Rightway Investments Pty Limited v Kevin Russell (as Executor for the Estate of the Late Malcolm MacKenzie-Orr)
[2017] ACTMC 11
•28 June 2017
MAGISTRATES COURT OF THE AUSTRALIAN CAPITAL TERRITORY
Case Title: | Rightway Investments Pty Limited v Kevin Russell (as Executor for the Estate of the Late Malcolm MacKenzie-Orr) |
Citation: | [2017] ACTMC 11 |
Hearing Date(s): | 21 June 2017 |
DecisionDate: | 28 June 2017 |
Before: | Magistrate Theakston |
Decision: | 1. The orders of Deputy Registrar Edwards of 8 March 2017 be set aside. 2. The Application in the Proceeding filed by the Plaintiff on 7 February 2017 be dismissed. 3. The Defendant pay the Plaintiff’s costs of the above Application in Proceedings. 4. The costs of this Appeal be costs in the cause. 5. Orders 3 and 4 do not take effect if, within seven days of this order, a party notifies my Associate in writing that it wishes to be heard in relation to alternative orders as to costs. |
Category: | Interlocutory application |
Catchwords: | CONTRACT – Summary Judgement – Application to set aside decision of Deputy Registrar – Superseded loan agreement – Consideration |
Legislation Cited: | Court Procedures Rules 2006 |
Cases Cited: | Dunlop Pneumatic Tyre Co Ltd v Selfridge & Co Ltd [1915] AC 847 Woolworths Ltd v Kelly (1991) 22 NSWLR 189 Kevern v Marshall [2012] ACTSC 9 |
Texts Cited: | LexisNexis Butterworths, Civil Procedure: Australian Capital Territory, vol 1 (at Service 99) |
Parties: | Rightway Investments Pty Limited (Appellant) Kevin Russell (as executor for the estate of the late Malcolm MacKenzie-Orr) (Respondent) |
Representation: | Counsel Mr D Robens (Appellant) Mr R Arthur (Respondent) |
| Solicitors Kamy Saeedi Law (Appellant) Pana Legal (Respondent) | |
File Number(s): | CS 882 of 2016 |
Decision under appeal: | Court/Tribunal: Magistrates Court Before: Deputy Registrar Edwards Date of Decision: 8 March 2017 Case Title: Russell v Rightway Investments Pty Limited Court File Number: CS 882 of 2016 |
MAGISTRATE THEAKSTON:
Background
A party may appeal to a magistrate against an order made by a deputy registrar. The appeal is heard as a rehearing of the matter anew.
In this matter, Deputy Registrar Edwards made an order in favour of Mr Kevin Russell, the plaintiff and applicant in the proceedings, granting summary judgment. Rightway has appealed against that order. I have heard Mr Russell’s application anew.
Pleadings and Evidence
Mr Russell seeks summary judgment of $145,000 plus interest and costs. Mr Russell’s Statement of Claim can be summarised as follows:
(a)Mr Russell is the executor of the estate of the late Malcolm Mackenzie-Orr.
(b)In May 2013, Mr Mackenzie-Orr entered into a written agreement to sell to Rightway a property in the suburb of Hughes, and entered into a further written agreement with Rightway to loan Rightway the sum of $145,000 for the purpose of the deposit due under the contract of sale.
(c)The loan amount was to be repaid (to Mr Mackenzie-Orr) by 31 December 2013, with interest accruing retrospectively if the amount was not repaid in full by that date.
(d)The sale was completed in July 2013.
(e)Rightway has not repaid the amount.
Rightway’s Defence can be summarised as follows:
(a)The original loan agreement was superseded by a new loan agreement in late May 2013.
(b)The new agreement:
(i)reduced the amount to be repaid to $132,500,
(ii)provided an interest free period of three years, and
(iii)required the amount to be repaid only to Mr Mackenzie-Orr personally or his wife Ms Kim Mackenzie-Orr.
For the purpose of the original hearing Rightway did not file any evidence. Since lodging the appeal, Rightway has filed material, which was admitted into evidence at the hearing of this appeal. That material includes the evidence of Darren Strickland, a director of Rightway, emails between Mr Strickland and Mr Mackenzie-Orr, a letter from Mr Mackenzie-Orr to Mr Strickland and a signed loan agreement, each of which are consistent with Rightway’s Defence.
Initial submissions on behalf of Mr Russell
It was submitted, on Mr Russell’s behalf, that the subsequent loan agreement was not effective to modify the original loan agreement because:
(a)the original agreement referred to $145,000 and the subsequent agreement only to $132,500 and it was therefore not certain that the subsequent agreement referred to the original agreement, and or
(b)the subsequent agreement was not supported by consideration from Rightway, and therefore not enforceable.
Could the subsequent agreement effect the original agreement
In relation to the first point, I note that the email correspondence makes reference to changing the amount owing, and appears to have occurred only two weeks after the original agreement was signed. It therefore appears to be at least open on the evidence that the subsequent agreement was referring to the original agreement.
In relation to the issue of consideration, I requested supplementary submissions. It was submitted on behalf of Rightway that there was no evidence of performance of the original loan agreement by either party and, therefore, the consideration for the subsequent agreement included each party giving up the right to enforce the original agreement. A response to that submission may be that the $145,000 deposit due under the sale agreement was payable by Rightway to Mr Mackenzie-Orr on the same day as the loan amount of $145,000 was payable by Mr Mackenzie-Orr to Rightway under the loan agreement. Due to the existence of those mutual obligations, performance of each obligation could be achieved without the physical exchange of funds. However, such a response assumes the two transactions relate to the same property, and that there were no similar transactions on foot. However, the loan agreement expressly states the loan is for the purpose of purchasing a different property to that described in the purchase agreement. Accordingly, it remains open on the evidence that there was no performance, and therefore consideration for the subsequent agreement could be described as each party giving up the right to enforce the original agreement.
