Perpetual Nominees Limited v Aus Constructions Pty Limited

[2005] NSWSC 1199

CITATION:	Perpetual Nominees Limited v Aus Constructions Pty Limited and Ors [2005] NSWSC 1199
HEARING DATE(S):	20 October 2005
JUDGMENT DATE :	20 October 2005
JURISDICTION:	Possession List
JUDGMENT OF:	Johnson J at 1
DECISION:	1. Judgment be entered for the Plaintiff against the Third and Fourth Defendants in the sum of $4,773,587.93; 2. The Third and Fourth Defendants are to pay the Plaintiff's costs of these proceedings.

CATCHWORDS:	CONTRACTS - loans for purposes of residential unit development - claim under loan agreements and guarantees - application for summary judgment against guarantors - issue estoppel - summary judgment granted
LEGISLATION CITED:	Corporations Act 2001 Uniform Civil Procedure Rules
CASES CITED:	Dey v Victorian Railway Commissioners (1949) 78 CLR 62 at 91 General Steel Industries Inc v Commissioner of Railways (NSW) (1964) 112 CLR 125 Webster v Lampard (1993) 177 CLR 598 Cosmos E-Commerce Pty Ltd v Bidwell & Associates Pty Ltd [2005] NSWCA 81 Perpetual Nominees v Masri Apartments [2004] NSWSC 551 Masri Apartments Pty Ltd (In Liquidation) v Perpetual Nominees Ltd [2004] NSWCA 255 Masri Apartments Pty Ltd (In liquidation) v Perpetual Nominees Ltd [2004] NSWCA 471 Blair v Curran (1939) 62 CLR 464 Peppers Hotel Management Pty Ltd v Hotel Capital Partners Limited [2004] NSWCA 114 Kuligowski v Metrobus (2004) 208 ALR 1; [2004] HCA 34
PARTIES:	Perpetual Nominees Limited (Plaintiff) Aus Constructions Pty Limited (First Defendant) Masri Apartments Pty Limited (Second Defendant) Lawrence Deboni (Third Defendant) Samir Masri (Fourth Defendant)
FILE NUMBER(S):	SC 11320/04
COUNSEL:	Mr L V Gyles (Plaintiff) No appearance for Defendants
SOLICITORS:	Gadens Lawyers (Plaintiff) No appearance for Defendants

LOWER COURT JURISDICTION:

IN THE SUPREME COURT
OF NEW SOUTH WALES
COMMON LAW DIVISION
POSSESSION LIST

Johnson J

20 October 2005

11320/04 Perpetual Nominees Limited v Aus Constructions Pty Limited and Ors

JUDGMENT

1 JOHNSON J: This is an application for summary judgment brought by the Plaintiff, Perpetual Nominees Limited, against the Third and Fourth Defendants in these proceedings, Lawrence Debono and Samir Masri. The First and Second Defendants, Aus Constructions Pty Ltd and Masri Apartments Pty Ltd, are in liquidation and no relief is sought against them.

An Ex Parte Hearing

2 By notice of motion filed on 10 March 2005, the Plaintiff seeks summary judgment. On 8 July 2005, the notice of motion was listed for hearing today. Yesterday, the Third and Fourth Defendants made application to the Duty Judge, Latham J, to vacate the hearing date. Her Honour refused the application. I am informed that Mr Chippindall, of Counsel, appeared for the Third and Fourth Defendants before Latham J yesterday.

3 When the matter was called on for hearing today, there was no appearance of the Third and Fourth Defendants. Mr Gyles of Counsel, who appears for the Plaintiff, informed me that he had spoken to Mr Chippindall this morning and that Mr Chippindall had indicated that he had no instructions to appear today.

4 I was satisfied that the Third and Fourth Defendants were and are aware of this hearing being listed today and that it was to proceed. Accordingly, I proceeded with the hearing on an ex parte basis.

5 I am giving judgment at 2 pm on 20 October 2005, and the Third and Fourth Defendants have not appeared at any time during the course of the hearing today.

