QBE Insurance (Australia) Limited v Chatfield
[2013] NSWDC 108
•24 June 2013
District Court
New South Wales
Medium Neutral Citation: QBE Insurance (Australia) Limited v Chatfield [2013] NSWDC 108 Hearing dates: 14 and 24 June 2013 Decision date: 24 June 2013 Jurisdiction: Civil Before: P Taylor SC DCJ Decision: 1. Judgment for the plaintiff in the sum of $176,918.32.
2. The defendant to pay the plaintiff's costs assessed on an indemnity basis.
Catchwords: CONTRACT - deposit bond - payment - whether bond payable - construction of terms of bond - construction of bond application - indemnity costs Legislation Cited: Duties Act 1997, s 204, s 207, s 211, s 304 Cases Cited: General Steel Industries Inc v Commissioner for Railways (1964) 112 CLR 125
Macquarie International Health Clinic Pty Ltd v Sydney South West Area Health Service (No 3) [2010] NSWSC 1139
Reliance Developments (NSW) Pty Limited v Lumley General Insurance Limited [2008] NSWSC 172
Toll (FGCT) Pty Limited v Alphapharm Pty Limited (2004) 219 CLR 165Category: Principal judgment Parties: QBE Insurance (Australia) Limited ACN 003 191 035 (plaintiff)
Anne Louise Chatfield (defendant)Representation: Mr M S Henry (plaintiff)
Mr J T Johnson with Mr Kalanter (defendant)
Polczynski Lawyers (plaintiff)
Hickey Law (defendant)
File Number(s): 2013/12938 Publication restriction: No
ex tempore Judgment
QBE Insurance (Australia) Limited
QBE Insurance (Australia) Limited ("QBE") provided a deposit bond for Anne Chatfield in respect of a property in Gloucester Street, The Rocks, that Ms Chatfield contracted to purchase. Subsequently, the vendor purported to terminate the contract and claimed the deposit under the bond, which QBE paid. QBE seeks to recover the amount paid and related expenses from Ms Chatfield, but this is resisted on the basis that QBE was not, in the circumstances, obliged to pay the deposit to the vendor.
QBE seeks summary judgment
Ms Chatfield has applied to amend her defence. As to the proposed amendments no question of prejudice arises. The issues clarified by the amendment were argued as part of the summary judgment application. The only real opposition to the amended defence was on the basis of futility. In these circumstances, the result of the amendment application will follow the result of the summary judgment application.
Background
Ms Chatfield contracted to purchase the property on 5 March 2008. On 29 October 2009, she applied for a deposit bond from QBE. She completed a deposit bond application in which she gave various details including the deposit bond amount ($169,000) and the required duration of the deposit bond (12 months). She noted that she was contributing $950,000 towards the purchase price of $1.69 million and was selling her property in Hope Street, Seaforth, to raise funds for the purchase. The terms and conditions of the deposit bond application were as follows:
"The Parties to this Application
This application is made by you to QBE Insurance (Australia) Limited ("QBE") ABN 78 003 191 035 through its authorised agent Deposit Access Pty Limited ("DA") ABN 60 091 487 553. The reference to QBE and DA includes the successors and assigns of QBE and DA.
For the purposes of this application, references to:
· "you", "your, I/we", "me/us" and "my/our" is a reference to the applicant/s referred to in the sections titled "Applicant - Personal Details" on page one of this application, and if there is more than one applicant it is a reference to all of them jointly and each of them severally
The Application
I/We request QBE through DA to provide me/us with a Deposit Bond for the Maximum Deposit Bond Amount requested in this application. I/We warrant and represent that all of the information and materials provided to QBE through its agent DA in respect of this application are true and correct. If there is any material change in that information from the time it was provided and before the Deposit Bond is issued l/we shall immediately advise DA of the change. QBE may at its option revoke any approval if there is any material change. If a Deposit Bond is provided to the purchaser, I/We:
· shall, within 48 hours of purchasing a property at auction, advise DA and provide DA a copy of the front page of the Contract of Sale.