Further, the subsequent agreement contained a variation that could, of itself, be described as consideration. In the original loan agreement the loan amount was to be paid simply to Mr Mackenzie-Orr. Following Mr Mackenzie-Orr’s death, that obligation would require payment to Mr Russell as the executor of Mr Mackenzie-Orr’s estate. In the subsequent agreement, the loan amount was to be repaid only to Mr Mackenzie-Orr personally or Ms Mackenzie-Orr. The term ‘personally’ may mean to him in person, as opposed to him in his personal capacity. Only the latter would include payment to Mr Russell as the executor. In May 2013, Mr Mackenzie-Orr was in the advanced stage of a terminal illness. In that context, precisely who the loan amount was to be repaid to could be of significance, for example Mr Mackenzie-Orr may have desired the amount not to be repaid to his estate. This is supported by the final statement in Mr Mackenzie-Orr’s letter of 24 May 2013 that stated:
Darren I reiterate I don’t trust Kevin and the $132,500 is to go to Kim.
The subsequent loan agreement is evidenced by emails and a signed agreement of 23 May 2013, and a letter from Mr Mackenzie-Orr to Mr Strickland of 24 May 2013. It was submitted on behalf of Mr Russell that the signed agreement of 23 May 2013 occurred first in time and what was said or done afterwards should not be used as an aid to the construction of the agreement. Further, if negotiations were reopen after the signing of that subsequent agreement, then any further variation would fail because the negotiations had not reached finality. However, the signed agreement itself includes the provision limiting who repayment should be made to.
I note that consideration may take a range of forms and the following definition was approved by the House of Lords in Dunlop Pneumatic Tyre Co Ltd v Selfridge & Co Ltd [1915] AC 847 at 855:
An act or forbearance of the one party, or the promise thereof is the price for which the promise is bought, and the promise thus given for value is enforceable.
Precisely who was to receive the repayment may have been of significance to Mr Mackenzie-Orr and therefore the change of terms provided by the subsequent agreement in that regard may have been of value to Mr Mackenzie-Orr. Those terms required both an act and forbearance by Rightway, or at least a promise thereof. That is because they require Rightway to make the payment in a particular way, and not in any other way, even if doing so would be inconvenient and or delay the payment and possibly incur additional interest under the agreement.
I also note that consideration must be sufficient but need not be adequate: Woolworths Ltd v Kelly (1991) 22 NSWLR 189 at 193-4. Therefore once the consideration is accepted as sufficient, there is no requirement to inquire into how valuable the consideration may be.
Accordingly, it remains open on the evidence that the subsequent loan agreement was supported by consideration.
I also note that there is a further live issue about what interest rate should apply, as the original loan agreement referred to ‘the rate of the Commonwealth Bank of Australia at the time the repayment date (sic)’, the subsequent loan agreement did not specify an interest rate and, in any event, the Commonwealth Bank may not have a single interest rate.
Law and its application
The application for summary judgment is made under r 1146(2) of the Court Procedures Rules 2006. That rule provides:
The court may give judgment for the plaintiff against the defendant for all or a part of the plaintiff's claim for relief, unless satisfied that—
(a) the defendant has a good defence to the claim for relief on the merits; or
(b) sufficient facts are disclosed to entitle the defendant to defend the claim for relief generally.
As noted by the Deputy Registrar in his earlier decision, the principles relating to the exercise of summary judgment for a plaintiff were set out by Master Harper in Kevern v Marshall [2012] ACTSC 9 at [30] – [37] and are relevantly summarised in LexisNexis Butterworths, Civil Procedure: Australian Capital Territory, vol 1 (at Service 99) [1146.5] as follows:
(a) once it appears to the court that there is a real issue to be tried, the court will not give summary judgment and will instead direct the parties to proceed to trial;
(b) the plaintiff must comply strictly with the procedural requirements and show that there is no defence or no need for a trial;
...
(f) the plaintiff bears the overall onus of establishing it is proper to enter summary judgment;
(g) the court maintains a discretion whether or not to grant summary judgment, even if the elements of subr (2) are made out.
18. It is clear from the discussion above that there remains a number of facts to be determined before justice can be done between the parties, including the relationship between the various agreements, and the sequence of events on 23 May 2013. It also remains open that the original loan agreement was modified and that the same could amount to a defence. Therefore real questions remain to be tried. In these circumstances it would not be just or appropriate to exercise the discretion to grant summary judgment to Mr Russell and thereby prevent Rightway from defending the claim. Accordingly the appeal will be upheld.
Costs
19. In relation to the question of costs, there was no explanation why Rightway did not put on evidence at the earlier hearing before the Deputy Registrar. It therefore appears appropriate to award costs in favour of Mr Russell for that application and simply leave costs of this appeal as costs in the cause. As I have not heard submissions on the issue of costs, the orders will be structured to allow the costs issue to be argued further if necessary.
Orders
20. I make the following orders:
1. The orders of Deputy Registrar Edwards of 8 March 2017 be set aside.
2. The Application in the Proceeding filed by the Plaintiff on 7 February 2017 be dismissed.
3. The Defendant pay the Plaintiff’s costs of the above Application in Proceedings.
4. The costs of this Appeal be costs in the cause.
5. Orders 3 and 4 do not take effect if, within seven days of this order, a party notifies my Associate in writing that it wishes to be heard in relation to alternative orders as to costs.
| I certify that the preceding twenty [20] numbered paragraphs are a true copy of the Reasons for Judgment of his Honour Magistrate Theakston. Associate: Taden Kelliher Date: 28 June 2017 |
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