Picca & Cioffi v Pamaco Pty Ltd & Anor No. DCCIV-02-885

PICCA & CIOFFI V PAMACO PTY LTD & ANOR
[2003] SADC 176
Judge Kitchen
Appeal Against the Decision of a Master

This is an appeal against an order of a Master made on 30 May 2003 that, pursuant to DCR-25.02, judgment be entered for the respondents (the plaintiffs in the action) against the appellants (the third and fourth defendants in the action) for damages to be assessed.
The respondents’ action was instituted on 14 June 2002 against Memoria Pty Ltd (“Memoria”), Geoffrey Joseph Anderson (“Mr Anderson”), Genaro Picca (“Mr Picca”) and Edward Cioffi (“ Mr Cioffi”). The claim against Memoria alleged breaches by Memoria as the respondents’ lessee of premises at Pirie Street, Adelaide (the premises) under a lease dated 26 February 2001; the alleged breaches were Memoria’s failure to pay rent and other outgoings between 1 January 2001 and 1 June 2002 totalling, with interest, $161,397.21,. The claim against Messrs Anderson, Picca and Cioffi was as guarantors of Memoria’s payment, and other, obligations under the lease pursuant to a guarantee (the guarantee), forming part of the lease, executed by them as directors of Memoria.
The substance of the defence filed by Messrs Picca and Cioffi was:
1.(a)     that they executed the guarantee on or about 31 January 2001 and they were the only parties who had executed either the guarantee or the lease at that time.
(b)       that on 23 February 2001 they informed the plaintiffs they would not     be proceeding ‘as partners’ in the Business and hence they would not accept any liability under the guarantee. The “Business” was identified in the defence to be the premises, the subject of the lease, upon which the personal defendants “as partners” were to use Memoria to establish a wine and restaurant business.
(c)    that on 23 February 2001 the personal defendants executed an agreement to record the terms upon which they ‘dissolved’ their intended relationship as ‘partners’ in the Business.
(d)    that notwithstanding they had informed the plaintiffs on 23 February 2001 they would not accept any liability under the guarantee the plaintiffs executed the lease, and an agreement to provide Memoria “100% vendor finance in respect of the liquor licence and goodwill associated with the premises.
2.that the lease dated 26 February 2001 was tainted by illegality as a conspiracy between the plaintiffs and Anderson to defraud the Commissioner of Taxation, and is therefore unenforceable, the allegation being that the rent of $110,000, for the first year of the lease term, included $50,000 for the price of plant and equipment at the premises, the subject of the lease, sold by the plaintiffs to Memoria.
In their reply to the defence of the third and fourth defendants, the plaintiffs denied, inter alia, what I have set out as the substance of the defence.
The respondents’ application for summary judgment against the appellants was filed on 28 February 2003; it was supported by the affidavit of Antonio Cocchiaro (“Mr Cocchiaro”), a shareholder and director of the second respondent sworn on 26 February 2002 . Both respondents, as trustees, are registered as the proprietors of the land the subject of the lease.
No affidavit was filed by the appellants in relation to the respondents’ application, although they were given leave to do so; they were represented by a solicitor at the hearing of the application.
In his reasons for the order he made granting the respondents’ application, the Master summarised the contents of Mr Cocchiaro’s affidavit and the pleadings, and reviewed (at paragraphs 24-36 of his reasons) a number of authorities bearing on the issue of the exercise of the power to order summary judgment, reminding himself that it is to be exercised with great care and should never be exercised until it is clear there is no real question to be tried (Fancourt and Another v Mercantile Credit Ltd (1983) 154 CLR 87 at 99); the Master directed himself that the onus is upon a plaintiff, on the balance of probabilities on the whole of the evidence, to show an entitlement to the relief sought, which necessarily requires the plaintiff to persuade the court that on the evidence there is no fair or reasonable probability of the defendant having a real or bona fide defence (Banque de Paris et des Pays-Bas (Suisse) SA v de Naray (1984) 1 Lloyd’s Rep 21 followed in Commonwealth Bank of Australia v Wallis (1995) ATPR 40317).
