Perpetual Nominees Limited v Redev Pty Ltd (In Liquidation)

[2006] QSC 20

SUPREME COURT OF QUEENSLAND

CITATION:

Perpetual Nominees Limited v Redev Pty Ltd (In Liquidation) [2006] QSC 020

PARTIES:

PERPETUAL NOMINEES LIMITED
ACN 000 733 700
(plaintiff)
v
REDEV PTY LTD (IN LIQUIDATION)
ACN 103 571 115
(first defendant)
INGO OESTREICH
(second defendant)
RICHARD GORDON BERCKELMAN
(third defendant)

FILE NO/S:

BS 8687/04

DIVISION:

Trial Division

PROCEEDING:

Application

ORIGINATING COURT:

Supreme Court of Queensland

DELIVERED ON:

7 February 2006

DELIVERED AT:

Brisbane

HEARING DATE:

14 February 2006

JUDGE:

McMurdo J

ORDER:

1.   Judgment for the plaintiff against the second defendant in the sum of $244,145.67.

2.   The application for summary judgment upon the balance of the plaintiff’s claim against the second defendant is dismissed.

CATCHWORDS:

PROCEDURE – QUEENSLAND – PRACTICE UNDER RULES OF COURT –SUMMARY JUDGMENT – whether judgment ought be granted under r 292 Uniform Civil Procedure Rules 1999


Uniform Civil Procedure Rules 1999, r 292

Hancock v Williams (1942) 42 SR (NSW) 252, cited
Pigot’s Case (1614) 11 Co Rep 26b, cited

Ward v National Bank of New Zealand (1883) 8 App Cas 755, distinguished

Wood Hall Ltd v The Pipeline Authority (1979) 53 ALJR 487, cited

COUNSEL:

M R Bland for the plaintiff
The second defendant appeared on his own behalf

SOLICITORS:

Quinn Box and Muller for the plaintiff
The second defendant appeared on his own behalf

1. McMURDO J:This is an application for summary judgment against the second defendant pursuant to r 292 of the Uniform Civil Procedure Rules 1999. The claim is for monies due from the second defendant as a guarantor of the obligations of the first defendant. The second defendant, who is self represented, admits that he signed the guarantee and that at least most of the amount claimed is owing by the principal debtor. But on various grounds he argues that he is not now liable at all, or in the amount claimed.

1. There are two loan agreements between the plaintiff and the first defendant.  What I will call the first loan was of an amount of $2,233,000, at an interest rate of 10 per cent increasing to 15 per cent upon default.  The second loan was for $967,000 at 20 per cent, increasing to 25 per cent upon default.  The loan agreements are each dated 23 July 2003.  The second defendant and his co-director (the third defendant) signed them on behalf of the first defendant.  The Deed of Guarantee signed by each of them is also dated 23 July 2003.  By its clause 3, they guaranteed payment of “the Guaranteed Sums” which were defined effectively as all amounts at any time owing by the first defendant to the plaintiff.

1. From uncontested evidence, I find that the plaintiff made loans in those amounts to the first defendant on or about 23 July 2003 which it failed to repay, as the agreements required, on 23 July 2004.  Interest was payable thereafter at the default rates.  According to further evidence, on 31 October 2005 the amount of $81,623.36 was owing by the first defendant under the first loan and the sum of $142,517.96 was owing under the second loan, and interest has accrued on these amounts since.  Save in certain respects which I will discuss, that evidence is uncontested.

1. The first matter raised by the second defendant concerns the respective amounts agreed to be lent under the first and second loan agreements.  He says that without his consent, the loan agreements came to provide for loans in the amounts already mentioned, i.e. $2,233,000 and $967,000.  He says that he agreed to guarantee loans of $2,666,400 and $533,600.  Of course the total is the same ($3,200,000) but because of the difference in the respective rates of interest, the amounts which were specified in the loan agreements resulted in more interest.

1. In his defence filed on 3 December 2004 (signed by his then solicitors) he admitted loans in the amounts expressed in the loan agreements.  But in his affidavit of 16 December 2005 in response to this application, he says that upon reviewing the documents he realises that his defence is incorrect in that respect.  He refers to a letter from Flower & Hart (solicitors he says were acting for the first defendant but not for him) dated 7 July 2003 which specifies the amounts as $2,666,400 and $533,600.  He then points to the reference to the loan agreements in a schedule to the Deed of Guarantee, in which those amounts are typed but by handwriting have been ruled out and replaced with the sums which are expressed in the loan agreements.  He says that he did not authorise those alterations to the Deed of Guarantee which were done without his approval after he had signed it, which he says he did on about 4 July 2003.  And he says that he did not sign the loan agreements with the amounts expressed as they now are.

