Police and Nurses Ltd v Betts
[2014] WADC 91
•22 JULY 2014
POLICE & NURSES LTD -v- BETTS [2014] WADC 91
| DISTRICT COURT OF WESTERN AUSTRALIA | Citation No: | [2014] WADC 91 | |
| Case No: | CIV:3150/2013 | 11 JULY 2014 | |
| Coram: | DEPUTY REGISTRAR KUBACZ | 22/07/14 | |
| PERTH | |||
| 11 | Judgment Part: | 1 of 1 | |
| Result: | Application dismissed | ||
| PDF Version |
| Parties: | POLICE & NURSES LTD TREVOR STANLEY JOHN BETTS PHILLIPE STEINIER |
Catchwords: | Practice and procedure Plaintiff's application for summary judgment Application out of time Whether extension should be granted Whether signing guarantee was induced by unconscionable conduct Turns on own facts |
Legislation: | Australian Securities and Investments Commission Act 2001 (Cth) s 12CB |
Case References: | Ansearch Ltd v Wavtech Pty Ltd [2006] WASC 184 Deputy Commissioner of Taxation v Roget [2014] WADC 25 Esanda Finance Corporation Ltd v Spence Financial Group Pty Ltd [2006] WASC 177 Fancourt v Mercantile Credits Ltd (1983) 154 CLR 87 Moscow Narodny Bank Ltd v Mosbert Finance (Aust) Pty Ltd [1976] WAR 109 |
JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
- IN CIVIL
- Plaintiff
AND
TREVOR STANLEY JOHN BETTS
PHILLIPE STEINIER
Defendants
Catchwords:
Practice and procedure - Plaintiff's application for summary judgment - Application out of time - Whether extension should be granted - Whether signing guarantee was induced by unconscionable conduct - Turns on own facts
Legislation:
Australian Securities and Investments Commission Act 2001 (Cth) s 12CB
Result:
Application dismissed
Representation:
Counsel:
Plaintiff : Mr B C Smith
First-named Defendant : Mr P Lafferty
Second-named Defendant : Not applicable
Solicitors:
Plaintiff : Gadens Lawyers
First-named Defendant : Kings Park Corporate Lawyers
Second-named Defendant : Not applicable
Case(s) referred to in judgment(s):
Ansearch Ltd v Wavtech Pty Ltd [2006] WASC 184
Deputy Commissioner of Taxation v Roget [2014] WADC 25
Esanda Finance Corporation Ltd v Spence Financial Group Pty Ltd [2006] WASC 177
Fancourt v Mercantile Credits Ltd (1983) 154 CLR 87
Moscow Narodny Bank Ltd v Mosbert Finance (Aust) Pty Ltd [1976] WAR 109
1 DEPUTY REGISTRAR KUBACZ: This is an interlocutory application, brought by way of chamber summons dated 11 April 2014, in which the plaintiff applies for orders against the first-named defendant that:
1. The action be removed from the inactive cases list;
2. The time for filing an application for summary judgment be extended to the date of the application;
3. The entry for trial milestone be extended pending the outcome of the application;
4. Pursuant to O 14 r 1 of the Rules of the Supreme Court 1971 judgment be entered in favour of the plaintiff against the first-named defendant in the following terms:
(a) The first-named defendant pay to the plaintiff the sum of $455,790.93 plus interest from 23 December 2013 at the rate of 6% per annum pursuant to s 32 of the Supreme Court Act 1933; and
(b) The first-named defendant pay the plaintiff's costs of the action including the costs of the application for summary judgment to be taxed.
1. The affidavit of Tamara Elise Strack dated 10 April 2014; and
2. The affidavit of Andrew Sharpes dated 9 April 2014.
3 In opposition the first-named defendant filed one affidavit dated 21 May 2014.
Removal from the inactive cases list
4 I heard submissions regarding the removal of the matter from the inactive cases list and following in light of these submissions and the fact that the first-named defendant neither consented nor opposed the application, I made orders on 11 July 2014 that the matter to be removed from the inactive cases list and the entry for trial milestone reset to 30 January 2015.