The Master concluded that the submission by the appellants’ solicitor that the lease was not signed by the respondents until after 23 February 2001, that is after the appellants allegedly informed the respondents to the effect they would not proceed and withdrew from their proffered guarantee, was contrary to the evidence of Mr Cocchiaro that the lease was executed by the parties to it prior to 23 February 2001 and was not controverted by any sworn evidence from the appellants.
The Master further concluded, for the reasons he gave, that the contention the lease was unenforceable on the grounds it was tainted by the alleged illegality was unsustainable.
The notice of appeal, which is extensive, complains in substance that the Master erred in his conclusions of law and his findings of fact in deciding that there was no real question to be tried and that the appellants were bound to fail.
On the hearing of the appeal there was a wholly different approach from the stated grounds. Rather than try to summarise what counsel for the appellants explained to be the basis on which the appeal was pursued, I will set out the relevant part of his submission.
“This will be an unusual appeal, in the sense that very little criticism is made of the decision of Master Rice and the manner in which he approached the task that he had before him, which was to deal with the application for summary relief.
The only criticism that can be made, unfortunately, is that of the third and fourth defendant’s previous solicitor, who, for reasons which we need not go into, decided he would attempt to defend this application without advising the third and fourth defendants that the application had been made, providing them with an opportunity to comment on it, or to provide instructions and, more importantly in applications of this nature, to file answering affidavits where there was to be a dispute as to the assertions made by the deponent to the affidavit in support of the application for summary relief. So, we have a very unusual set of facts, in that the third and fourth defendants - and this is deposed to in the affidavits of Mr Picca and Mr Cioffi, were simply unaware that this application had been made by the plaintiffs and were only advised of it after the order had been made by Master Rice and they were looking down the barrel of a judgment being entered against them, and it’s just a question really of assessment of damages.
So, the first hurdle that the appellants must overcome, absent any further evidence - and there’s an affidavit which is in the appeal book which your Honour can or cannot have regard to, depending on how you treat my application - is that there are very good grounds to support an application to your Honour to exercise your powers pursuant to rule 97.10 of the rules and 97.10B, which permits your Honour, in the exercise of your discretion, to receive any further evidence on any question of fact.”
Section 43(2) of the District Court Act (DCA) provides to a party a right of appeal to a judge of the court against a judgment given in the action by a Master; the appeal is governed by DCR97 which includes DCR97.10 that a judge when hearing the appeal has a discretion to receive further evidence upon any question of fact. By DCR97.01 an appeal against an interlocutory judgment of a Master is to be by way of rehearing.
Counsel for the respondents contended that the judgment entered by the Master was a final not an interlocutory judgment. As Walters J (with whom King CJ agreed) observed in Atco Industries (Aust) Pty Ltd v Ancla Maritima SA and Others (1984) 35 SASR 408 at 410:
“..... it must now be accepted that the proper test to be applied in deciding whether a judgment or order is final or interlocutory is: ‘Does the judgment or order, as made, finally dispose of the rights of the parties?’ (Licul v Corney (1976) 50 ALJR 439), per Gibbs J. (as he then was) at p. 444; Carr v Finance Corporation of Australia (1981) 55 ALJR 397).”
In the present case the Master concluded (paragraphs 41-44) that the guarantee was of the kind by which the guarantors undertook that Memoria would carry out its obligations under the lease and therefore the respondents, upon proof of breach by Memoria, were entitled to damages from the guarantors. By entering judgment for the respondents against the appellants, it is to be inferred that the Master was exercising the court’s power under section 38(1) of the DCA which provides:
“38(1)In an action for damages the Court may give a declaratory judgment finally determining the question of liability between the parties, but leaving the quantum of damages to be determined subsequently.”
Section 38(1) is substantially similar to section 30B(1) of the Supreme Court Act. In Annan v Wayne (1988) 147 LSJS 90 the plaintiff had obtained judgment against the defendant for damages to be assessed, pursuant to section 30B(1). The plaintiff contended that the judgment was a “final” and not an “interlocutory” judgment. O’Loughlin J rejected the plaintiff’s contention: he wrote at page 96:
“I am satisfied on the authority of Hahn v Conley ((1971) 126 CLR 276) that the declaratory judgment obtained in the present proceedings in the name of the plaintiff on 16^th May 1984 was not a ‘final’ judgment and that it cannot be classified as having the same effect as a ‘final’ judgment.”