· acknowledge that the Counter Indemnity Agreement set out below will automatically be binding.
· acknowledge and agree that QBE must pay out under the Deposit Bond irrespective of whether;
· the vendor is entitled to terminate the contract for sale
· the vendor is entitled to claim the deposit under the contract for sale
· l/we have a dispute with the vendor
· acknowledge and agree that QBE is irrevocably authorised to pay out under the Deposit Bond upon a request for payment being made and may make such payment without reference to me/us and without the need for any further authority from me/us.
Counter Indemnity Agreement
In consideration of QBE issuing the Deposit Bond to me/us, l/we:
· irrevocably indemnify QBE against all actions, claims, demands, liabilities, Goods and Services Tax liabilities, losses, damages, costs and expenses (including, without limitation, legal expenses on a full indemnity basis) which QBE at any time suffers or incurs directly or indirectly under or in connection with the Deposit Bond
· agree to pay QBE within 7 days upon demand any amount so indemnified
· understand that if l/we do not pay any amount demanded by QBE under this Indemnity when due, then interest will accrue on that amount from the date payable up until the day the outstanding amount is paid. Interest will accrue on a daily basis at the 90-day bank bill Swap reference rate (rounded to two decimal places) plus a margin of 2%. The interest is payable on demand.
· agree that upon QBE:
· making a written demand under this Indemnity
· notifying me/us in writing that it considers there has been a material adverse change in my/our financial position or that it considers l/we will not be able at any future time to perform the terms and conditions set out in this Indemnity then l/we as and from the date of the written demand or notification (as the case may be) charge as security for each amount demanded or which may become due and owing under this Indemnity all of my/our present and future real and personal property (whether held solely or jointly with any other party)
· irrevocably appoint QBE as my/our attorney and agent to:
· enforce or pursue any rights l/we may have under any contract for sale to which the Deposit Bond relates, and in this regard l/we irrevocably authorise QBE to commence and conduct any legal proceedings in my/our name and to settle or compromise any such legal proceedings on such terms as QBE thinks fit provided that QBE shall pay all legal costs associated with such proceedings
· do anything which l/we can do as the owner of my/our real and personal property
· sign any documents on my/our behalf of any nature to perfect the creation of the charge contemplated under this Indemnity or for the purpose of registering any such charge (as may be required)
· ratify and confirm any and all acts that QBE carries out as my/our agent and/or attorney pursuant to the above authority and power of attorney and indemnify QBE against any loss, cost, expense or liability suffered or incurred by QBE in connection with carrying out any such acts; and
· confirm that any charge over real property created in favour of QBE under this Indemnity creates an equitable interest in favour of QBE in any present or future real property I/we own (whether solely or jointly with any other party) and l/we irrevocably authorise QBE to lodge and/or maintain a caveat over any such property
The law governing the Indemnity is the law of the jurisdiction in which the property to be purchased is situated.
Signing and Acknowledgements
l/we acknowledge and agree that:
· QBE has no obligation to provide me/us with a Deposit Bond unless QBE accepts my/our application and receives the "Total Fee Payable" by Deposit Access in cleared funds.
· QBE may require further information and materials to be provided in support of this application.
· If a Deposit Bond is issued, l/we shall be bound by all of the terms and conditions set out in this application and in particular with the matters set out in the paragraph entitled "Counter Indemnity Agreement" of this application.
IMPORTANT - By signing this application, you acknowledge that you understand and agree to the following statements.
· The Counter Indemnity Agreement gives QBE the right to recover from you any amount paid by QBE under this Deposit Bond
· The Counter Indemnity Agreement gives QBE the right to create a charge over your real and personal property.
This application (including the Counter Indemnity Agreement) is executed as a deed
Signed, sealed and delivered by Applicant 1"
On 25 November 2009, QBE issued a deposit bond in the following terms:
"DEPOSIT BOND
Bond No. B27131109
At the request of ANNE LOUISE CHATFIELD (Purchaser), and in consideration of STAMFORD WINDSOR LIMITED as trustee for STAMFORD RAFFLES TRUST ABN 78 977 203 670 (Vendor) accepting this undertaking in respect of the Contract of Sale between the Vendor(s) and Purchaser(s) for the property at 21B/ 171 -193 GLOUCESTER STREET, THE ROCKS NSW 2000, for a full purchase price of $1,690,000.00 (One Million Six Hundred and Ninety Thousand Dollars Only) (Contract of Sale).