Application for Summary Judgment – Relevant Principles

6 The application for summary judgment is brought under Pt 13.1 of the Uniform Civil Procedure Rules. Those provisions provide that if on application by a plaintiff in relation to the Plaintiff's claim for relief, there is evidence of the facts on which the claim or part of the claim is based and there is evidence given by the Plaintiff or some responsible person that in the belief of the person giving the evidence, the Defendant has no defence to the claim or part of the claim or no defence except as to the amount of any damages claimed, the Court may give judgment for the Plaintiff or make such other order on the claim or part of the claim as the case requires.

7 It is accepted by Mr Gyles that, on an application such as this, the Plaintiff bears a heavy burden. I approach the application on the basis that a very clear case is required before summary judgment is granted and that the power to order summary judgment should be sparingly used: Dey v Victorian Railway Commissioners (1949) 78 CLR 62 at 91; General Steel Industries Inc v Commissioner of Railways (NSW) (1964) 112 CLR 125 at 129; Webster v Lampard (1993) 177 CLR 598 at 602-603; Cosmos E-Commerce Pty Ltd v Bidwell & Associates Pty Ltd [2005] NSWCA 81 at paragraphs 37-38. The primary issue in the present application is whether a triable or arguable defence is disclosed to the claim which has been brought by the Plaintiff.

The Evidence

8 The evidence before me on the present application comprises:

(a) an affidavit of Michael Christodoulou King sworn 6 October 2004;

(b) a further affidavit of Mr King sworn 3 August 2005;

(c) a number of documents exhibited to the affidavits of Mr King;

(d) an affidavit of Stewart John Adamson sworn 19 October 2005;

(e) two additional documents - a property title search with respect to land contained in folio 13/1393 (Exhibit A) and a certificate of debt issued by Mr King certifying the level of the indebtedness which is said to be relevant to this claim as at 19 October 2005(Exhibit B).

9 In addition, I have been taken to several judgments of this Court which have touched upon matters relevant to the present claim. During the course of this judgment, I will refer to those judgments.

10 The Plaintiff contends that no arguable defence exists to the claim and that the requirements of Pt 13.1 have been met in this case, and that summary judgment ought accordingly be entered.

Facts Emerging From the Evidence

11 The proceedings arise out of loans advanced with respect to property at 16-18 George Street, Liverpool. The Second Defendant was the registered proprietor of the whole of the land in folio identifier 12/12339 and 13/3397 situated at 16-18 George Street, Liverpool in New South Wales.

12 By a number of agreements in writing entered into on 17 September 2003, the Plaintiff agreed to advance to the First Defendant certain sums of money. The Third and Fourth Defendants, Mr Debono and Mr Masri, were directors of the First Defendant.

13 The agreements entered into on 17 September 2003 contain a number of provisions. For present purposes, it is not necessary to set out extensively the terms of the relevant agreements. It should be noted, however, that the first loan agreement involved an agreement for the Plaintiff to advance to the First Defendant a sum of money not exceeding $10,078,000 by way of a loan to be advanced, and that the First Defendant would repay any sum advanced under that loan no later than 16 months from the advance date.

14 In addition to the first loan agreement, there was a guarantee entered into by agreement in writing on 17 September 2003 (“the first guarantee”). Under the first guarantee, the Second, Third and Fourth Defendants guaranteed and indemnified the Plaintiff for payment of money due and owing by the First Defendant under the first loan agreement.

15 On the same day, there was entered into a second loan agreement by which the Plaintiff agreed to advance to the First Defendant a sum not exceeding $2,028,400.00, with a second guarantee by which the Second, Third and Fourth Defendants guaranteed and indemnified the Plaintiff for payment of money due under the second loan agreement.

16 The evidence before me includes the relevant loan agreements and guarantees. I will refer to parts of them for the purpose of identifying the issues which I have to determine. For this purpose, I shall refer to the first loan agreement and the first guarantee, noting that as to the parts to which I will refer there is no material difference in the second loan agreement and the second guarantee.

17 Clause 7 of the first loan agreement provided as follows:

" Events of default .

The Borrower shall at the option of the Lender be immediately in default upon the occurrence of any of the following events of default:

...

7.18 If a caveat or other encumbrance is registered against the Security Property without the Lender’s consent".

18 Clause 8 contained the following provisions:

" Rights Upon Default .