1. In response the plaintiff’s solicitor swore a further affidavit to the effect that whilst it had been initially proposed that the loans would be in the amounts for which the second defendant contends, by agreement between all parties, including the second defendant, the amounts were varied to become those expressed in the loan agreements.  That affidavit exhibits correspondence between the plaintiff’s solicitors and Flower & Hart of 22 and 23 July 2003 which seems to record that agreed variation.  There is a fax from Flower & Hart of 23 July which refers to the second defendant as having “now re-executed the documents in Hawaii” and his “sending a copy of same by facsimile to (his co-director) in Sydney”.  In a further fax of 23 July, Flower & Hart sent to the plaintiff’s solicitors a copy of a document (for each loan agreement) entitled “Authority to Amend Document” by which the borrower and the guarantors apparently approved any necessary variation to the documentation to record loans in the respective amounts as the plaintiff now claims.  On their face these documents bear the signature of the second defendant as a guarantor and his further signature on behalf of the first defendant.  The second defendant, in his original affidavit, had stressed that he was in Hawaii on 23 July 2003 from which he said he could not have signed any document bearing that date.  But this further evidence for the plaintiff would appear to demonstrate the sequence by which the documents came to be in their present terms.  The ‘Authorities to Amend’, which are exhibited to this recent affidavit, show printing at the top of the page, indicating that the document has been faxed and refaxed.  The first in time of those faxes would appear to be one which was sent to a number beginning with the international code for fax transmissions to Australia.  On its face, this evidence in the plaintiff’s further affidavit seemed to put paid to the second defendant’s argument. 

1. But faced with this evidence, the second defendant told me that he had not signed these authorities to amend and that what appear to be his signatures upon them are forgeries.  In a further affidavit he swears that he does not believe the signatures or initials on these authorities to be his.  Accordingly there are issues as to whether he did sign those documents and whether the handwritten alterations to the Deed of Guarantee, as well as the insertion of new pages in the loan agreements, were approved by him.  The resolution of those issues would require a trial.  But the plaintiff argues that the issues are irrelevant because the effect of the Deed of Guarantee in its original terms, that is without the handwritten alterations to its schedule, was no different from that after the alteration, and that it results in the liability for the amounts now claimed.

1. As mentioned, the alteration to the Deed of Guarantee was to the description in a schedule of the loan agreements.  That description is referred to in the Deed’s recital that “the Guarantor has before execution of this Guarantee inspected understood and approved the documents specified in item 6 (Documents)”.  It is not otherwise referred to in the Deed.  The description in the schedule does not affect the guarantor’s obligations as defined by the Deed, and in particular by its definition of “The Guaranteed Sums” in clause 5, by which those sums are agreed to include all amounts owing and payable or that may become payable by the principal debtor to the lender “in any manner and on any account” and “as a consequence of any past, present or future transaction”.  Also included are amounts relevant to other issues (discussed below) in relation to fees and charges.  Before the handwritten changes to item 6 of the Schedule, the Deed of Guarantee was in terms which bound the second defendant to pay anything owing by the first defendant to the plaintiff upon any account at any time.  The extent of that obligation was unchanged by the alteration to the Schedule.  If the alteration was without his approval, nevertheless it was an alteration which did not prejudicially affect any party liable under the Deed and its immateriality precludes any operation of the rule in Pigot’s Case[1]: see Halsbury’s Laws of Australia at [140-270] and the cases there cited. 

   [1](1614) 11 CoRep 26b; 77 ER 1177

1. The second defendant argues that, in his mind, he meant to guarantee loans in the amounts originally expressed not as they became.  But it is his intention as expressed in the Deed of Guarantee which must be considered.  According to its terms, he guaranteed the first defendant’s obligations under the loan agreements as they became on 23 July 2003, whether or not he knew or approved of the change to the respective amounts.  And this is not a case where the guarantor can claim to be discharged by variation of the contract whose performance was guaranteed according to cases such as Ward v National Bank of New Zealand (1883) 8 App Cas 755 at 763. In this guarantee, the parties have agreed (within clause 8) that the Guarantor’s liability would not be prejudiced by the lender, without his consent, “increasing or otherwise varying the limit of or the interest rate on loans, advances and financial accommodation granted to the debtor” or “replacing (those) arrangements with new arrangements”.[2]  As already discussed, this is not a guarantee of some specific obligation or agreement but instead it secures the payment of any amount owing by the principal debtor.  Accordingly this first challenge to the plaintiff’s case fails.

   [2]The question being one of the interpretation of the guarantee in question: see Hancock v Williams (1942) 42 SR (NSW) 252, 256; Wood Hall Ltd v The Pipeline Authority (1979) 53 ALJR 487, 492

1. The remaining issues concern the precise state of the account between the plaintiff and the first defendant, and thereby extent of any obligation of the present respondent.  The first of them concerns entries made by the plaintiff in the loan account statements on 23 December 2004, by which the second loan was increased by $96,490 and the first loan reduced by the same amount.  The effect was to increase the interest payable.  This may have been the subject of agreement between the plaintiff and the first defendant.  If so, for reasons already given the second defendant would be liable for the debt as varied.  But I am not satisfied that this was a subject of an agreement between the plaintiff and the first defendant.  The issue has not been the subject of any factual investigation within this summary judgment application.  That is understandable from the plaintiff’s perspective, because as appears from a calculation made for the plaintiff,[3] the difference in interest to 31 October 2005 is $8,247.92 and to the date of this judgment the difference is $8,846.74.  That should be deducted from the amount for which judgment should otherwise be given.