QBE Insurance (Australia) Limited A.B.N. 78 003 191 035 (Financial Institution) of 82 Pitt Street, Sydney, NSW, 2000, undertakes to the Vendor to pay on demand any sum or sums which may be demanded by the Vendor to a maximum aggregate sum of $169,000.00 (One Hundred and Sixty Nine Thousand Dollars Only) (Bond Amount).
The Financial Institution will make payment, should it receive from the Vendor:
· a copy of a notice of termination or rescission of the Contract of Sale served by the Vendor on the Purchaser; and
· a statement in writing by the Vendor stating that the Vendor is entitled to the deposit under the Contract of Sale (Deposit) and that the Deposit has not been paid to the Vendor by the Purchaser in accordance with the terms of the Contract of Sale; and
· a written demand for the outstanding amount; and
· the original of this undertaking.
It is agreed that the Financial Institution will make payment or payments to the Vendor under and in accordance with this undertaking forthwith without reference to the Purchaser and notwithstanding any notice given by the Purchaser not to make any such payment or payments.
This undertaking is to continue until:
· the contract of sale has been completed; or
· 4pm, (Sydney time) on the 25th Day of November, 2012; or
· the original of this undertaking is returned to the Financial Institution; or
· the Vendor notifies the Financial Institution in writing that this undertaking is no longer required; or
· the Financial Institution has paid to the Vendor the whole of the Bond Amount or such part of the Bond Amount as the Vendor may require,
whichever first occurs at which time this undertaking expires.
Signed on behalf of
QBE Insurance (Australia) Limited by its authorised agent Deposit Access Pty Ltd.
Dated at Sydney this 25th day of November, 2009"
In a letter dated 6 November 2012, the vendor, Stanford Windsor Limited, made a claim on QBE for payment of the bond in the following terms:
"Dear Sir/Madam
Stamford Windsor Limited as trustee for Stamford Raffles Trust (Vendor) and Anne Louise Chatfield (Purchaser)
Property: Apartment 21B, 171-193 Gloucester Street, The Rocks
Background
The Vendor entered into a contract for the sale of land with the Purchaser on 5 March 2008 for the sale of the above Property (Contract).
QBE Insurance (Australia) Limited (Financial Institution) issued a deposit bond for the sum of $169,000.00 dated 25 November 2009 (Bond) which was provided to the Vendor as the deposit under the Contract (Deposit).
The Purchaser appointed Mark Hickey of Hickey Law to act on the Purchaser's behalf in this matter in 2011.
Under the Contract completion was first scheduled to take place on 13 October 2011.
The Vendor attempted to complete the Contract on a number of other occasions however the Purchaser did not complete.
A notice to complete dated 16 October 2012 was served by us on behalf of the Vendor on the Purchaser calling for completion on 31 October 2012.
Although the Purchaser's solicitor attended our offices at the time nominated in the notice to complete the Purchaser was not ready, willing and able to settle as no completion documents or cheques (to be provided by the Purchaser) were available.
The Purchaser did not complete the Contract.
The Vendor was ready, willing and able to settle.
The Vendor's notice of termination dated 1 November 2012 terminating the Contract was served on the Purchaser.
Claim on the Bond
Under the Bond, the Financial institution agreed to make payment on receipt from the Vendor of the following:
c/- Stamford Property Services Pty Ltd
Suite 2 / Level 10,139 Macquarie Street, Sydney NSW 2000
ARBN: 129 364 263
1 a copy of a notice of termination of the Contract served by the Vendor on the Purchaser;
2 a statement in writing by the Vendor stating the Vendor is entitled to the Deposit under the Contract and the Deposit has not been paid to the Vendor by the Purchaser;
3 a written demand for the outstanding amount; and
4 the original Bond.