Should the plaintiff be granted leave to make its application for summary judgment out of time
5 The plaintiff’s application filed on 11 April 2014 is 'out of time' by approximately six months.
6 There are no firm laws as to when an extension ought be granted as this is a matter for the court's discretion upon a consideration of all the circumstances of the case. Central to the exercise of that discretion is whether there has been a prejudice to the defendant occasioned by the delay.
7 The delay is explained by the plaintiff in the affidavit of Tamara Elise Strack dated 10 April 2014 and in summary is on the basis that the parties had been conferring regarding the plaintiff's intention to bring such application since 28 October 2013, and in the meantime a request for further and better particulars of the statement of claim was made and answers provided and a defence and counterclaim filed by the first-named defendant.
8 Discussions between the plaintiff and first-named defendant regarding the basis of the summary judgment application were ongoing until 24 February 2014, after which time it appears discussions ceased and the application was finally filed with the court in April 2014.
9 In oral argument, the first-named defendant submitted that the prejudice was in the time factors taken to bring the application and the costs associated with the delay.
10 Given that the first-named defendant’s solicitors were well aware of the plaintiff's intention to file a summary judgment application since the commencement of its involvement in the matter and that in the months of discussion between the parties regarding the issue, no objection was raised by the first-named defendant nor were any costs implications discussed, I do not believe that the time taken to make this application has had any great additional cost implications to the first-named defendant.
11 For the reasons above, it does not appear to me that the first-named defendant has suffered any real prejudice in the plaintiff bringing the application out of time.
12 I am satisfied that the plaintiff has shown that the delay was justifiable in the circumstances and that the first-named defendant has failed to show any prejudice. I therefore grant leave to the plaintiff to make the application out of time.
Summary judgment
13 The principles of when a court should allow an application for summary judgment are well established and are summarized by this court in the matter of DeputyCommissioner of Taxation v Roget [2014] WADC 25 (Davis DCJ).
14 I therefore do not propose to outline the principles in any great detail apart from to mention the salient principles relevant to this application.
15 First, that the power to order summary judgment should be exercised with great care and should never be exercised unless it is clear that there is no real question to be tried (Fancourt v Mercantile Credits Ltd (1983) 154 CLR 87, 99).
16 Second, that the defendant must show by affidavit or otherwise that there is some triable issue either of fact or law, and that he has an arguable defence or a defence on the merits (Moscow Narodny Bank Ltd v Mosbert Finance (Aust) Pty Ltd [1976] WAR 109, 110 - 111).
17 Third, if after argument, there remains a real uncertainty about the plaintiff's right to judgment without further investigation of the facts, summary judgment must be refused (Ansearch Ltd v Wavtech Pty Ltd [2006] WASC 184, 28).
The plaintiff's claim
18 The plaintiff relied on the affidavit of Andrew Sharpes sworn 9 April 2014 to verify the following facts:
1. On or about 2 March 2005 the plaintiff entered into a written loan agreement with Bertram Heights which was varied in writing on or about 27 September 2005, 2 November 2006 and 21 August 2007.
Pursuant to the loan agreement:
(a) Bertram Heights borrowed the sum of $2,589,460 from the plaintiff;
(b) Bertram Heights agreed to pay the loan amount to the plaintiff in accordance with the terms and conditions of the loan agreement;
(c) Bertram Heights agreed to pay interest to be calculated daily on the unpaid daily balance of the loan amount at a variable interest rate, which was 8.31% per annum as at 3 September 2013, until the loan amount was repaid;
(d) Bertram Heights provided security to the plaintiff by way of a registered mortgage over a property located at 101 Johnson Road, Bertram in the State of Western Australia;
(e) The plaintiff advanced the loan amount to Bertram Heights;
(f) The whole of the amount owing under the loan agreement became payable at the expiration of the term of the loan agreement on or about 13 August 2008.
2. By a deed of guarantee and indemnity dated 2 March 2005 between the plaintiff and defendants which was varied in writing on or about 27 September 2005, 2 November 2006 and 21 August 2007, each of the defendants:
(a) Jointly and severally guaranteed the due and punctual payment by Bertram Heights of all moneys, including interest, owing to the plaintiff under the loan agreement; and
(b) Agreed to pay to the plaintiff on demand any money that Bertram Heights did not pay on time in accordance with the loan agreement.
