Trent v Bolton

[2019] NSWDC 853

District Court

New South Wales

Medium Neutral Citation:	Trent v Bolton [2019] NSWDC 853
Hearing dates:	15, 16, 17 and 18 October 2019, further submission 22 October 2019
Date of orders:	11 December 2019
Decision date:	11 December 2019
Jurisdiction:	Civil
Before:	P Taylor SC DCJ
Decision:	(1)   Judgment for the plaintiffs against the defendants in the sum of $32,537.53. (2)   Cross-claim otherwise dismissed. (3)   Any application in respect of a costs order must be notified by email to my associate by noon on Friday, 20 December 2019, and indicate the costs order sought.
Catchwords:	GUARANTEE AND INDEMNITY — contract of guarantee —co-guarantors — entitlement to contribution – set-off
Legislation Cited:	District Court Act 1973, s 134 Limitation Act 1969, s 14 Uniform Civil Procedure Rules 2005, r 42.35
Cases Cited:	Albion Insurance Co Ltd v Government Insurance Office (NSW) (1969) 121 CLR 342 Burke v LFOT Pty Ltd (2002) 209 CLR 282; [2002] HCA 17 Lang v Le Boursicot (1993) 5 BPR 97,406 Mahoney v McManus (1981) 180 CLR 370 McLean v Discount & Finance Ltd (1939) 64 CLR 312
Texts Cited:	JD Heydon, MJ Leeming & PG Turner, Meagher, Gummow & Lehane's Equity Doctrines & Remedies (LexisNexis Butterworths, 5th ed, 2015)
Category:	Principal judgment
Parties:	Bradley Trent (first plaintiff/first cross-defendant) Eraina Trent (second plaintiff/second cross-defendant) Kenneth Bolton (first defendant/first cross-claimant) Pauline Shumack (second defendant/second cross-claimant)
Representation:	Counsel: Mr D C Price (plaintiffs/cross-defendants)   Solicitors: Shaddicks (plaintiffs/cross-defendants)
File Number(s):	2018/155580
Publication restriction:	None

Judgment

A. INTRODUCTION

1. Bradley and Eraina Trent, and Pauline Shumack and her husband, Kenneth Bolton, were guarantors for the debts of AJ Roberts Removals and Storage Pty Ltd to the National Australia Bank. Mr and Mrs Trent paid an amount sought by NAB under the Guarantee, and seek half the amount paid as contribution from Mr Bolton and Ms Shumack.

B. JURISDICTION

2. No issue was raised about jurisdiction. The Court has jurisdiction under s 134(1)(h) of the District Court Act 1973. Additionally, there is authority that a claim by a guarantor against a co-guarantor under the same instrument is a claim at law for a debt. [1]

   1. Lang v Le Boursicot (1993) 5 BPR 97,406 at 11,785 per McLelland J.

C. ISSUES

3. Ms Shumack appeared unrepresented. Although she had no legal training, she said that her husband, Mr Bolton, was unwell and sought to appear for him as well as for herself. Mr and Mrs Trent did not oppose this course and leave was granted.

4. The pleadings of Mr Bolton and Ms Shumack, and her affidavits, reflect that absence of legal training, making it difficult in many cases to ascertain precisely the nature of their claim or defence. The matter was conducted with a level of informality, where Mr and Mrs Trent did not object to much of the material relied on by Mr Bolton and Ms Shumack even though its relevance was often hard to discern. Ms Shumack was left to rely upon material which comprised pleadings, affidavits, submissions and argument, for what it was worth.

5. Mr Bolton and Ms Shumack resist the claim. They say there were four conditions of the guarantee which were not met, and they assert a number of matters to justify claims against Mr and Mrs Trent, which they seek to offset against the contribution claim.

6. The issues can be listed thus:

1. Whether the four asserted conditions of “registration”, “formation balance sheets”, “cash flow forecasts” and “two key person insurance policies” are conditions of the guarantee.

2. Whether certain payments gave rise to a contribution claim or set-off, namely:

1. repayment of a loan to NAB,

2. payments to MLC Life Insurance,

3. a director’s loan,

4. a difference in director’s wages,

5. unpaid rent by the yard owner,

6. loss of sale of containers; and

7. other matters.

D. THE BACKGROUND

7. Mr and Mrs Trent, Mr Bolton and Ms Shumack agreed in 2001 to purchase a removals and storage business. The purchase was made through the AJ Roberts company, in which each of the plaintiffs and the defendants held 25 of the 100 issued shares. Mr Trent and Mr Bolton worked in the company and were the directors.