8.1 At any time after default the Lender may in the manner and at the time that the Lender in its absolute discretion deems appropriate but without any obligation to do so and notwithstanding any omission neglect delay or waiver of the right to exercise such option and without liability for loss:

(a) Cancel this Facility;

(b) Require payment of the Debt and recover same from the Borrower and/or any Guarantor;

...”

19 Clause 9.5 was in the following terms:

" Lender's Calculation of Debt .

The Lender's determination of any calculation required hereunder or which may be done for the purpose of this Agreement (including, without limiting the generality of the foregoing, the calculation of the Debt) shall in the absence of proof to the contrary, be conclusive and binding. A statement in writing by the Solicitor for the Lender as to the Lender's determination of any such calculation shall be conclusive proof of such determination".

20 The first guarantee, which is a critical document with respect to the present claim, included the following pertinent conditions. Clause 3 provided:

" Guarantee .

The Guarantor guarantees payment of the Guaranteed Sums by the Debtor when they are due and undertakes to pay the Guaranteed Sums to the Lender on demand if they are not paid by the Debtor".

21 Clause 5 provided as follows:

“ Guaranteed Sums .

The Guaranteed Sums are:

(a) all amounts:

(i) that are owing and payable by the Debtor to the Lender;


...

in any manner and on any account, whether as principal debtor or surety or otherwise, and whether alone or jointly with any other person;

...”

22 Clause 10 of the first guarantee included the following provision:

“ Suspension of Guarantor's Rights .

10.1 Guarantor Not to Raise Set-off or Make Claims

As long as any of the Guaranteed Sums are owed by the Debtor to the Lender (whether or not the Guarantor has become liable for that money under this Guarantee) the Guarantor must not:-
(a) in reduction of the Guarantor's liability under this Guarantee, raise any set-off or counter claim available to the Debtor or any co-surety against the Lender or claim any set-off or make any counter claim against the Lender;

...”

23 Clause 24 of the first guarantee provided:

" Certificate as to Guaranteed Sums .

A certificate signed by an Authorised Officer of the Lender stating the amount of the Guaranteed Sums or of any amount due this Guarantee at a particular date is prima facie evidence as to its contents".

24 On 17 September 2003, the sum of $2,447,550 was advanced by the Plaintiff to the First Defendant under the first loan agreement. On the same day, the sum of $492,450 was advanced by the Plaintiff to the First Defendant under the second loan agreement.

25 On 2 February 2004, a caveat was lodged over the property by Global Capital Corporation Pty Ltd. On 6 February 2004, a caveat was lodged over the property by Bassen El Masri.

26 On 3 March 2004 the Plaintiff gave written notice to the Third and Fourth Defendants by service of a notice of demand for payment with respect to the two loan agreements. The amounts have not been paid then or since by the Third and Fourth Defendants.

27 On 6 May 2004, the Plaintiff commenced the present proceedings in the Common Law Division of this Court. The relief sought with respect to the four Defendants included, amongst other things, an order that the Plaintiff be given possession of the land and that judgment be entered against the Third and Fourth Defendants for the debts payable under the first and second guarantees.

28 The proceedings commenced by the filing of that Statement of Claim alleged a number of defaults. For present purposes, it is sufficient to refer to the defaults which are said to arise from the lodgement of the caveats.

29 The Statement of Claim alleged in paragraph 8(j) that the First Defendant would be immediately in default of the first loan agreement if a caveat or other encumbrance was registered against the land without the Plaintiff's consent.

30 In paragraphs 20 to 23 of the Statement of Claim, it was alleged that the caveats had been lodged on 2 and 6 February 2004 and that the Defendants were in default as a result of the lodgement of those caveats. Demand was made for repayment of the sum advanced pursuant to the first and second loan agreements.

31 On 11 June 2004, a Defence was filed in the proceedings on behalf of all four Defendants, including Mr Debono and Mr Masri. That Defence, in paragraph 6, provided as follows:

“The defendants admit paragraph 8(g) of the plaintiff's Statement of Claim. The defendants further say that the two Caveats were registered on the property by caveators that did not have a caveatable or other interest in the property. The first Caveat registered was withdrawn immediately upon it being challenged. The second Caveat was registered by the finance broker of the plaintiff as a result of the plaintiff failing to pay from the advance the mortgage broker’s fees. The defendants further say that the mortgage broker who registered the Caveat does not have and has never had a caveatable interest in the property to sustain the said Caveat.”