Copy of notice of termination
The Vendor encloses a certified copy of the notice of termination of the Contract served on the Purchaser.
We also enclose a copy of the fax confirmation. It was also sent by courier to Mark Hickey's office.
Statement that the Vendor is entitled to the Deposit under the Contract
The Vendor hereby confirms to the Financial institution that:
1 following the termination of the Contract the Vendor is entitled to the Deposit provided by the Purchaser under the Contract; and
2 the Purchaser has not paid to the Vendor the Deposit under the Contract.
Written demand for payment
The Vendor hereby demands the Financial Institution pay the Vendor the sum of $169,000.00.
Original Bond
We also enclose the original Bond no. B27131109.
Arrangement of payment
Would you kindly confirm by reply the intended timing for payment noting the Vendor requires payment to be made immediately.
For your ease of reference we set out below details of how a cheque should be drawn or alternatively our bank details if you would prefer to deposit the amount into our account:
Cheque details: Payee: Stamford Windsor Limited
Sum: $169,000.00
Bank account details: A/C Name: Stamford Windsor Limited
Bank: ANZ Banking Group Limited
Branch: Mascot, 1191 Botany Road, Mascot NSW 2020
BSB: 012-345
A/C No: 837498357
Please confirm when you intend to make the payment or alternatively please let us know when the cheque is available for collection.
Please contact us if you require any further information.
..."
As indicated, the letter was accompanied by the original deposit bond and a copy of the notice of termination. The notice was in the following terms:
"Notice of Termination by Vendor
TO:
Anne Louise Chatfield
c/- Hickey Law
Level 8, 65 York Street
Sydney NSW 2000
1. In this notice of termination the terms Vendor, Purchaser, Property and Contract have the meaning given to them in the Schedule below.
2. A notice to complete dated 16 October 2012 was served on the Purchaser under the Contract (Notice to Complete).
3. The Purchaser has:
(1) repudiated the Contract by wrongfully purporting to terminate the Contract by notice dated 31 October 2012, which repudiation is accepted by the Vendor; and
(2) failed to comply with the Notice to Complete, in that it was not ready, willing and able to settle the contract in accordance with the Notice to Complete.
4. The Vendor gives notice that the Contract is terminated.
SCHEDULE
Vendor: Stamford Windsor Limited ARBN 129 364 263 as trustee for Stamford Raffles Trust ABN 78 977 203 670
Purchaser: Anne Louise Chatfield
Property: Apartment21B, 171-193 Gloucester Street, The Rocks NSW 2000
Contract: The contract for the sale of land dated 5 March 2008 between the Vendor and the Purchaser for the safe of the Property.
DATED this 1st November 2012
Signed for and on behalf of Stamford Windsor Limited as trustee for Stamford Raffles Trust ABN 78 977 203 670 by its attorney Anthony Rice under power of attorney number Book 4611 No 434 in the presence of:
..."
The letter was received on 7 November 2012. On 8 November 2012, QBE issued a cheque for $169,000 payable to the vendor. QBE banked the cheque in the vendor's account on 9 November 2012. Letters confirming this were sent by QBE to the vendor and Ms Chatfield on the same date.
The letter to Ms Chatfield demanded payment of the $169,000 immediately, referred to the indemnity in the bond application, and threatened proceedings if no payment was received by 20 November 2012. After a further letter of demand dated 14 December 2012 from QBE's lawyers, proceedings were commenced on 15 January 2013.
Issues
The following issues arise on the application:
(a) Was QBE obliged to make a payment to the vendor under the deposit bond; and
(b) if not, was Ms Chatfield liable in any event under the terms and conditions of the deposit bond application.
A stamp duty question
After the evidence on the application was admitted Ms Chatfield, by her counsel, noted that the deposit application was not stamped. The application of ss 204, 207, 211 and 304 of the Duties Act 1997 was raised. Those sections provide:
"204 Imposition of duty
This Chapter charges duty on instruments that fall within the definition of a mortgage. Duty chargeable under this Chapter is called mortgage duty.
Notes.