With respect, I agree. In Hahn v Conley, the plaintiff sued for damages for injuries she suffered when run down by a motor car as she was crossing a road. The defendant driver joined the plaintiff’s grandfather as a third party. The plaintiff, an infant, recovered judgment in the action for $1,388.21 by way of special damages and for an amount of general damages to be assessed; the trial court also adjudged the third party to have been negligent and held him to be responsible for twenty-five per cent of the total damages. The third party’s appeal to the Full Court was dismissed and he then appealed to the High Court as of right, or alternatively applied for leave to appeal. A right to appeal lay only if the judgment against him was a final judgment. At the time the appeal was heard the general damages payable to the plaintiff under the judgment had not been assessed. Barwick CJ wrote (at p.278):
“In my opinion, however, the applicant is not entitled as of right to appeal to the Court from the order for contribution made by the learned trial judge. It is true, as the applicant’s counsel points out, that that order not merely decides the applicant’s liability to make contribution but finally fixed the extent of that contribution expressed as a percentage of a sum yet to be determined. But the judgment in the action in favour of the infant is still not a final order. It is, in my opinion, an interlocutory order and will not be final until the general damages are assessed and judgment entered up for the total amount of damages payable. The order for contribution is in my opinion in no better case than the judgment for the plaintiff. Consequently, in my opinion, the applicant needs this Court’s leave to appeal.”
Accordingly an appeal against an order such as that made in this case is to be by way of a rehearing of the evidence before the Master, with such further evidence as may be received on the appeal.
As I have earlier recorded, the appellants make no criticism of, or challenge concerning, the Master’s findings, his reasons therefor or the order he made upon the material before him and to that extent they effectively abandoned the grounds set out in the notice of appeal. Their contention is that upon the facts averred in the affidavit sworn by Mr Picca on 5 August 2003 the order of the Master should be set aside, and they seek the exercise of the court’s discretion (vide DCR97.10) to receive Mr Picca’s affidavit for that purpose. There is an affidavit sworn by Mr Cioffi on 5 August 2003 on which the appellants also rely, but that is expressed “.... I agree with the entire contents....” of Mr Picca’s affidavit.
By way of narrative, drawn from the respondents’ pleadings and Mr Cocchiaro’s affidavit sworn on 26 February 2003, the respondents’ case was that in October 2000 Mr Cocchiaro was approached by Mr Anderson, whom he knew, with a proposal to take up a lease of the premises to establish a restaurant. Knowing that Mr Anderson had been successful in establishing and running restaurants and cafes, but aware he had some “financial problems”, he told Mr Anderson the respondents would be prepared to lease the premises to a company controlled by Mr Anderson “if there were appropriate guarantors of the lease”, informing him that his (Mr Anderson’s) guarantee alone would not be sufficient. There were subsequent discussions following which Mr Anderson informed Mr Cocchiaro that Mr Picca and Mr Cioffi were experienced in running restaurants and cafes, were involved with him in a café business in Adelaide and would guarantee the proposed lease of the premises; on the basis a guarantee would be given by Messrs Anderson, Picca and Cioffi, Mr Cocchiaro agreed that the respondents would lease the premises to Memoria.
A draft lease was prepared by the respondents’ solicitor, Mr Franco Camatta, and sent by him to a firm of solicitors under cover of a letter dated 31 October 2000. A copy of the letter, which is exhibited to Mr Cocchiano’s affidavit, has the handwritten postscript “PS This draft is awaiting out clients’ approval and is subject thereto”. On or about 7 November 2000, Mr Anderson informed Mr Cocchiaro that he “would be dealing with the lease negotiations” and on 11 November 2000 Mr Anderson wrote to Mr Camatta stating, inter alia, he was enclosing a copy of the draft lease “annotated with several suggested amendments ..”
Mr Anderson and Mr Cocchiaro spoke to each other on about 23 November 2000. Under cover of a letter dated 28 November 2000 Mr Camatta sent a final version of the lease to Mr Anderson.