8. The purchase of the business in 2001 was funded by loan facilities provided by NAB, including a loan of $165,000, an overdraft of $40,000 and a “lease purchase facility” of $150,000. Security for the borrowings included a “Guarantee and Indemnity” given by Mr and Mrs Trent, Mr Bolton and Ms Shumack, and registered mortgages over the family homes of the two couples.

9. In 2009 Mr Trent ceased employment with the company. Thereafter, although Mr Trent remained a director and secretary, Mr Bolton and Ms Shumack managed the business on a daily basis.

10. In 2012 Mr and Mrs Trent sold their home. NAB accepted as security in lieu of the mortgage on that property a deposit of $155,000.

11. On 15 September 2017 by order of the Supreme Court, the AJ Roberts company was placed in liquidation.

12. In 2018 $104,757.09 remained owing to NAB. This became the payout figure in December 2018 to discharge the liability under the Guarantee. This amount was paid by Mr and Mrs Trent from the $155,000 deposit. They seek half of the paid amount, $52,378.55, together with statutory interest from 13 December 2018 from Mr Bolton and Ms Shumack as their co-guarantors.

E. THE GUARANTEE

13. The Guarantee and Indemnity was signed as guarantors by Mr and Mrs Trent, Mr Bolton and Ms Shumack in 2001. It provided for a basic liability “of up to $260,000”, together with consequential “costs, expenses, liabilities, taxes and bank fees and charges” making up the “maximum amount” at risk. By it the signatories guaranteed the obligations of the AJ Roberts company to NAB and agreed to pay any amounts so owed up to the basic liability.

14. The Guarantee contained an acknowledgement in these terms:

“You acknowledge that:

(a) all the terms and conditions of this guarantee and indemnity are set out in these provisions; and

(b) in deciding to enter into this guarantee and indemnity the only statements by the Bank which you took into account are those contained in this document, and you did not rely on any other statement, document or promise by the Bank or on behalf of the Bank; and

(c) no other statement, document or promise can affect the operation of this guarantee and indemnity; and

(d) no provision can by [sic] varied or waived by the Bank except by written notice from the Bank; and

(e) you are responsible for making, and for continuing to make, your own investigation of the creditworthiness, financial position and honesty of the customer and any other person named as a co-guarantor in this guarantee and indemnity.” [2]

2. Exhibit A, p 42, cl 3.

F. THE FOUR ASSERTED CONDITIONS

15. The four conditions to the Guarantee asserted by Mr Bolton and Ms Shumack appear to be derived from the letter of offer dated 8 August 2001 from their finance company, RTF Financial Services. It noted the facilities to the AJ Roberts company borrower approved by NAB, as indicated above, and then stated:

“Conditions of the above approval are:-

∙ Confirmation of registration of the above (or other similar) Company

∙ Receipt of signed formation balance sheet for Company

∙ Cashflow Forecast to be signed by Directors

∙ Keyperson Insurance for a minimum of $385,000 to cover company debts to be held by Kenneth James Bolton & Bradley Trent”. [3]

3. Affidavit of Pauline Shumack, 11/10/19, p 5.

16. Thus, the four conditions on the Guarantee asserted by Mr Bolton and Ms Shumack, namely “registration”, “formation balance sheet”, “Cashflow Forecast” and “Keyperson Insurance” were said to be “Conditions of the above approval”. In other words, they were described by RTF to be conditions that the bank had imposed for the approval of the finance facilities.

17. As events transpired, the AJ Roberts company was registered, as Mr Bolton and Ms Shumack accepted in submissions, but they challenged the fulfilment of the other conditions: whether the financial records, including the balance sheet and cash flow forecasts, given to NAB were accurate, and whether key person insurance was only obtained for Mr Bolton, and not Mr Trent.

18. There is reason to doubt whether the RTF letter accurately summarised the conditions of the finance, at least because the guarantee was not for $385,000 but only $260,000. But even if the RTF letter was otherwise accurate, and even if some of the conditions were not satisfied, it has no impact on the enforceability of the guarantee.

19. If NAB ultimately decided to grant the facilities on more favourable terms, with or without conditions, it would not and did not impact on the terms of the Guarantee. There was within the Guarantee no terms related to signed formation balance sheets or cash flow forecasts, or key person insurance. Any question about the financial position of the AJ Roberts company was for the guarantors to investigate, under cl 3 of the Guarantee; it was not a matter for the Bank.