(1) Mortgage duty is calculated, in most cases, according to "the amount secured by the mortgage". Contingent liabilities may also be included. This is dealt with in Part 2.
(2) Ad valorem duty is only chargeable on one of a package of mortgages securing the same advance. This is dealt with in section 214.
(3) Provision is also made for the apportionment, for duty purposes, of the amount secured by any mortgage over property in different Australian jurisdictions. This is dealt with in section 216."
"207 Who is liable to pay the duty?
The person liable to pay mortgage duty is the mortgagor or the person bound."
"211 Consequences of non-payment of duty
A mortgage on which duty is required by this Chapter to be paid is unenforceable to the extent of any amount secured by the mortgage on which duty has not been paid."
"304 Receipt of instruments in evidence
(1) An instrument that effects a dutiable transaction or is chargeable with duty under this Act is not available for use in law or equity for any purpose and may not be presented in evidence in a court or tribunal exercising civil jurisdiction unless:
(a) it is duly stamped, or
(b) it is stamped by the Chief Commissioner or in a manner approved by the Chief Commissioner.
(2) A court or tribunal may admit in evidence an instrument that effects a dutiable transaction, or is chargeable with duty in accordance with the provisions of this Act, and that does not comply with subsection (1):
(a) if the instrument is after its admission transmitted to the Chief Commissioner in accordance with arrangements approved by the court or tribunal, or
(b) if (where the person who produces the instrument is not the person liable to pay the duty) the name and address of the person so liable is forwarded, together with the instrument, to the Chief Commissioner in accordance with arrangements approved by the court or tribunal.
(3) A court or tribunal may admit in evidence an unexecuted copy of an instrument that effects a dutiable transaction, or is chargeable with duty in accordance with the provisions of this Act, if the court or tribunal is satisfied that:
(a) the instrument of which it is a copy is duly stamped, or is stamped in a manner approved by the Chief Commissioner, or
(b) the copy is duly stamped under section 299".
After some argument about the applicability of these provisions to the application, the plaintiff undertook to provide the name, address, and a copy of the application to the Commissioner under s 304(2)(b) of the Act. It was common ground that the undertaking was sufficient to resolve any question of admissibility and accordingly the application was admitted. I proceeded with the application for summary judgment. By consent of the parties I directed that any evidence or submissions on whether the application was subject to duty were to be filed and served by 4pm on 20 June 2013. I stood the matter over to today for further hearing.
The plaintiff indicated that if necessary it would pay the duty, and I excused counsel from appearing today if they so chose on the basis that it was likely that there may be no further argument in relation to s 211. I have admitted the stamped bond application, and accordingly, there is evidence that the duty has been paid and there remains no residual issue under s 211 of the Duties Act 1997.
(a) Was QBE obliged to pay the deposit to the vendor
The deposit bond provided that QBE undertook to pay the vendor on demand the amount demanded, up to $169,000. It provided that QBE would make payment if four matters were satisfied. The vendor in its letter dated 6 November 2012 referred to these four matters and purported to comply with them. Ms Chatfield raises two arguments as to why the vendor did not comply.
In the first place, Ms Chatfield says that the original deposit bond was provided on 7 November 2012 and the deposit bond was paid on 9 November 2012. This is significant, so Ms Chatfield says, because once the deposit bond was returned to QBE there remained no continuing undertaking. It follows, submitted Ms Chatfield, that the undertaking expired on 7 November 2012 and thus, QBE was under no obligation to pay the deposit on 9 November 2012.
It can readily be seen that there is some tension between the third bullet point in paragraph 5 of the deposit bond and the fourth bullet point in paragraph 3. The former operates to determine the obligation under the deposit bond when the original bond is returned, the latter requires the return of the bond in order to enliven that same obligation.
