Shettleston Pty Ltd v Australian Horticultural Finance Pty Ltd

[1992] QCA 414

IN THE COURT OF APPEAL	[1992] QCA 414
QUEENSLAND

C.A. No.154 of 1992

BETWEEN:

SHETTLESTON PTY. LTD.

(Plaintiff) Appellant

- and -

AUSTRALIAN HORTICULTURAL FINANCE PTY. LIMITED

(Defendant) Respondent

C.A. No.155 of 1992

BETWEEN:

JEKOS HOLDINGS PTY. LTD.

(Plaintiff) Appellant

- and -

AUSTRALIAN HORTICULTURAL FINANCE PTY. LIMITED

(Defendant) Respondent

C.A. No.156 of 1992

BETWEEN:

ERAND PTY. LTD.

(Plaintiff) Appellant

- and -

AUSTRALIAN HORTICULTURAL FINANCE PTY. LIMITED

(Defendant) Respondent

REASONS FOR JUDGMENT OF THE COURT

Delivered the first day of December, 1992

On 13 July, 1992, a Judge in the Trial Division dismissed, with costs to be taxed, eleven applications for summary judgment brought by separate plaintiffs against the present respondent, Australian Horticultural Finance Pty. Ltd.. The present appellants are three of the unsuccessful plaintiffs in those proceedings, Shettleston Pty. Ltd., Jekos Holdings Pty. Ltd. and Erand Pty. Ltd.. Apart from the amounts claimed, there are no significant differences suggested between the various actions, and it is convenient to deal with them compendiously.

On or about 29 June, 1990, each of the appellants received a prospectus relating to a macadamia nut and herb plantation project. The prospectus was dated 8 June 1990 and was expressed to expire on 8 December 1990. Subject to various qualifications, it contained statements that certain payments, if made prior to 30 June 1990, should be deductible for income tax purposes.

On the same day, each of the appellants executed various forms, including an Application for units, a Plantation License Agreement, a Plantation Management Agreement and a Deed of Loan, and each provided a cheque for prepaid interest in respect of the anticipated loan to the respondent which was named as the lender in each Deed of Loan. At that time, the documents had not been executed by the other parties. In substance, the loans to be made by the respondent were to finance the appellants' acquisition of the units for which they had applied.

Various of the documents suggest that the transactions were intended to be finalised before 30 June 1990, presumably in order to enable anticipated tax deductions to be obtained in that financial year. Thus, for example, the Plantation Licence Agreement and the Plantation Management Agreement each speaks of being made on "... June 1990". More importantly for present purposes, clause 4(a) of the Deed of Loan contains a direction by the borrower to the lender to make the loan to the trustee company named therein as the borrower's representative not later than 30 June 1990.

The appellants did not issue writs until 27 April 1992, almost two years after they executed the documentation and prepaid the interest. Each then issued a specially indorsed writ claiming the return of the interest as money paid to the respondent "in consideration of the [respondent] providing financial assistance to the [appellant], which consideration has wholly failed, together with interest".

The Statements of Claim indorsed on the writs are as follows
(with differences only as to detail such as amounts):

"1. The Plaintiff and the Defendant are, and were at all material times, companies duly incorporated.

2.    On or about 29 June, 1990 the Plaintiff offered:-

(a)	to borrow from the Defendant a sum sufficient to enable it to acquire units in the Okari Plantations Venture,
(b)	to pay interest in accordance with the provisions of a draft Deed of Loan contained in the prospectus relating to the said venture,
(c)	to enter into a written Deed of Loan with the Defendant in the terms of the said draft.

3.

In contemplation of the Defendant:-
(a) making the said advance; and

(b) entering into a formal Deed of Loan in terms of the draft,

the Plaintiff paid to the Defendant at Brisbane in the State of Queensland on 29 June, 1990 the sum of $79,326.00 representing a payment of interest in advance as contemplated by Clauses 7.1(a) and 7.2(a) of the draft.

4. The Defendant failed to:
(a) make the said advance, or
(b) enter into a formal Deed of Loan.

5.    The consideration for the payment by the Plaintiff has wholly failed and the Defendant has had and received the said sum to the use of the Plaintiff."

Each appellant filed a judgment summons with an affidavit in support on 2nd June 1992. The affidavits contained little more detail than the particulars endorsed on the writ, as appears from the following example:

"...

2. The Plaintiff is a company duly incorporated in the State of Queensland having its registered office at care of McCullough Robertson, 99 Creek Street, Brisbane in the said State.

3. On or about the 29th June, 1990 at 14th Floor, 10 Market Street, Brisbane in the State of Queensland:-

(a) I received on behalf of the Plaintiff from one ALISTER HASELL as agent of the Defendant, a Prospectus and a draft Deed of Loan together with other related documents concerning "The Okari Plantations Venture".