20. The defence accepted, and it was established, that Mr Bolton and Ms Shumack signed the Guarantee, that the AJ Roberts company in 2018 (although then in liquidation) owed the sum of $104,757.09 to NAB, and that Mr and Mrs Trent paid the company’s debt to the Bank. As the conditions asserted by Mr Bolton and Ms Shumack were not part of the Guarantee, but were, at most, obligations on the AJ Roberts company, which were either fulfilled by it, or waived by the Bank, those conditions cannot limit Mr and Mrs Trent’s entitlement to recover contribution.

G. THE DOCTRINE OF CONTRIBUTION

21. Under the doctrine of contribution:

“persons who are under co-ordinate liabilities to make good the one loss (e.g. sureties liable to make good a failure to pay the one debt) must share the burden pro rata”.[4]

4. Albion Insurance Co Ltd v Government Insurance Office (NSW) (1969) 121 CLR 342 at 350 per Kitto J; McLean v Discount & Finance Ltd (1939) 64 CLR 312 at 328 per Latham CJ.

22. In Mahoney v McManus,[5] Gibbs CJ (with whom Murphy and Aicken JJ agreed) observed that “[t]he operation of such a principle should not be defeated by too technical an approach”.

    5. (1981) 180 CLR 370 at 378.

23. The matter in issue is the ambit of the “loss” or “burden”. Whilst “too technical an approach” is discouraged, entitlement to contribution does not arise in respect of any actual or purported obligation by one or other of the parties, but only where the obligation is a co-ordinate liability to make good the one loss. The obligations to NAB under the Guarantee are an example. Another is where parties are liable for the same sum under a judgment. [6] An entitlement to claim, or cross-claim, contribution requires proof of that co-ordinate liability. It is not established by proving a payment to a third party that either the payer, or the party from whom contribution is claimed, is not under an obligation to pay.

    6. See Burke v LFOT Pty Ltd (2002) 209 CLR 282; [2002] HCA 17.

24. As I have indicated, the payments by Mr and Mrs Trent discharged the liability for which each Mr and Mrs Trent, Mr Bolton and Ms Shumack were liable under the Guarantee. That payment therefore enlivens a right of contribution. The remaining issues in the proceedings are whether any, and which, of Mr Bolton’s and Ms Shumack’s asserted payments were made and reduced that right, or in some other way enliven a claim against Mr and Mrs Trent.

H. LOAN PAYMENTS TO NATIONAL AUSTRALIA BANK

25. The first amount raised by Ms Shumack and Mr Bolton is particularised in the defence as “Co Surety Claim NAB loan account. Half of $43,000”. [7] The defence alleges that Mr Bolton and Ms Shumack “paid monthly interest on this loan (NAB 534467318) and paid out the loan in full in 2013”, and that “[t]he Plaintiffs did not contribute to the paying of this loan”. [8] The facts asserted in the defence were verified by an affidavit of Ms Shumack.

    7. At “PARTICULARS OF SET OFF CLAIM – Co surety”.

    8. At [37].

26. In the cross-claim, the truth of which was also verified by an affidavit of Ms Shumack, Mr Bolton and Ms Shumack assert that:

“11 From September 2009 the First Cross Claimant [Mr Bolton] continued to pay the original Loan…at the rate of approx. $2,000/month. The Cross Defendants did not contribute to the payments.

12 The balance of the loan in September 2009 was approximately $43,000. The loan was paid out by 2013.” [9]

9. Cross-claim, [11]-[12]; see also [4] herein.

27. In her affidavit, Ms Shumack said:

“NAB loan account no 534467318

This account was the account that was the original loan to purchase the business.

When the Plaintiff left the balance was $43,000. The cross defendants made no contribution. I never took any wage throughout this time. I only took some limited wages in 2017 when Ken’s pension was continually delayed.

There were times when Ken took very little in wages. MYOB report for 1/7/2009 to 30/06/2010 - $34,838.” [10]

10. 19/9/19, [50].

28. The financial statements of the AJ Roberts company for 2013 and 2014, by the absence of any reference to this loan, support the assertion that the loan was fully repaid by then, perhaps by 30 June 2012. [11]

    11. See Exhibit 5, Balance sheet as at 30 June 2013, figures for “last year”.

29. Ms Shumack was not cross‑examined on this evidence or at all. None of these matters were disputed by Mr Trent in evidence, although the defence to cross-claim did not admit them. Mrs Trent and Mr Bolton did not give evidence.

30. By reason of all these matters, I am persuaded on the balance of probabilities that Mr Bolton and Ms Shumack repaid to NAB a loan of the AJ Roberts company. [12] The debt of the AJ Roberts company to NAB comes within the terms of the Guarantee.