Mr Cocchiaro deposed that “in mid December 2000” Mr Anderson delivered to him “the lease executed by all the defendants” and the respondents then executed the lease.
I pause here to observe that the lease and the guarantee, which are exhibited to Mr Anderson’s affidavit, apparently formed one document. It is not disputed that Messrs Picca and Cioffi signed the guarantee. The common seal of Memoria which is affixed to the lease is stated to have been affixed in the presence of Messrs Anderson and Picca; the signature above the name “Gennaro Picca” appears to my eye to be the same as the signature of Mr Picca on the guarantee.
Mr Cocchiaro deposed that on 15 December 2000 he delivered the lease to Mr Camatta together with two cheques drawn, respectively, by Windsor Heritage Consultants Pty Ltd and 273 Rundle Street Pty Ltd which had been given to him by Mr Anderson in mid-December “to cover the rental and costs associated with the lease including stamp duty”; exhibited to his affidavit are copies of extracts from ASIC which record that Mr Cioffi since 4 October 2000 has been the sole director of the first company and that in December 2000 Messrs Anderson, Picca and Cioffi were directors of the second company.
The lease is expressed to be for a term commencing on 1 December 2000 and expiring on 30 November 2005, with two rights of renewal. Mr Cocchiaro deposed that “The defendants were in occupation of the premises from 1 December 2000 and I handed the keys to (Mr Anderson) well prior to that date to allow him access”.
The page of the lease on which the common seals of the Corporate parties are affixed is headed “Dated 26/2/01”, the numerals being in script. There is no evidence as to who it was wrote that date. The face sheet of the lease, and the guarantee, each bear the stamp of the State Commissioner of Taxation that duty was paid on 27 February 2001.
Mr Cocchiaro deposed that “in or about 23 February 2001” he was contacted by Mr Anderson who informed him an agreement had been reached that Messrs Picca and Cioffi would no longer “be involved in the project”; asked by Mr Anderson what was his view in relation to the guarantee of the lease he told him that “if they found suitable alternate guarantors that we would consider releasing Messrs Picca and Cioffi”. He then received from Mr Anderson a facsimile dated 23 February 2001 which included a copy of the agreement made between Messrs Anderson, Picca and Cioffi by which the appellants agreed, inter alia, to transfer their shares in Memoria to Mr Anderson and resign as directors; it is Exhibit AC8 to Mr Cocchiaro’s affidavit. As the Master observed, paragraph 8 of that agreement includes the words “The transferor(s) procure the written release (from the respondents) ………. of each and every personal guarantee and obligation of (Mr Cioffi and Mr Picca) under the existing lease …….. on condition that (Mr Cioffi and Mr Picca) will be substituted by other person or persons suitable and acceptable by the lessors and vendors”. The Master concluded, emphasising the words “existing lease”, (paragraph 11 of his reasons) that paragraph 8 of the agreement “acknowledges that the defendants had already executed the lease prior to 23 February 2001” and therefore the date 26/2/01 on the lease “as the date of execution cannot be correct”. In my opinion that conclusion was wholly justified.
In his affidavit Mr Picca deposes:
·that his former solicitor did not provide to him a copy of the respondents’ application for summary judgment or the affidavit of Mr Cocchiaro in support of that application and neither did his former solicitor seek his instructions for an affidavit to respond to Mr Cocchiaro’s affidavit.
·that he was not aware an application for summary judgment had been made against him and Mr Cioffi until his former solicitor informed him on 6^th July 2003 that such an application had been made and had been granted.
