Pico Holdings Inc v Dominion Capital P/L
[2001] VSC 334
•30 August 2001
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
No. 6630 of 2001
| PICO HOLDINGS INCORPORATED | Plaintiff |
| v | |
| DOMINION CAPITAL PTY. LTD. | Defendant |
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JUDGE: | BONGIORNO, J. | |
WHERE HELD: | MELBOURNE | |
DATE OF HEARING: | 30 AUGUST 2001 | |
DATE OF JUDGMENT: | 30 AUGUST 2001 | |
CASE MAY BE CITED AS: | PICO HOLDINGS INC. v. DOMINION CAPITAL PTY. LTD. | |
MEDIUM NEUTRAL CITATION: | [2001] VSC 334 | |
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Judgment summons – Promissory notes – Partial judgment in foreign currency – Partial leave to defend.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr. M. Pearce | Gilbert & Tobin |
| For the Defendant | Mr. J. Styring | Malleson Stephen Jaques |
HIS HONOUR:
This action has been brought by the plaintiff in respect of two promissory notes, one of which is dated 9 September 2000 and the other is dated 22 December 2000.
The first is in the sum of $US1m, and is payable on 6 September 2001. The second is in the sum of $US1.2m, and was originally payable on 5 January 2001, but was subsequently extended unilaterally by the plaintiff to a date in April 2001.
The plaintiff has proved the existence of each of those promissory notes and has proved that the note payable ultimately in April has not been met. It has also pointed to evidence upon which it relies to prove the proposition that collateral due to be delivered in respect of the first note of 9 September 2000 was never delivered, and has said that evidence exists that in any event that collateral had already been pledged to some other lender in breach of an breach of an express warranty given by the defendant. It relies upon an implied term in the note to the effect that the non delivery of the collateral, or the delivery of collateral which did not meet the description required in the note, was itself a breach of the note entitling it to be called up immediately thus entitling the plaintiff to repayment of the full amount of the note plus interest.
With respect to that note, the defendant raises by its material a somewhat remarkable conversation between Mr Voss of the defendant and Mr Webb of the plaintiff which supports a submission that the note was created by an agreement between the plaintiff and the defendant solely to mislead the plaintiff's auditors, so that in fact no sum of a million dollars was ever due and owing. Such sum in fact represented merely a payment of a fee by the plaintiff to the defendant in respect of other transactions with which this action is not concerned. The agreement allegedly reached in the conversation was to mislead the plaintiff's auditors in respect of the true facts.
The plaintiff replies by pointing to a number of documents which it says demonstrate an admission by the defendant that the sum was and is still owing.
The most significant of these documents is a letter sent by the plaintiff to the defendant and then countersigned by the defendant and returned acknowledging unequivocally the existence of the $1m debt on the relevant promissory note. I am referring to Exhibit JH15 to the affidavit of Mr Hart of 27 August 2001.
That letter, which is dated 8 February 2001, is, in terms, a request to the defendant to confirm an amount receivable by the plaintiff of $1m on that note. The defendant, by its managing director, Mr Voss, has countersigned that letter acknowledging the debt. It appears to have been returned to the plaintiff under cover of another letter which, in terms, does nothing to detract from the acknowledgement in the 8 February 2001 letter.
There is a another document relied upon by the plaintiff, and that is the handwritten document which may be part of a document dated 18 May 2001, and which refers to this promissory note being assigned to another company. The plaintiff says that the amount attributed to that promissory note identifies it as the relevant promissory note.
On an application for judgment such as this the test to be applied is whether the plaintiff has proved its case and whether the defendant has an arguable defence. Mr Pearce for the plaintiff acknowledges that if the conversation in which Mr Webb and Mr Voss are alleged to have agreed to create the note solely for the purpose of misleading the plaintiff's auditors in fact occurred and the note was constructed as a result of it and not as a result of a loan, then the defendant would have a defence.
It seems to me that notwithstanding very serious issues of credit which attach to the evidence of Mr Voss (he having, in effect, deposed to having engaged in a conspiracy to mislead the plaintiff's auditors) having regard to that conversation and to what appears from the documents to which I have referred, there does appear some semblance of a defence in the defendant so far as this note is concerned. It is not appropriate for me to say any more than that. In respect of that note, the defendant should have leave to defend.
The story is different with respect to the note payable originally on 5 January for $1.2 million. No defence has been suggested other than matters going to the note itself. It is not suggested that the money is not owed.
Mr Styring on behalf of the defendant says that the terms of the note itself were not complied with by the plaintiff so as to deprive it of the right to judgment at this time.
He says firstly that the payee is required by the note to designate a place of payment, and that that not having been done, the note is not callable until such designation has occurred. I reject that submission. Not only is it not open on a proper construction of Clause 1 of the note, it is not open on the evidence which includes numerous demands for payment by the plaintiff both orally and in writing on which it can be at least inferred that the place of payment was to be the place from which those demands were made.
The next point taken by the defendant is that the plaintiff extended the time for payment of the note without consultation with the defendant. This point likewise has no merit. The plaintiff has simply given the defendant an indulgence which it is entitled to do. The terms of the note itself are clear that no such indulgence should act as a waiver of the plaintiff's rights. I am referring to Clause 9. That defence has no merit.
Mr Styring suggested that there might be an estoppel created by representations of fact made by the plaintiff in the course of negotiation with the defendant in relation to a general rearrrangement of its business affairs. That estoppel is not supported by the facts. It does not constitute an arguable defence.
Finally, Mr Styring pointed to the jurisdictional question as raising a defence. The exclusive jurisdiction of the Californian court which might have been the appropriate jurisdiction in which to bring this action has now been bypassed by subsequent events. By holding as I did this morning that the defendant is no longer entitled to rely upon that conferring of exclusive jurisdiction on those courts that matter disappeared as a defence. It goes not to the merits of the debt owed, but rather to a procedural question of where the action should have been pursued. It is not an answer to a judgment submission at this stage.
It is not suggested nor could it be suggested, I suspect, that there was any defence available under Californian law which was not available under Victorian law. If there had have been I would have expected that to have been raised with appropriate evidence as to what that law was. That has not been done and accordingly there is no basis for a defence based upon either the exclusive jurisdiction clause, or the clause immediately preceding it, that is the clause which imports the law of California into any litigation in respect of these notes.
I might add that even if there was as a matter of fact some principle of law of the State of California which would have afforded the defendants some defence, the failure of the defendant to bring forward evidence of that law means that this Court must assume the law of California to be the same as the law of Victoria. If there is no defence in Victoria, there is, by the application of that presumption, no defence in California.
In my opinion the plaintiff is entitled to judgment in respect of the note of 22 December 2000. The orders I will make will be as follows:
(1)There will be judgment for the plaintiff in the sum of $US1.2m with interest at 12 per cent from 22 December to the date of payment.
(2)The defendant is otherwise to have unconditional leave to defend limited to the plaintiff's claim in respect of the action brought upon the promissory note of 9 September 2000.
(3)The costs of this application be costs in the cause.
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