Now produced and shown to me marked with the letter "A" and exhibited hereto are copies of the Prospectus, draft Deed of Loan and the other related documents concerning the Okari Plantations Venture.

(b) On behalf of the Plantation I arranged for the completion of the relevant documentation given to me by Mr. Hasell and returned them to him together with a cheque for $79,326.00 being a pre-payment of interest pursuant to Clause 7 of the draft Deed of Loan. Now produced and shown to me marked with the letter "B" and exhibited hereto is a copy of the said cheque.

4. Notwithstanding the submission of the documents and the prepayment of interest, the Defendant has failed to advance any moneys to the Plaintiff (or at its direction) pursuant to the draft Deed of Loan and failed to execute the Deed of Loan executed by the Plaintiff which was given to Mr. Hasell on 29th June, 1990.

5. The Plaintiff has never received either a stamped or an unstamped Deed of Loan executed by the Defendant. 6. The Plaintiff paid the sum of $79,326.00 to the Defendant solely in contemplation of entering into a formal executed Deed of Loan pursuant to which the Defendant would provide the Plaintiff with funds to acquire units in The Okari Plantation Venture.

7. I have read the specifically indorsed Writ of Summons filed herein and verily believe that all of the allegations of fact contained therein are true and correct.

8.    In my belief the Defendant has no defence to this

action."

Two affidavits were filed on behalf of the respondent by one of its directors, and a proposed Defence and Counter- Claim broadly reflecting the substance of what he deposed to was exhibited. Paragraphs 3 to 8 of his first affidavit were in the following terms:

"3. On 29 June 1990 the Plaintiff offered, by way of an application for loan, to borrow from the Defendant a sum to enable it to acquire units in the Okari Plantations Venture. In conjunction with its offer the Plaintiff executed, on 29 June 1990 a form of Deed of Loan a copy of which is Exhibit A to the affidavit of Brian James Prendergast sworn on 2 June 1992 in these proceedings ("the Deed of Loan") and furnished that to the Defendant with its application for loan. On the same day the plaintiff paid to the defendant the sum of j$79,326.00 as contemplated by the plaintiff's offer and as contemplated by clause 7 of the Deed of Loan.

4.   The Defendant approved the loan and accepted the plaintiffs offer in the terms of the Deed of Loan and on or about 2 July 1990 provided financial assistance to the Plaintiff by paying an amount of $449,496 to the Representative (as defined in the Deed of Loan) on behalf of the Plaintiff as contemplated by the Plaintiff in its offer and as contemplated by the Deed of Loan.

5.    On or about 13 July 1990 I, as a duly authorised officer of the Defendant, and on the Defendant's behalf, executed the Deed of Loan, previously executed by the Plaintiff.

6.    In late July or early August 1990 I, on behalf of the Defendant, caused a letter to be sent to the plaintiff informing it that the loan had been approved. I now cannot locate a copy of the letter.

7.    Clauses 5(a) and 5(b) of the Deed of Loan provide that the Plaintiff pay to the Defendant the amount set out in Item 4 of the Schedule to the Deed of Loan, ninety days and one hundred and eighty days after the date of the deed. The plaintiff failed to make the repayments as required by clauses 5(a) and 5(b) and as at the date of swearing this affidavit no repayments have been made by the Plaintiff.

8.   Annexed hereto and marked "A" is the defence and counter-claim proposed to be filed by the Defendant in these proceedings."

Prior to the hearing of this appeal, the letter referred to in paragraph 6 of the Affidavit filed on behalf of the respondent was found by the appellants and a copy was provided to the Court without objection. The letter, dated 9th August, 1990, provided:

"Re: LOAN APPLICATION

OKARI PLANTATION VENTURE

I refer to your recent loan application. I am happy to advise that it was approved prior to 30 June 1990.

The funds were forwarded to the Permanent Trustee
Company in line with your request.

Attached is your loan statement and an advice of when the two capital repayments are due.

The loan documents have been forwarded to the Office of State Revenue for stamping. When these are to hand we will direct them to you.

Should you have any queries please contact the undersigned."

Quite obviously, the appellants were not entitled on that material to summary judgment on the basis of the Statements of Claim indorsed on their writs. Accordingly, it was submitted for the appellants that the Deeds of Loan executed by them were offers which, having regard to the terms of the Deeds, especially clause 4(a), could only be accepted and had to be performed by the making of the loans by June 30, 1990. Since that had not occurred, the appellants argued that there had been a total failure of consideration for the interest which they had prepaid.

No application to amend the Statements of Claim indorsed on the writs was made by the respondents and neither party sought an adjournment.

The evidence before the primary judge did not reveal whether, or if so when, the appellant's applications for units had been accepted and the acceptance communicated to the appellants, or whether, and if so when, the other parties had executed the Plantation License Agreement and Plantation Management Agreement and notified the appellants accordingly.