Concerning the guarantee, Mr Picca deposes that he and Mr Cioffi executed it some time in late December 2000 or early January 2001 and when they executed it they were not provided with or made aware of the terms and conditions of the Memorandum of Lease other than, as he was told by Mr Anderson, that the lease was for premises at Pirie Street, the first year’s rent was approximately $110,000, including the leasing of certain plant and equipment, and the second year’s rent was approximately $60,000. He avers that one Joseph Vilardi (“Vilardi”) who witnessed, or purported to witness, the execution of the guarantee by Messrs Picca and Cioffi, is not known to him and Vilardi did not witness his or Mr Cioffi’s signature. In paragraphs 6-12 of his affidavit Mr Picca deposes:
“6.Shortly after, at a date I cannot accurately recall, but prior to 23 February 2001, Cioffi and I became dissatisfied with how Anderson was proposing to conduct the venture. At this time the business had not commenced trading. I telephoned Cocchiaro and advised him that as between the three of us we had resolved that only Anderson who was to continue to be involved in the venture and that Cioffi and I were not to be involved in any further way in the venture. Cocchiaro initially responded that he did not care whether it was only Anderson involved as Cioffi and I had executed the guarantee to the lease. I restated to Cocchiaro that Cioffi and I wanted nothing more to do with the venture including as guarantor to the lease. Cocchiaro responded using the following words ‘that was fine and that he would be thereafter dealing with Anderson’ (‘the telephone conversation’). From that point I believed that both Cioffi and I had been released from the guarantees.
7.After the telephone conversation, Cioffi and I spoke with Anderson and told him of our conversation with Cocchiaro, that we had told him that we would not be involved further with the venture, and that Anderson should now confirm that with Cocchiaro and put that in writing. Anderson agreed to our request and then in our presence prepared a handwritten document being a transfer of shares dated 23 February 2001 which is exhibited and marked ‘A8’ to Cocchiaro’s affidavit (‘the transfer’). Anderson agreed to have Cocchiaro execute the transfer.
8.Neither Cioffi nor I have any formal legal training or are tertiary educated as is Anderson who at one time practised as a solicitor. Notwithstanding that my understanding was that the Transfer relieved Cioffi and myself of any liability pursuant to the Guarantee.
9.In about March 2001, the business commenced trading. Neither Cioffi or I had not had any association with Anderson, Cocchiaro or the business after February 2001 in respect of the venture and I did not regard myself as having any obligation as a guarantor since the telephone discussion with Cocchiaro referred to in paragraph 7 herein.
10.From March 2001 to May 2001 I had no interest or involvement in the operations of the Pirie Street premises. I took no interest in the financial success or otherwise of the venture as I simply did not believe it was any of my business and certainly I did not believe that I had any financial risk due to the agreement I believed had been reached with Cocchiaro.
11.In about May 2001 Cioffi and I were asked by Cocchiaro to meet with him (‘the meeting’). At the meeting Cocchiaro presented a document which contained figures which appeared to be monies which Cocchiaro claimed were owed by us to the lessor. We asked Cocchiaro why he was chasing us for this money as we had no liability to him. In an attempt to settle the matter, and without admitting any liability Cioffi and I offered to take over the running of the business. Cocchiaro advised that he had already re-entered the premises and would not give us an opportunity to run the business. Further Cocchiaro advised he had somebody interested in leasing the premises and he was very close to signing a new lease but he would not reveal the identity of the proposed tenant.
12.I have only had contact with Cocchiaro on three occasions being the telephone conversation, the meeting and a subsequent telephone conversation with Cocchiaro where I again attempted to resolve the problem by reference to the agreement I maintain we had reached in the telephone conversation.”

In an affidavit sworn on 20 August 2003 in response to Mr Picca’s affidavit, Mr Cocchiaro denies that prior to 22 February 2001 he was either contacted by Mr Picca or had the conversation to which Mr Picca deposes in paragraph 6, and as to the conversation related in paragraph 11 of Mr Picca’s affidavit he avers it was not in May 2001 but after September 2001 and on that occasion he told Messrs Picca and Cioffi he was “seeking money from them as they had guaranteed the lease”; he denied “they offered to take over the running of the business” and says “no proposal was put by them”.
In Pradham v Eastside Day Surgery Pty Ltd and Another ((1999) SASC 256, unreported) Bleby J with whom Doyle CJ and Prior J agreed wrote (paragraph 32):
“There is no doubt that pursuant to Rule 95.15 this Court may in its discretion receive further evidence upon any question of fact. Whether it does so will depend, among other things, on whether it was available at the time and why it was not led before the Master, and whether, if admitted, it is likely to have a material effect on the result. The primary concern should be the interests of the administration of justice.”
and at paragraph 35:
“… the interests of justice require that the evidence be received if it is likely to have a material effect on the outcome of the case, and the plaintiff should not be prejudiced by any failure on the part of his solicitor either to make proper enquiry or to prepare comprehensive affidavits”.