   [3]           Exhibit CHS 21 to the affidavit of Mr Stride filed on 6 February 2006.

1. Next there is an issue as to a so called extension fee of $16,730.20.  It was paid by the first defendant but the second defendant suggests that this was a fee paid for an extension of the “maturity date” of the loans which was not forthcoming so that the first defendant was and is entitled to a repayment of it.  He then says that only an amount of $3,230.20 was adjusted in the borrower’s favour instead of the full $16,730.20.  The ultimate onus here is upon the plaintiff.  But on this point, the respondent challenges the state of the account, as proved by the plaintiff.  I am not persuaded that the respondent has raised by this point an issue to be tried.

1. The next point concerns a default administration fee of $27,500.  The plaintiff’s evidence is that this fee is payable by the first defendant, and pursuant to clause 8.16 of the loan agreements, which provides that in addition to payment of the default rate of interest, the plaintiff will be entitled to fees for administrative procedures resulting from events of default.  There is evidence for the plaintiff that MFS Administration Propriety Limited has sent an invoice to the plaintiff for such services and in the sum of $27,500.  The defendant’s evidence is to the effect that he does not know how this amount is calculated so that he disputes it.  In the light of the plaintiff’s evidence that the expense of $27,500 was incurred for the provision of services to the plaintiff consequent upon the borrower’s defaults, the defendant raises no issue to be tried in this respect.

1. Next he challenges the amount of the legal fees charged to the accounts of the first defendant.  The plaintiff’s solicitor deposes that those fees have been charged and that they are reasonable.  The defendant swears that he has been advised by his (former) legal representatives “that on the face of the material, for the work that would have been necessary and consequent upon the termination of the loan, the level of such fees is extraordinary.  He asks for a “full disclosure of the plaintiff’s records subsequent to termination of the loan agreements”.  Clause 8.1 of the loan agreements in each case provides that all costs, including legal costs on a “full indemnity basis” between solicitor and client and other amounts incurred or paid by the lender shall be for the account of the borrower.  The most recent affidavit of the plaintiff’s solicitor sets out in some detail the various fees and expenses involved, most of which do not involve fees to his firm.  As he also correctly points out, the defendant’s affidavit wrongly calculates the fees and expenses as $100,486.54 whereas the true figure (as appears from the same documents for which the defendant has made his calculation) is a total of $67,899.92, and much of that relates to the payment by the solicitors of other consultants and expenses.  In that respect, there was a mortgagee’s sale.  The defendant’s evidence and argument raises no issue of substance in the face of the plaintiff’s evidence.

1. Next the respondent disputes a valuation fee of $5,500.  According to the plaintiff’s solicitor, in November 2004 the plaintiff commissioned a valuation in relation to the property mortgaged for these loans, and an oral advice was given prior to the mortgagee’s auction in March 2005.  The likely fee to be charged by the valuer is $5,500, the solicitor says.  But curiously no account has been sent by the valuer and I am not persuaded that the plaintiff is obliged to pay this or some other particular sum to the valuer such that it now forms part of the debt which is owing.  It should be deducted.

1. Lastly the defendant complains that some of the proceeds of the plaintiff’s sale of the secured property were not credited until some 14 days after the settlement.  The sale settled on 1 March 2005, and part of the proceeds were credited on that day to the first loan.  But an amount of $1,063,490.10 from the proceeds was not credited in the debtor’s favour until it was put against the second loan on 14 March 2005.  The plaintiff’s argument is that this was not an unreasonable period.  But there is at least an issue as to why it was not applied immediately in the debtor’s favour.  The amount for which summary judgment should be given should be reduced for the interest which accrued on that sum of  $1,063,490.10 at the rate of 25 per cent for the 14 days ($10,197.85 plus the interest on that from 14 March 2005 to the date of this judgment: $2,353.88).  This results in a reduction for this point of $12,551.73.

1. The plaintiff ultimately sought judgment in the sum of $269,994.89 made up as follows:

Balance under the first loan to 31.10.05  $  81,623.36
Interest thereon to 6.2.06  $    3,287.30
Balance owing under the second loan as at 31.10.05   $142,517.96   
Interest thereon to 6.2.06  $    9,566.27
Default administration fee  $  27,500.00
Valuation fee  $    5,500.00

Total  $269,994.89

1. The plaintiff would seek further interest for the eight days from 6 February to the date of this judgment which, for the first loan, is another $268.34 and for the second loan another $780.91  To today’s date, the plaintiff would therefore seek $271,044.14. 

1. That amount should be reduced firstly by the sum of $12,551.73 referred to in paragraph [15]. There should also be deducted the sum of $8,846.74 referred to above at [10]. The valuation fee of $5,500 should be deducted. The result is that the plaintiff should have judgment against the second defendant in the sum of $244,145.67.

1. I will hear the parties as to costs.