His Honour dismissed the applications, stating:

"I note that all of this has been brought to a head by a writ issued twenty-two months after the failure of consideration allegedly occurred. There is no evidence as to what has happened in the intervening time. There is evidence that moneys were advanced although it is alleged that they were not advanced in accordance with the offer made. Having regard to the allegation that there has been a total failure of consideration, it seems to me that there are issues of fact the resolution of which may depend on the application of the rules of evidence in relation to the missing documents. In respect of the legal effect of the transactions, which goes to the fundamental proposition underlying the plaintiffs' cases that there has been a total failure of consideration, I think that there are questions in dispute that ought to be tried and that there ought to be a trial of the claims."

The correctness of that view was confirmed by the course of events before this Court, which included extensive debate concerning the discrepancy between the case pleaded by the appellants and the case which they seek to advance, and an application by the respondent (which was objected to and rejected) to tender additional evidence aimed at meeting the appellants' present, as distinct from its pleaded case.

Considerable emphasis was given to the unsuitability of summary judgment in the circumstances by the appellants' unsatisfactory pleadings, the dependence of their case upon inferences drawn from documents without any detailed background information, the delay in bringing the applications, and the absence of potentially material information, including details of the events in the lengthy period between the initial steps in the transaction and the institution of the actions, especially when there are significant counter-claims by the respondent which seem at least broadly associated with the same transactions.

The appellants also complained of the orders for costs made against them by the primary judge. We were told that there was no argument on the costs issue, and the judge gave no reasons for his orders.

However, it is not suggested that the parties were denied the opportunity of raising questions of costs before the Judge, or that he refused to entertain argument on the matter. Decisions on the applications for summary judgment were reserved from the hearing date of 10 June until 13 July 1992, when they were delivered with written reasons. There was therefore more than one occasion when the matter for costs could have been debated.

In any event, once appeals against the substantive decisions are held to fail, as we consider they do here, the appellant is in each case seeking to appeal against an order for costs and nothing more than that. For that purpose leave is specifically required by s.9 of the Judicature Act.

No such leave was ever obtained or even asked for in these cases; and no explanation has been offered as to why this essential step was never taken. Without it we are not free to consider whether or not the discretion with respect to costs was wrongly exercised in the court below.

The appeals must be dismissed with costs.

IN THE COURT OF APPEAL

QUEENSLAND

C.A. No.154 of 1992

BETWEEN:

SHETTLESTON PTY. LTD.

(Plaintiff) Appellant

- and -

AUSTRALIAN HORTICULTURAL FINANCE PTY. LIMITED

(Defendant) Respondent

C.A. No.155 of 1992

BETWEEN:

JEKOS HOLDINGS PTY. LTD.

(Plaintiff) Appellant

- and -

AUSTRALIAN HORTICULTURAL FINANCE PTY. LIMITED

(Defendant) Respondent

C.A. No.156 of 1992

BETWEEN:

ERAND PTY. LTD.

(Plaintiff) Appellant

- and -

AUSTRALIAN HORTICULTURAL FINANCE PTY. LIMITED

(Defendant) Respondent

The President
Mr Justice McPherson
Mr Justice Derrington

Reasons for Judgment of the Court delivered on the first day of December, 1992

APPEALS DISMISSED WITH COSTS.

IN THE COURT OF APPEAL

QUEENSLAND

Before the Court of Appeal

The President
Mr Justice McPherson

Mr Justice Derrington

C.A. No.154 of 1992

BETWEEN:

SHETTLESTON PTY. LTD.

(Plaintiff) Appellant

- and -

AUSTRALIAN HORTICULTURAL FINANCE PTY. LIMITED

(Defendant) Respondent

C.A. No.155 of 1992

BETWEEN:

JEKOS HOLDINGS PTY. LTD.

(Plaintiff) Appellant

- and -

AUSTRALIAN HORTICULTURAL FINANCE PTY. LIMITED

(Defendant) Respondent

C.A. No.156 of 1992

BETWEEN:

ERAND PTY. LTD.

(Plaintiff) Appellant

- and -

AUSTRALIAN HORTICULTURAL FINANCE PTY. LIMITED

(Defendant) Respondent

REASONS FOR JUDGMENT OF THE COURT

Delivered the first day of December, 1992

MINUTE OF ORDER:	APPEALS DISMISSED WITH COSTS.
CATCHWORDS:
Counsel:	Mr C. Brabazon QC. with him Ms. A. Philippides for the appellants
Mr J. Muir Q.C. with him Mr J. Kimmins for the respondent
Solicitors:	Messrs. Lees Marshall and Warnick for the appellants
Messrs. Lyons for the respondent
Hearing Date:	18th November, 1992