There was no application by the respondents pursuant to DCR-83.12 that Mr Picca be called to be cross-examined upon the content of his affidavit. As to some of that to which Mr Picca deposed, the affidavit of Mr Cocchiaro sworn on 20^th August 2003 deposed to different or contrary facts. There are, however, the averments in Mr Picca’s affidavit that his and Mr Cioffi’s then solicitor did not inform him of the respondents’ application for summary judgment or the affidavit in support of that application, and did not seek his instructions for an affidavit in response; in relation to those matters the respondent’s failure to seek to cross examine Mr Picca upon his affidavit may be taken as an implied acceptance of them – Van Reesema v Wheaton & Ors.(1990) S 2107 judgment of Jacobs J dated 12^th February 1990 (unreported). For the purposes of this appeal I proceed on the basis that such an acceptance is to be implied.
The respondents submitted that Mr Picca’s averment concerning the claimed conduct of his solicitor gave rise to three possibilities; that the solicitor overlooked the need to obtain instructions about the application for summary judgment and the supporting affidavit; or made a deliberate decision it was unnecessary to do so because there was otherwise a good answer to the application; or the solicitor, on the instructions he had before the filing of the application for summary judgment and the supporting affidavit, judged when those documents were received that there was no evidence which could be adduced on affidavit in opposition to the respondents’ application.
As to the last of those possibilities counsel for the respondents identified parts of the appellants’ defence to submit that their solicitor had extensive instructions at the time the defence was filed, and as there was no plea in the defence that Mr Cocchiaro had released the appellants from their guarantee before the respondents executed the lease, as Mr Picca now asserts, it is submitted this is not a case where the solicitor either by inadvertence failed to, or by deliberate decision chose to not, elicit and put before the Master evidence on affidavit of the release asserted by Mr Picca, but rather his apparently extensive instructions necessary for the preparation of the filed defence did not include any such assertion otherwise it would have been included in the defence. The respondents therefore submit that the averment by Mr Picca of there having been a conversation between him and Mr Cocchiaro as Mr Picca deposed occurred, and which Mr Cocchiaro refutes, is not credible.
In support of that submission the respondents also referred to the documents (Exhibit AC8) to the affidavit of Mr Cocchiaro sworn on 26^th February 2003 in support of the application for summary judgment. One of the two documents forming that exhibit is a handwritten document by which the appellants as transferors agreed, subject to the conditions set out in the document, to transfer their respective shares (one each) in Memoria to Mr Anderson or his nominee. It is not disputed that it bears the signature of each of Messrs Picca and Cioffi above the date 23^rd February 2001. One of the conditions, to which I have referred earlier in these reasons, is:
“8. The transferor(s) procure the written release from Pamaco Pty Ltd and Ananco Pty Ltd (or their authorised agent) being lessors and vendors of each and every personal guarantee and obligation of E Cioffi and G Picca under the existing lease and any proposed vendor finance agreement, on condition that E Cioffi and G Picca will be substituted by other person or persons suitable and acceptable by the lessors and vendors.”
It is urged that the provisions of this document are inconsistent with Mr Picca’s averment that prior to 23^rd February 2001 he had the conversation with Mr Cocchiaro which he deposed to in paragraph 6 of his affidavit and on which he and Mr Cioffi rely for their case that they “believed” they had been released from the guarantee.
The asserted conversation between Mr Picca and Mr Cocchiaro was, at least impliedly although with insufficient particulars as to its full substance and effect if Mr Picca’s version of it were to be accepted, pleaded in paragraph 2.7 of the defence. Also in paragraph 2.9 of the defence, as I infer, the agreement dated 23^rd February 2001 made between the personal defendants is pleaded. The respondents filed a reply to the defence; the next step in the proceedings was the respondents’ application for summary judgment in his affidavit in support of which Mr Cocchiaro deposed to a conversation with Mr Anderson on 23^rd February 2001, and the receipt by him on that day of a copy of AC8 and that he had never been contacted by Messrs Picca and Cioffi “in relation to their release from the guarantee and no alternative guarantors have been offered to the plaintiff”.