3. As at 11 September 2012 Bertram Heights had failed to pay the sum of $1,431,111.62 to the plaintiff when it was due and by that failure Bertram Heights was in default under the loan agreement and the defendants became liable to pay that amount to the plaintiff pursuant to the guarantee.
4. The plaintiff issued a notice of demand to both Bertram Heights and the defendants on 11 September 2012 demanding the payment of the full amount owing within seven days.
5. The money was not paid and so the plaintiff proceeded to sell the secured property on 4 September 2013, which sold for the sum of $1,149,656.54.
6. The shortfall of the sale and the amount owing was $437,392.22. As at the date of the account closing the amount outstanding was $455,790.93.
19 In my view, on the evidence before me, the plaintiff has satisfied the requirements of O 14 of the Rules of the Supreme Court and the first-named defendant must establish that there is some triable issue of fact or law that would give rise to a defence to the plaintiff's claim.
The position of the first-named defendant
20 In his defence and counterclaim dated 27 November 2013, the first-named defendant pleads, in essence two grounds in defence of the plaintiff's claim:
1. First, that the guarantee has no legal effect as the plaintiff failed to exercise its duties under the Code of Banking Practice (Banking Code) by failing to provide the required information and notices under the code regarding guarantees and for not advising the first-named defendant to obtain independent legal advice or to think about signing the guarantee overnight.
2. Second, that by virtue of the plaintiff's unconscionable conduct, pursuant to breaches of s 12CB of the Australian Securities and Investments Commission Act 2001 (Cth) (the ASIC Act) the guarantee is unenforceable.
21 I note that the defence does not clearly articulate the relevant relief sought, but that is not a matter for determination by me.
22 In his affidavit dated 21 May 2014, the first-named defendant appeared to abandon the defence under the Banking Code and relies solely on the defence of unconscionable conduct. This was confirmed by counsel in oral submissions. However, the first-named defendant still wished to rely on the provisions of the Credit Union Movement Credit Union Code of Practice (Credit Union Code) as a ground to support the unconscionable conduct defence.
23 With respect to the unconscionable conduct claim, in his affidavit, the first-named defendant deposes that toward the end of 2004, a bank manager of the plaintiff, named Richard Mulroney, circulated the loan documents and guarantee documents for signing by both defendants.
24 He further deposes that:
1. He liaised with Mr Mulroney with respect of the documents and informed him that there was a delay in the Company signing the documents;
2. That he informed Mr Mulroney on several occasions that he was not a shareholder of the Company that that he should not sign the guarantee because the second named defendant was already providing the guarantee and that should be sufficient to the plaintiff;
3. He informed Mr Mulroney that he was not prepared to sign the guarantee;
4. Mr Mulroney informed him that to change the loan document at such a late stage to reflect his decision not to sign the guarantee would take time and would need to go to the board of the plaintiff for approval;
5. Irrespective of that, he was not prepared to sign the guarantee;
6. Mr Mulroney said, words to the effect that:
(a) The guarantee would not cause him any grief and that he should just sign it;
(b) By not signing the guarantee would cause delay to the Company acquiring the land as the board would require time to assess the decision not to provide a guarantee;
(c) It was more of a problem than it was worth and there was no real issue in him providing the guarantee; and
(d) It would not look good for Mr Mulroney as a senior officer of the plaintiff at that late stage to request the board to approve amendments to the loan documents.
7. Mr Mulroney advised him on 2 March 2005 that not to sign the guarantee may result in the plaintiff deciding to withdraw its financial support to the Company; and
8. That by reason of the above, he felt pressured to sign the guarantee and felt that he had no other option than to sign the guarantee to avoid the delays Mr Mulroney advised him of.
9. He therefore reluctantly signed the guarantee.
25 The first-named defendant also claims that at no stage was he advised to obtain independent legal advice before signing the guarantee, as required under the Credit Union Code, and that this gave rise to further unconscionable conduct.
Determination
26 I will deal firstly with the issue raised by the first-named defendant under the Credit Union Code.
27 Clause 17.1(ii) of the Credit Union Code specifically excludes the need for Credit Unions to provide guarantors with the option to seek independent legal advice as to the terms and obligations under the guarantee if the guarantor is a director, secretary or member of the borrower corporation or its related entities.
