Robinson v Bride

[2002] WADC 66

JURISDICTION     :   DISTRICT COURT OF WESTERN AUSTRALIA

IN CIVIL

LOCATION:   PERTH

CITATION:   ROBINSON -v- BRIDE & ANOR [2002] WADC 66

CORAM:   REGISTRAR KINGSLEY

HEARD:   8 JANUARY 2002

DELIVERED          :   4 FEBRUARY 2002

PUBLISHED           :  4 APRIL 2002

FILE NO/S:   CIV 2462 of 2001

BETWEEN:   STANLEY ROBERT ROBINSON

Plaintiff

AND

JOHN OLIVER BRIDE
First Defendant

EDWARD JAMES BRIDE
First Defendant

Catchwords:

Practice - Summary judgment - Order 14 Rule 5C - Loan agreement - Loan made personally or as agents of trustee

Legislation:

Nil

Result:

Conditional leave to defend

Representation:

Counsel:

Plaintiff:     Mr M L Segler

First Defendant             :     Mr B L Oakley

First Defendant             :     Mr B L Oakley

Solicitors:

Plaintiff:     Shane Brennan

First Defendant             :     Granich Partners

First Defendant             :     Granich Partners

Case(s) referred to in judgment(s):

Re Anderson; Ex Parte Alexander (1927) 27 SR (NSW) 296

Case(s) also cited:

Nil

1. REGISTRAR KINGSLEY:   This is the plaintiff's application pursuant to Order 14 Rules of the Supreme Court.  It is pleaded in September 1997 the plaintiff agreed to lend to the defendants John Oliver Bride and Edward James Bride the sum of $85,000 which the defendants agreed to repay by 18 September 1998.  The agreement was made orally and evidenced by a memorandum in writing.  The monies were paid by the plaintiff to the defendant on 18 September 1997.  In September 1998 the plaintiff and defendants agreed to vary the terms of the loan so as to extend the time for repayment to September 1999.  The agreement was further varied to extend the time for repayment to 18 September 2000.  The plaintiff pleads that the defendants have not paid the principal and interest capitalised thereon and the plaintiff claims $113,135.

2. The plaintiff's application is supported by the affidavit of the plaintiff sworn 8 November 2000.  The first loan agreement is exhibited together with the amended loan agreement.  The defendants oppose the application and notwithstanding the application for summary judgment, have filed a defence and counterclaim.  Subsequent to the first return of the application the defendants filed two affidavits sworn 24 January 2002.  In the affidavit of John Oliver Bride, John Bride admits that the loan monies referred to were loaned as pleaded but deny that they were loaned to him or to Edward James Bride.  John Oliver Bride deposes that he is informed by his father, Edward James Bride (senior) that the loan as pleaded in the statement of claim was negotiated on behalf of the Pinwernying Family Trust No 2 ("the Trust") and not on behalf of the named defendants.  John Bride acknowledges executing the loan agreement and the amended loan agreement but in the belief he was executing those agreements for and on behalf of the Trust.  John Bride did not believe that he and Edward Bride were entering into any agreements in their personal capacities.

3. John Bride deposes that at all times he and Edward Bride have been beneficiaries only of the Trust and at no time have they been appointed trustees of the trust.  John Bride deposes he was present on 8 September 1997 when the plaintiff handed to Edward James Bride (senior) a cheque for $85,000.  He deposes that it was explained to, and clearly understood by, the plaintiff that the named defendants were merely beneficiaries of the Trust and not trustees and they were signing on behalf of the Trust because the then trustees were facing impending bankruptcy and the named defendants believed the trustees could not therefore sign on behalf of the Trust.

4. In an affidavit sworn by Edward James Bride (senior), Bride (senior) sets out the background to the loan of monies and par 6 states that Bride (senior) prepared the loan agreement.  The agreement was to be a loan between the plaintiff and the Trust with the named defendants to sign on behalf of the trust.  Bride (senior) deposes that at no time did he or his sons believe that there would be personal liability for the borrowed funds.

5. On 27 August 2001 the plaintiff’s solicitor wrote a letter to the named defendants demanding payment of the sum of $124,448 reflecting the outstanding loan monies.  On 9 September 2001 Bride (senior) wrote to the plaintiff's solicitor, under his own hand.  In that letter Bride (senior) states that he delayed answering the letter to enable "a complete and up‑to-date picture as to what was happening in readiness to pay your client the loan money and interest in full and as early as possible".  Bride (senior) then goes on to state that on legal advice a company has been incorporated and that a business plan/feasibility study will be presented to two Western Australian companies who have expressed interest in an equity for capital arrangement.  Bride (senior) then goes on to state that the plaintiff has "expressed satisfaction in the work to date" and that the plaintiff "has continually supported us over the period of the loan".  Bride (senior) broadly concludes with a request that the plaintiff extend his past patience.  The letter is signed under the hand of Bride (senior) only.

6. The plaintiff's counsel submits that the loan agreement discloses that the defendants were purporting to act as trustees of the Trust and not otherwise.  The defendants represented themselves as having the capacity to contract on behalf of that trust and in that regard could only be the trustees thereof.  The plaintiff's counsel goes on to submit that as the legal owner of the trust property, the trustee is personally liable for any debt that he incurs in carrying out the trust.  Unless a trustee incurs a debt on the basis that only trust assets will be available for payment of the debt then the trustee will remain personally liable for the debt.  Citing Re  Anderson; Ex Parte Alexander (1927) 27 SR (NSW) 296 it is only where, by express agreement with the creditor, a trustee specifies that his liability to the creditor is not personally undertaken but only to the extent of the trust assets, then the trustee may avoid personal liability for the debt.

7. For the defendants, counsel submits there is no reference or representation the defendants were purporting to act as trustees.  On the affidavit evidence it is alleged that the position with and the identities of the trustees and beneficiaries were fully disclosed to the plaintiff.  Defendants' counsel then submits that the defendants could only contract on behalf of the trust as agents for a principal.  Any contract concluded as a result of the agency is between the principal and the third party.  The general rule is that the agent who discloses and names his or her principal has no obligations to the third party.

8. By letter dated 9 September 2002 Bride (senior) makes no statement that the plaintiff’s solicitors have made a demand against the wrong parties.  In their defence which has been filed there is no statement that the wrong parties have been sued.  For the defendants to now raise the defence as contended in the affidavits an amended defence must be sought to be filed, which by implication will involve withdrawal of admissions.

9. However, it may well be that the named defendants were contracting on behalf of a disclosed principal, namely the trustee of the Trust.  That then leads to an argument as to whether the proper defendants have been joined.  Having regard to my foregoing comments I am of the opinion that leave to defend ought to be granted but that leave be conditional upon the capital sum, namely $85,000, being brought into Court.  The orders therefore are that the defendants have leave to defend conditional upon the sum of $85,000 being brought into Court, or secured by way of a bank guarantee or such other form of security as agreed between the plaintiff and defendant, within 21 days.

10. In the circumstances costs ought be costs in the cause.