32 In paragraphs 23 to 26 of the Defence, the Defendants responded to paragraphs 20 to 23 of the Statement of Claim. The Defendants denied that they were in breach of the loan agreement “because the first caveator did not have a caveatable interest in the land, and that Caveat was withdrawn as soon as the Defendants became aware of the lodgement” of the caveat.

33 The Defendants denied they were in breach of the loan agreement as “the second caveator did not have an interest in the land and his Caveat arose as a result of a breach of an arrangement between the second caveator and the plaintiff”. Accordingly, the Defence did not put in issue the fact that caveats had been lodged or registered.

34 The Defence filed on behalf of the Defendants, including the Third and Fourth Defendants, raised as a purported defence to the claim the fact that the caveats had been lodged by persons who did not have a registrable interest or a caveatable interest.

35 The Plaintiff submits that there is no arguable defence to the Plaintiff's claim based upon such a premise. Although the Statement of Claim has been amended since that originally filed in 2004, no further Defence has been filed in the proceedings. Accordingly, it is appropriate to have regard to the Defence filed on 11 June 2004 for the purpose of the present decision.

The Equity Division Proceedings

36 In separate proceedings brought by the Plaintiff in the Equity Division of this Court, the Plaintiff sought orders for the winding up of the First and Second Defendant companies and for the appointment of a liquidator.

37 The Third and Fourth Defendants were not parties to the proceedings in the Equity Division. They were, however, as Austin J noted, the controllers of the two companies: Perpetual Nominees v Masri Apartments [2004] NSWSC 551 at paragraph 2. It appears that affidavits were filed in the proceedings that were heard by Austin J, including affidavits of Mr Masri, the Fourth Defendant in these proceedings.

38 In the course of the judgment dealing with that application, Austin J considered the lodgement of caveats issue which is central to the present case. His Honour said in paragraph 54:

“In its statement of claim in the Possession List proceeding, Perpetual contends that caveats were lodged against the Liverpool land on 2 and 6 February 2004, in breach of the loan agreements, and that Masri Apartments has failed to do everything it could to remove the caveats, in breach of the mortgages. In their defence, the defendants admit that two caveats were lodged against the property. They say that the caveators did not have caveatable interests. They say that the first caveat was withdrawn immediately upon it being challenged. They say that the second caveat was lodged by Perpetual's finance broker as a result of Perpetual failing to pay the broker's fees from the loan, and the broker had no caveatable interest.”

39 His Honour observed, in paragraph 56, that the Defendants were able to contend that there was a genuine dispute as to whether the amounts claimed in the two statutory demands were due and payable. His Honour considered, for the purposes of that application, whether there was a genuine dispute arising with respect to the alleged default arising from the registration of the caveats. In that respect, His Honour concluded at paragraph 59:

“But Perpetual relies on two other events of default. The lodgement of each of the two caveats, without the lender's consent, was itself an event of default under clause 7.18 of the loan agreements, entitling the lender to require the borrower and the guarantor to pay all advances and interest. It seems to me plain beyond argument, from the language of clause 7, that it is the very lodgement or ‘registration’ of the caveat that gives rise to the default, regardless of whether the caveat might be open to removal or other challenge. That construction is hardly surprising, since a commercial lender is likely to be more concerned about the fact that there is a caveat on the title to the secured property than that the caveat might at some future time, perhaps after litigation, be removed. To the extent that Perpetual relies upon lodgement of the caveats as a default entitling it to require payment of all advances and interest, I cannot see that there is any substantial basis for disputing its claim.”

40 At paragraph 61, Austin J said:

"My conclusion is that the amount claimed by Perpetual in the two statutory demands is an amount which can not be disputed on any substantial ground, having regard to the effect of lodgement of the two caveats under the terms of the loan agreements".

41 Austin J concluded, at paragraph 66, that the two companies were clearly insolvent and that orders should be made winding them up on the grounds of insolvency.