28 There was therefore no requirement under the Credit Union Code for the plaintiff to advise the first-named defendant to obtain such legal advice as he has admitted in his affidavit that he was a director at all relevant times of the borrower company. Further the Credit Union Code is a voluntary code of conduct and does not form binding law.
29 For these reasons, I find that there is no basis in the first-named defendant's submissions that a purported breach of the Credit Union Code supports an unconscionable conduct claim and this therefore does not give rise to a triable issue.
30 I turn now to the issue of unconscionable conduct under the ASIC Act.
31 The plaintiff submitted in oral argument that it is necessary for me when determining that there is a triable issue that I must be satisfied that every element of the defence, namely unconscionable conduct, must be made out by the first-named defendant. In support of this, the plaintiff referred to the decision of Master Newnes, as he then was, in the matter of Esanda Finance Corporation Ltd v Spence Financial Group Pty Ltd [2006] WASC 177. Although Master Newnes did detail the reasons why there was no triable issue by reference to the elements of unconscionable conduct, I do not agree that that case states that the defendant needs to make out all the elements of unconscionable conduct. That to me is a matter for the judge.
32 What does arise from that case is the importance of taking great care and consideration to dismiss a matter summarily when the outcome of the disputed issue turn on the facts. Master Newnes stated [43]:
The need for caution is nowhere more important than where the ultimate outcome turns upon the resolution of some disputed issue or issues of fact: Webster v Lampard(1993) 177 CLR 598. It was never intended that when the facts are in dispute, actions should be disposed of summarily: White v Johnston (1886) 8 ALT 53. But if after argument there remains real uncertainty as to the plaintiff’s right to judgment without further investigation of the facts, summary judgment must be refused: Australian Can Co Pty Ltd v Levin & Co Pty Ltd [1947] VLR 322.
33 The present case before me goes much further than the facts in Esanda Finance Corporation Ltd v Spence Financial Group Pty Ltd in that the first-named defendant alleges that it was represented to him personally and directly by the plaintiff, not via an agent, that 'the guarantee would not cause him any grief'.
34 If this allegation is made out, it appears to me that this could form the basis of unconscionable conduct pursuant to the ASIC Act. My finding would be different if the only allegation made by the first-named defendant was solely that he was told that if he did not sign the guarantee then there would be delays in providing the loan and the loan might fall through. This is not a ground for unconscionable conduct. However, the allegation that the plaintiff said that 'the guarantee would not cause him any grief' to me requires further investigation of the facts before it can be determined whether this falls within the realms of unconscionable conduct.
35 I note the defence and counterclaim filed on behalf of the first-named defendant on 27 November 2013 makes no reference to the allegation that Mr Mulroney said the words 'the guarantee would not cause him any grief' and a trial judge may find that relevant to the credibility of whether the alleged statement was in fact made. However, if it were accepted such statement was made, in my view, this could be sufficient to have led the first-named defendant to believe that the rights against him as a guarantor would never be enforced. His subsequent signing further acknowledgements would not be contrary to such a belief.
36 Further, it is not necessary for the first-named defendant to establish that he did not understand the nature of a guarantee as it is open to a trial judge to find that this fact was the reason he was reluctant to provide a guarantee. The first-named defendant's claim is, in essence, that he was induced to believe the guarantee would not be enforced.
37 In this case, given the issues of fact and law that arise from the first-named defendant's affidavit, I am unable to say that there is no real question of fact or law to be tried and I am of the opinion that there remains a real uncertainty about the plaintiff's right to judgment without further investigation of the facts, particularly given the first-named defendant's claim of unconscionable conduct on the part of the plaintiff.
38 Accordingly, I am of the view that there is a real question to be tried on whether Mr Mulroney made such a statement, and if so whether that statement induced the first-named defendant to sign the guarantee thereby making it unconscionable for the plaintiff to now rely on its rights under the guarantee.
39 In these circumstances, and for the reasons outlined, the plaintiff's application for summary judgment is dismissed.
40 I will hear the parties on the final orders to be made, including the costs of the application.
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