The Master found that the respondents and Memoria executed the lease, and the appellants executed the guarantee, prior to 23^rd February 2001 and had likely done so before Christmas 2000. Counsel for the appellants urged that until Memoria accepted the “vendor finance” proffered by the respondents it was unlikely that an application made by Memoria for the transfer to it of the relevant licence under the Licensing Act would be granted. Memoria, by the agency of Mr Anderson, informed Mr Cocchiaro in a facsimile letter (the other document forming AC8) to Mr Cocchiaro that, inter alia, “Memoria Pty Ltd is desirous to accept your proposal for vendor finance to facilitate liquor licence transfer, after which an internal transfer will occur always subject to your approval (under the lease and finance agreement).” The lease is dated 26^th February 2001 and it was assessed and stamped for duty on 27^th February 2001.
If judgment is set aside the appellants would wish to challenge the respondents to show that the respondents retained the executed but un-dated lease until the agreement for vendor finance was in place and by the time the respondents “delivered up” the executed lease the respondents were already estopped from any further reliance upon the appellants’ guarantee by reason of the conversation deposed to by Mr Picca. A mere assertion that a defendant wishes to cross-examine the plaintiff or his witnesses is not enough to prevent an order for summary judgment, unless there is sufficient in the defendant’s affidavit to justify putting the plaintiff to proof: Settlement Wine Co Pty Ltd v National and General Insurance Co Ltd (1988) 146 LSJS 150 at 155 per King J.
Were evidence of the matters deposed to by Mr Picca, and the response by Mr Cocchiaro, to have been part of the material to be considered upon the application for summary judgment is it likely to have had a material effect upon the result?
Counsel for the respondents submitted, and I accept, that a creditor and a guarantor may agree to discharge the guarantee, but the rescission is not legally enforceable unless the agreement is either under seal or is supported by consideration; if the agreement is not under seal, then absent consideration the creditors promise may still be effective as a waiver or as an estoppel: The Modern Contract of Guarantee: O’Donovan and Phillips, third edition at page 429. The promise on which the appellants rely was not under seal and it is not contended by the appellants that it was supported by consideration. The respondents say there is no plea of estoppel against them. In my view, however, that would not have been fatal to the appellants’ opposition to the application before the Master; the question is whether on the material properly before the Court the respondents had shown there was no triable issue: Settlement Wine at p. 152 per King CJ.
Where there has been a deliberate decision taken to not adduce evidence it would be “a rare case indeed” in which the court would permit that evidence to be tendered on appeal; Makhoul v Barnes (1995) 60 FCR 572, 577. Here, that which Mr Picca deposes to in paragraphs 2, 3 and 4 of his affidavit is to the effect he had no knowledge of the respondets’ application for summary judgment, he was not asked by his solicitor for instructions concerning the application and therefore he was deprived of the opportunity to attest to facts in opposition to the application. The several possibilities canvassed by counsel for the respondents as to the reasons which motivated the appellants’ solicitor to appear in opposition to the respondents’ application for summary judgment without, as Mr Picca deposes, informing the appellants of the application and obtaining their instructions, do not in my view show this is a case where there was an informed, deliberate decision, on the part of the solicitor not to adduce evidence, and by which the appellants should be bound.
In my view the appellants, on the evidence of Mr Picca, have shown that the court should exercise in their favour the discretion to receive the further evidence they seek to adduce on this appeal.
Where an application is made under DCR-25.02 it is for the applicant to show it is entitled, on the balance of probabilities, to the relief it seeks, and in considering whether or not that onus has been discharged the court looks to the cogency of the defence raised by the respondents’ affidavit – Leasefin Corporation Limited v Clarke & Others (SC) (SA Full Court, Judgment numbered S3660, 16^th October 1992 (unreported).
The appellants, in Mr Picca’s affidavit, assert in effect that in the conversation between Mr Cocchiaro and Mr Picca prior to 23 February 2001 deposed to by Mr Picca, Mr Cocchiaro, on the respondents’ behalf, led the appellants to believe that they were released from their guarantee, and relying upon that the appellants took no further part in the business; the appellants therefore contend that the respondents are estopped from relying on the guarantee.