42 The Defendants to those proceedings appealed to the Court of Appeal. For the purposes of that appeal, a stay was sought in the Court of Appeal. The stay was granted by Ipp JA on 30 July 2004 as part of an application to the Court for leave pursuant to s471A of the Corporations Act 2001 to bring an application for a stay and to pursue the appeal against the decision of Austin J: Masri Apartments Pty Ltd (In Liquidation) v Perpetual Nominees Ltd [2004] NSWCA 255.

43 In the course of the decision granting the stay, Ipp JA adverted to the decision of Austin J with respect to the caveat default and the argument which was sought to be advanced by the Defendants, the then appellants, that there was an arguable defence to that alleged default.

44 Ipp JA said at paragraph 14:

“Masri and AUS now contend that, on a proper construction of cl 7.18, there will be an event of default arising from the registration of a caveat only if the caveat is lawfully registered and the person registering the caveat has a relevant caveatable interest. In my view, this proposition is reasonably arguable and raises a serious issue for an appellate Court".

45 It should be observed that Ipp JA, in expressing that view, provided no elaboration upon the conclusion reached. That is not surprising. Given the nature of a stay application, a judge is called upon to determine as a matter of impression, the apparent arguable status of a particular point. Elaborate reasons are not usually given nor required. Accordingly, Ipp JA's views on this point do not extend beyond that which I have set out above.

46 The hearing of the appeal proceeded before the Court of Appeal on 23 November 2004. The Court comprised Spigelman CJ, Mason P and Beazley JA. On 17 December 2004 the Court dismissed the appeal: Masri Apartments Pty Ltd (In liquidation) v Perpetual Nominees Ltd [2004] NSWCA 471. In delivering the judgment of the Court, Beazley JA referred to a number of issues which arose on the appeal. Four issues were identified, one of which was an argument as to whether Austin J was correct in finding the registration of the caveat was sufficient to constitute an event of default under cl 7.18, or whether it was necessary for the present Plaintiff to show that the caveat had been properly lodged, that is by a person with a registrable interest. Having noted that as an issue which had been argued, the Court found it necessary to determine one issue only, not being the caveat issue. As a result of the decision of Austin J, the caveat finding stands, even though the Court of Appeal did not affirm it in determining that the appeal should be dismissed.

47 On 22 December 2004, Giles JA granted a stay of the orders of the Court of Appeal upon the basis that the then appellants, that is the First and Second Defendants in the present proceedings, were to seek special leave to appeal to the High Court of Australia. On 25 January 2005, an application for special leave was filed. On 7 February 2005, Giles JA lifted the stay which had been granted on 22 December 2004.

48 On 29 July 2005, the special leave application to the High Court of Australia was deemed to have been abandoned. Accordingly, there is no appeal or application for special leave to appeal on foot from a decision of Austin J or the Court of Appeal in the Equity Division proceedings.

Decision of Smart AJ

49 Whilst the appeal was on foot from the decision of Austin J, the Third and Fourth Defendants in the present proceedings sought certain relief in the Common Law Division. Pursuant to a notice of motion filed on 22 September 2004, the Third and Fourth Defendants sought leave to file and serve a cross claim out of time together with orders:

(a) that Lawrence Debono and Samir Masri be given leave pursuant to s.471A(1A)(d) of the Corporations Act 2001 to bring a cross claim on behalf of the First and Second Defendants, and

(b) by way of injunctions to maintain the status quo in respect of the land until the determination of the Court of Appeal in proceedings CA40544 of 2004, those proceedings in the Court of Appeal being the appeal from the decision of Austin J.

50 Smart AJ heard the notice of motion and gave judgment on 2 November 2004. In the course of giving judgment, Smart AJ outlined (at paragraph 9 and following) the matters determined by Austin J, including the caveat issue. Smart AJ (at paragraph 14) adverted to the finding of Ipp JA that there was a reasonably arguable defence and a serious issue for an appellate court with respect to the alleged caveatable defence.

51 Smart AJ observed at paragraph 14:

“That proposition may need further refinement or qualification but the general thrust is clear. In some cases it may be clear that there is no caveatable interest, or that a caveat is being lodged for an ulterior purpose and the matter can be disposed of quickly. In other instances it may be highly arguable whether there is a caveatable interest and take some extended litigation to resolve".

52 At paragraph 27 and following, Smart AJ considered whether there was a serious question to be tried. His Honour adverted to the caveat issue (at paragraph 30) and noted Austin J's conclusion and Ipp JA's finding on the stay application.