Contracts are not to be read in a vacuum. Toll (FGCT) Pty Limited v Alphapharm Pty Limited (2004) 219 CLR 165 at [40] requires that:
"This Court, in Pacific Carriers Ltd v BNP Paribas, has recently reaffirmed the principle of objectivity by which the rights and liabilities of the parties to a contract are determined. It is not the subjective beliefs or understandings of the parties about their rights and liabilities that govern their contractual relations. What matters is what each party by words and conduct would have led a reasonable person in the position of the other party to believe. References to the common intention of the parties to a contract are to be understood as referring to what a reasonable person would understand by the language in which the parties have expressed their agreement. The meaning of the terms of a contractual document is to be determined by what a reasonable person would have understood them to mean. That, normally, requires consideration not only of the text, but also of the surrounding circumstances known to the parties, and the purpose and object of the transaction"
In my view, the return of the deposit bond to QBE in these circumstances was not intended to determine the obligations under it. In particular, where the original of the bond is returned with the other documents in paragraph 3 of the bond, the copy of the notice of termination, the vendor's statement, and a written demand, the undertaking did not cease, or at least it did not cease so as to relieve QBE of the obligation to pay the amount to the vendor. To otherwise construe the deposit bond would be to give it an unreasonable construction and make it unworkable. If correct, Ms Chatfield's argument would result in the deposit bond never becoming payable, because payment required receipt by QBE of the original bond and receipt of the original bond, on the argument, ends all obligations under the bond.
Ms Chatfield argued that the deposit bond could still work if there was simultaneous exchange of the original deposit bond and the cheque in payment. This construction does not sit comfortably with the opening terms of paragraph 3, which provides that the obligation to pay arises only upon receipt. Further, that construction is impractical. The deposit bond would still be terminated if, for any reason, one of the other three documents in paragraph 3 were provided subsequent to the provision of the original bond.
Further, there is no suggestion in the bond application or the bond that there need be an "exchange". That could easily have been the subject of expressed provision if it were intended.
Moreover, paragraph 2 of the deposit bond contemplates that only part of the maximum sum may be demanded but nevertheless still requires provision of the original undertaking. The construction submitted by Ms Chatfield would preclude any further recovery after valid demand of a part.
In my view, the return of the original deposit bond would only terminate the obligations under the bond if the circumstances of that return implied such an intention. If, on the other hand, the provision of the original deposit bond was for the purpose of demanding payment, the third bullet point of paragraph 5 of the deposit bond would have no application.
I have considered whether the terms of paragraph 3 of the deposit bond were sufficient but not necessary circumstances for payment of the bond, in that QBE might be obliged to pay on demand as provided in cl 2 without the fulfilment of cl 3. But neither party submitted that this construction was correct, and in any event, that issue does not strictly arise.
Accordingly, I reject the argument that the deposit bond expired on the receipt by QBE of the original of the bond on 7 November 2012, so as to relieve QBE of an obligation to pay.
The second argument advanced by Ms Chatfield is that there was non-compliance with the second bullet point in the third paragraph of the deposit bond. This is because the vendor's demand did not repeat verbatim the statement in the deposit bond. Ms Chatfield relied upon the decision in Reliance Developments (NSW) Pty Limited v Lumley General Insurance. Limited [2008] NSWSC 172. That case involved a vendor seeking to enforce a deposit bond. Bryson AJ stated at [41]:
"[41] In my opinion the words of the Bond intractably require strict formal compliance. Formality is everything; if the formalities are met, Lumley has to pay".
Apart from the difference in the parties in that case - there the vendor was seeking to enforce the bond whereas here the purchaser complains about payment of the bond - the bond was also in different terms. In particular, the bond in the Reliance decision contained a clause stating:
"Lumley has no liability whatsoever under this Deposit Bond unless and until a demand by the Vendor is made strictly in accordance with the terms of this Deposit Bond".
The present bond does not have a clause that demands the same strictness. Further, the indirect speech in the second bullet point of the instant bond militates against the requirement of a verbatim reproduction of those words. Ms Chatfield went so far as to suggest that it would not be sufficient if the statement said, for example, "the purchaser has not paid the deposit to the vendor" because the requirement was that the statement say, "the deposit has not been paid to the vendor by the purchaser" even though the statement is conveying the same information by the more conventionally acceptable active voice. I do not accept this argument. In my opinion, if the statement conveys the substance of the matters required in the second bullet point that is sufficient. It is immaterial that the precise words were not used.