In Thompson v Palmer (1933) 49 CLR 507 Dixon J. at p.547, identified several circumstances where a party may be required to abide by an assumption made by another party to include a case where he directly made representations upon which the other party founded the assumption. In Grundt v The Great Boulder Pty Gold Mines Ltd (1938) 59 CLR 641, the same learned Judge said, at p.674:
“One condition appears always to be indispensable. That other must have so acted or abstained from acting upon the footing of the state of affairs assumed that he would suffer a detriment if the opposite part were afterwards allowed to set up rights against him inconsistent with the assumption. In stating this essential condition, particularly where the estoppel flows from representation, it is often said simply that the part asserting the estoppel must have been induced to act to his detriment. Although substantially such a statement is correct and leads to no misunderstand, it does not bring out clearly the basal purpose of the doctrine. That purpose is to avoid or prevent a detriment to the party asserting the estoppel by compelling the opposite party to adhere to the assumption upon which the former acted or abstained from acting. This means that the real detriment or harm from which the law seeks to give protection is that which would flow from the change of position if the assumption were deserted that led to it.”
An example of such a case of promissory estoppel is Marac Finance Ltd v Peters, Thompson & Smith (1984) 1 NZBLC 102, 129 in which the plaintiff was held to be precluded from relying on a guarantee by reason of a representation to the defendant that he would be released from his guarantee.
The inconsistency, pointed to by counsel for the respondents, between the conversation asserted by Mr Picca with Mr Cocchiaro to have occurred prior to 23^rd February 2001, upon which the appellants rely for the alleged estoppel, and the contents of the document dated 23^rd February 2001 (part of Exhibit AC8 to Mr Cocchiaro’s affidavit) signed by the appellants and Mr Anderson, does raise questions concerning whether or not the conversation deposed to by Mr Picca occurred to the effect he related. By paragraph 8 of the document, the paragraph set out earlier in these reasons, the appellants agreed with Mr Anderson that the appellants were to procure from the respondents a written release of their guarantee “and any proposed vendor finance agreement, on condition that (the appellants) will be substituted by other person or persons suitable and acceptable by (the respondents)”. However Mr Picca deposes that, notwithstanding the transfer evidenced by the document, his understanding was it released him and Mr Cioffi from their liability under the guarantee, asserting that the document was prepared by Mr Anderson who, at some time, had practised as a solicitor, whereas the appellants had neither any formal legal training nor a tertiary education.
In Wicklow Enterprises v Doysal (1985) 124 LSJS 225, King CJ (with whom the other members of the Court agreed) spoke of the potential mischief of deciding, in applications for immediate relief, complex issues of fact and law by means, inter alia, of a succession of affidavits, and, in the context of deciding whether or not further evidence should be admitted on an appeal against an order made in such applications, cited with approval from the judgment of Bray CJ in Ventura v Sustek (1976) 14 SASR 395. Bray CJ (at p.399) referred to the three conditions which must be fulfilled to justify the reception of such evidence, the last of which is that the evidence must be apparently credible, that is , “the evidence proferred is not so patently incredible that it can be said that on the face of it it is not worthy of any credence”.
In my opinion, the evidence of Mr Picca concerning the conversation he said he had with Mr Cocchiaro and what he said was his reliance upon it in thereafter taking no further part in the affairs of Memoria, cannot be said to be not worthy of any credence. If the applicants are able to make good Mr Picca’s testimony, in his affidavit, about those matters they have at least an arguable case in defence of the respondents’ claim against them; the assessment of that evidence together with all other relevant material and the legal consequences of it should be made after the course of a regular trial and not in a summary proceeding.
Pursuant to DCR 97.10 I exercise the court’s power to receive Mr Picca’s affidavit for the purpose of the appeal.
The appeal is allowed, the order of the Master entering judgment for the respondents against the appellants for damages to be assessed is set aside.
The proceedings are referred to a Master for further orders, or directions, on a date to be fixed by a Master and notified to the parties.
I will hear the parties on the question of the order for costs made by the Master, and the order for costs to be made in relation to this appeal.

[2003] SADC 176

11 December 2003