintiff's costs of the action, including the costs of the application on a solicitor client basis in accordance with the terms of the Guarantee.
CIV 2662 of 2019
1.The plaintiff have leave to extend the time for filing the summary judgment application pursuant to Rules of the Supreme Court 1971 (WA) Order 14 Rule 1.
2.The second defendant pay to the plaintiff the sum of $417,205.07 being the amount outstanding under the Guarantee and Indemnity dated 19 October 2018 (Guarantee) together with interest continuing after judgment at the rate of $160.95 per day from 2 May 2023 until payment in full.
3.The second defendant pay the plaintiff's costs of the action, including the costs of the application on a solicitor client basis in accordance with the terms of the Guarantee.
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
CM
Associate to the Acting Master
13 NOVEMBER 2023
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