In this particular case the additional words, "following the termination of the contract" are merely descriptive of the circumstances alleged earlier in the letter. Those words do not preclude the further statement, "the vendor is entitled to the deposit provided by the purchaser under the contract" from satisfying the requirements of the bond. Similarly, the reference to "under the contract" is not materially different from "in accordance with the terms of the contract of sale". In my view, the vendor's demand complies in all respects with the requirements stated in the bond and QBE was obliged to pay the sum of $169,000.
The plaintiff advanced an alternative argument, that in any event the terms of the application signed, sealed and delivered by Ms Chatfield provided:
"l/we:
· irrevocably indemnify QBE against all actions, claims, demands, liabilities, Goods and Services Tax liabilities, losses, damages, costs and expenses (including, without limitation, legal expenses on a full indemnity basis) which QBE at any time suffers or incurs directly or indirectly under or in connection with the Deposit Bond".
QBE submitted that the funds were paid "in connection with the deposit bond and were thus subject to the indemnity". I accept this submission. Indeed, it seems to me that Ms Chatfield's rights are confined to the terms of the deposit bond application and not to the deposit bond itself. The bond regulates the obligations between QBE and the vendor, but not QBE and the purchaser.
For Ms Chatfield to avoid the indemnity she must, in my view, identify a provision in the signed deposit bond application that gave her an entitlement that was not fulfilled. She was unable to do this. Ms Chatfield submitted that the reference to the deposit bond in the application required that the indemnity only applied if there was strict compliance with the deposit bond (in whatever form it took).
I have found that QBE complied with the terms of the deposit bond. But I do not think that is crucial so far as Ms Chatfield's rights are concerned. She agreed that "QBE is irrevocably authorised to pay out the deposit bond upon a request for payment being made". QBE provided a deposit bond that required more than this from the vendor before payment, but I do not think that the form of the deposit bond enlarges Ms Chatfield's rights.
Against this background Ms Chatfield agreed to indemnify QBE for any monies paid "in connection with the deposit bond". There can be no argument that the $169,000 paid to the vendor was an expense paid in connection with the deposit bond, and Ms Chatfield is thus liable to indemnify QBE for its loss.
Ms Chatfield also submitted that there remained a triable issue and that the matter was inappropriate for summary judgment. However, there was no factual contest between the parties. I invited counsel for Ms Chatfield to indicate whether there might be further evidence that might impact upon the construction of the relevant documents. Both parties indicated that there would be no further relevant evidence.
Thus, the defendant's argument that there was a triable issue depended upon there being a complex question of construction. I do not think that the construction issue raised in this case is complex. Further, in General Steel IndustriesIncv Commissioner for Railways(NSW) (1964) 112 CLR 125 at p 130, the High Court recognised that summary judgment was available even if complex questions of law may be involved:
"On the other hand, I do not think that the exercise of the jurisdiction should be reserved for those cases where argument is unnecessary to evoke the futility of the plaintiff's claim. Argument, perhaps even of an extensive kind, may be necessary to demonstrate that the case of the plaintiff is so clearly untenable that it cannot possibly succeed".
For all these reasons, I propose to grant summary judgment in favour of QBE. There is no issue about the total sum which, including interest and the stamp duty, amounts to $176,918.32.
Costs
QBE also seeks costs on an indemnity basis, relying upon the entitlement in the application that "expenses (including without limitation legal expenses on a full indemnity basis)" are to be indemnified.
Generally, such a provision should be given effect: Macquarie International Health Clinic Pty Ltd v Sydney South West Area Health Service (No 3) [2010] NSWSC 1139 at [39].
Ms Chatfield, when invited, did not suggest any circumstances that might lead to a different result. In this case, I do not think any such circumstances exist.
Accordingly, the orders of the Court are:
1. Judgment for the plaintiff in the sum of $176,918.32.
2. The defendant to pay the plaintiff's costs assessed on an indemnity basis.
**********
Decision last updated: 18 July 2013
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