53 Smart AJ then considered a second argument - that even if there be an arguable defence arising from the caveatable interest contention, the decision of Austin J gave rise to an issue estoppel, so that in the Common Law Division proceedings, the present Plaintiff would be able to call in aid the doctrine of issue estoppel as a response to the Defendants relying upon, once again, the caveatable interest defence.

54 Having referred to a number of authorities with respect to issue estoppel, including the decision of the High Court of Australia in Blair v Curran (1939) 62 CLR 464, Smart AJ concluded at paragraphs 37 and 38:

“To reach the conclusion that there was no genuine dispute on substantial grounds, Austin J necessarily had to decide, in the circumstances, that an event of default had occurred. He reached this conclusion on what he held to be the true construction of cl 7.18, cited earlier. Unless he had decided this Austin J could not have held that there had been an event of default. As Gummow J pointed out in Trawl Industries of Australia Pty Ltd (In Liq) v Effem Foods Pty Ltd (1992)108 ALR 335 at 347 it is very necessary to focus upon the substance of the proceedings.

In the absence of the reversal of the decision of Austin J Perpetual's point that an issue estoppel arises on the caveats point is a sound one".

55 Smart AJ (at paragraphs 39 and 40) noted that the hearing of the appeal was but a few weeks away and the strength of the caveatable interest argument would be the subject of consideration by the Court of Appeal. His Honour observed (at paragraph 50) that if the Court of Appeal upheld the appeal, he would grant the Defendants leave to file a cross claim out of time, but if the appeal was dismissed, leave would be refused. As it happens, the Court of Appeal dismissed the appeal and did not decide the caveatable interest ground.

The Plaintiff’s Submissions in Support of the Summary Judgment Application

56 In support of the summary judgment application, Mr Gyles submits that there are two bases upon which the relief ought be granted. Firstly, he submits that the decision of Austin J was clearly correct and that the Third and Fourth Defendants have no arguable defence to the claim. It was submitted that the reasoning of Austin J ought be adopted by me. It was submitted that the finding of Ipp JA on the stay application was a matter of impression, without elaboration, and was expressed for the limited purpose of a stay application. It was submitted that the reasoning of Austin J was clearly correct and there being no arguable defence, summary judgment ought be granted.

57 The second argument, which is put in the alternative, is that even if it might be said that Austin J's decision was not clearly correct and that, as was Ipp JA's view, there was a serious issue to be tried as to the caveatable interest defence, the judgment of Austin J gave rise to an issue estoppel, which was undisturbed as the Court of Appeal had not overturned the decision of Austin J, nor indeed made any decision with respect to the caveatable interest ground.

58 Accordingly, as Smart AJ acknowledged, the doctrine of issue estoppel was capable of operation so as to exclude any arguable defence. The Plaintiff submits that one way or the other, it is entitled to the relief which it seeks.

Caveatable Interest Defence Not Arguable

59 I turn to consider the first basis upon which relief is sought. I have given consideration to the reasons for judgment of Austin J and I have examined the relevant agreements. With respect, I consider that the reasoning of Austin J (at paragraph 59) is clearly correct. His Honour relied upon the clear words of clause 7.18 of the loan agreements.

60 I agree with His Honour's conclusion that, from the language of that clause, the very lodgement or registration of the caveat gave rise to default regardless of whether the caveat might be open to removal or other challenge. Apart from the plain words of the clause, His Honour's reasoning, which calls in aid the practical reality of commercial lending, is in my view supportive of that construction.

61 A commercial lender is likely to be more concerned about the fact that a caveat has been placed on the title to the secured property. The reason for the lodgement and the strength or otherwise of the interest which is sought to be protected by the lodgement of the caveat, are matters which may well be entirely outside the knowledge of the commercial lender. Even if the commercial lender does have some knowledge, it would not seem to be consistent with the practical reality of commercial lending that there should be some implied term in the otherwise clear condition that default only occurs if the caveat is lodged to protect a reasonable or caveatable interest. Commercial contracts are to be construed so as to be given a sensible commercial operation: Peppers Hotel Management Pty Ltd v Hotel Capital Partners Limited [2004] NSWCA 114 at paragraph 68.

62 I do not consider that Ipp JA's conclusion leads to any different construction of the provision. I have had regard to the view of Ipp JA which, for good reason, was not expanded upon, but I am satisfied that the construction of the provision adopted by Austin J is correct. I reach the same conclusion by Austin J having considered the matter independently for the purpose of this hearing.

The Issue Estoppel Question

63 Even if I am wrong, however, in that respect, and even if there was a reasonably arguable defence with respect to that ground, there is (somewhat unusually in this case) a second basis upon which, in my view, the Plaintiff is entitled to summary judgment.

64 I am satisfied that Austin J's decision gives rise to an issue estoppel. In Kuligowski v Metrobus (2004) 208 ALR 1; [2004] HCA 34, the High Court of Australia (at paragraph 21) stated that, for the doctrine of issue estoppel to apply in a second set of proceedings, it must be demonstrated that in the earlier proceedings:

(a) the same question has been decided,

(b) the judicial decision which is said to create the estoppel was final, and

(c) the parties to the judicial decision or their privies were the same persons as the parties to the proceedings in which the estoppel is raised, or their privies.

65 I am satisfied that the elements of issue estoppel exist in this case. Firstly, as Smart AJ observed, the same question was decided by Austin J, albeit in different proceedings, the question being whether there was an arguable defence or a triable issue with respect to the Plaintiff’s claim based upon an alleged breach of clause 7.18 of the loan agreement. Secondly, the decision of Austin J was, in my view, a judicial decision which was final. Thirdly, the parties to the judicial decision before Austin J, although not identical in the sense that the Third and Fourth Defendants were not actual parties to those proceedings, were, in my view, privies. The Third and Fourth Defendants were the controllers of the First and Second Defendants. Austin J so held, and it is apparent from His Honour's decision that those persons were the heads and hands of those corporations.

66 I am satisfied that the Third and Fourth Defendants would be caught by the doctrine of issue estoppel in raising this defence. Accordingly, I am satisfied that, even if the Plaintiff's first ground for relief failed and the caveatable interest ground was arguable, it was not open in this case because of the application of the doctrine of issue estoppel.

The Cross Claim Question

67 In so far as the Third and Fourth Defendant before Smart AJ had indicated a desire to file a cross claim with respect to these proceedings, Mr Gyles has advanced a number of submissions. He contends that any cross claim filed by the Third and Fourth Defendants based upon a breach by the lender of the primary contract could have no bearing upon this claim. No cross claim has been filed in any event, although the orders of Smart AJ opened the door for that to be done.

68 It does not seem to me that the potential for a cross claim to be brought by the Third and Fourth Defendants is a basis upon which I should decline to grant the relief sought. It does not seem to me that any cross claim would stand in the way of the Plaintiff obtaining the judgment which it seeks.

69 There is, in any event, as I have mentioned, within cl 10.1 of the guarantee a clause which affects the ability of the relevant parties to bring such a claim.

70 The fact is that the Third and Fourth Defendants have not participated in this hearing and have not taken any steps pursuant to the orders made by Smart AJ nearly a year ago. To the extent that the issue of a possible cross claim may bear upon the present application, I do not consider that there is any reason why I should decline to grant the relief sought by the Plaintiff.

The Plaintiff’s Belief that there is No Defence

71 Within the affidavit of Mr King, there is evidence which satisfies the technical requirement in Part 13.1(1)(b) UCPR, namely evidence that in the belief of Mr King, the First Defendant has no defence to the claim, and the Third and Fourth Defendants have no defence to the claim. Accordingly, that requirement is satisfied.

Conclusion

72 I am satisfied that there is no arguable defence revealed in the Defence filed on behalf of the Third and Fourth Defendants. I am satisfied that relief should be granted in accordance with Part 13.1 UCPR.

73 Mr Gyles has stated that the Plaintiff is in possession of the property and that no relief is sought against the First and Second Defendants. The making of the orders sought by the Plaintiff will bring these proceedings to an end.

74 I make the following orders:

(a) Judgment be entered for the Plaintiff against the Third and Fourth Defendants in the sum of $4,773,587.93.

(b) The Third and Fourth Defendants are to pay the Plaintiff's costs of these proceedings.

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