    12. See also [34], [38] and [44] herein.

31. Mr and Mrs Trent in their submissions describe the claim as in respect of “monies paid to the Bank by the Company”. They refer to paragraph 2 of the amended cross-claim. But this paragraph in its entirety says that, “The company commenced in 2001 borrowing funds from NAB Bank”. It says nothing about who made the repayments.

32. Mr and Mrs Trent submitted that the claim is misconceived because the company is separate from its shareholders, with separate property holdings. That separation is obvious. But the significance of the separation depends on the nature of the claim. The circumstance that the AJ Roberts company was the debtor under the loan to NAB does not deny the claim of Mr Bolton and Ms Shumack. Rather, it is an ingredient of a claim for contribution. The same position attached to the AJ Roberts overdraft. That was paid by Mr and Mrs Trent and enlivened their claim for contribution.

33. Mr and Mrs Trent submitted that:

“to the extent that a claim exists for contribution to the loan payments, it is a claim of the Company and not one able to be brought by the cross-claimants.” [13]

13. Plaintiffs’ written submissions (PWS), 16/10/19, [21].

34. This is not correct. Because the company is not a co-guarantor and separately because it has made no relevant payment, it has no entitlement to claim contribution. I have found on the balance of probabilities that Mr Bolton and Ms Shumack made payments for which they were liable as guarantors, to discharge the liability of the AJ Roberts company to NAB. As Mr and Mrs Trent bear the onus of proving a claim for contribution, I think the same result would follow, even if it were uncertain which of the company, Mr Bolton and Ms Shumack paid off the loan. It is not enough that Mr and Mrs Trent paid more than their share of one debt to NAB. Rather, they must have contributed more than their share of the guarantors’ liabilities to the Bank under the Guarantee. Other payments made by guarantors to the Bank under an obligation to do so are part of that calculation. [14]

    14. See JD Heydon, MJ Leeming & PG Turner, Meagher, Gummow & Lehane's Equity Doctrines & Remedies (LexisNexis Butterworths, 5th ed, 2015) at 10-140, and the cases there noted.

35. As an alternative to this submission, Mr and Mrs Trent assert “the claim is by the cross-claimants against the Company”. [15] It may be that Mr Bolton and Ms Shumack have a claim against the Company, so also would Mr and Mrs Trent in paying off the overdraft. More accurately both would have a claim in the liquidation, but that does not preclude a claim against a co‑guarantor.

    15. PWS, 16/10/19, [22].

36. Mr and Mrs Trent also submit that:

“there can be no claim for contribution because there was no co-ordinate obligation on the cross-claimants and the cross-defendants to make the loan repayments to the Bank. The obligation was on the Company”. [16]

16. PWS, 16/10/19, [23].

37. This is correct in principle, but under the Guarantee the guarantors were obliged to make the repayments to NAB. The Guarantee provided that “You guarantee that the customer will pay the Bank all the amounts which the customer owes the Bank at any time”. [17] The obligation was a co-ordinate obligation on all the guarantors. Of course the principal debtor, the AJ Roberts company, bore a repayment obligation to the Bank in respect of the loan. So also did the AJ Roberts company in the case of the overdraft repaid by Mr and Mrs Trent. It is because of the co-ordinate obligations under the Guarantee that there exists a right of contribution.

    17. Cl 6.1.

38. No argument was put or proved that the guarantors bore no liability because there was an absence of default by the AJ Roberts company. The significance of default, and its existence or otherwise, was uncertain. There was evidence that the AJ Roberts company was at the relevant time “starved of funds”,[18] that Mr Bolton could not be paid, [19] that the company had problems paying the rent, [20] and Ms Shumack’s superannuation was used for this purpose,[21] and that the container rental could not be paid. [22] The overdraft appeared to be at a level twice the approved limit. [23] These matters may indicate that there was default by the AJ Roberts company. But as indicated earlier, [24] the plaintiffs must prove that they have contributed more than their share of the liabilities to NAB under the Guarantee and that is not established by proving payment of a greater share of one debt.

    18. Verified defence at [38].

    19. Verified cross-claim at [20]-[21].

    20. Affidavit of Pauline Shumack, 23/9/19 at p 4/163, verified cross-claim at [24], Exhibit 4.

    21. Verified cross-claim at [25].

    22. Affidavit of Pauline Shumack, 23/9/19 at [41].

    23. Affidavit of Pauline Shumack, 23/9/19 at p127/163.

    24. See JD Heydon, MJ Leeming & PG Turner, Meagher, Gummow & Lehane's Equity Doctrines & Remedies (LexisNexis Butterworths, 5th ed, 2015) at 10-140, and the cases there noted.

39. Finally, Mr and Mrs Trent submitted that the claim for contribution for payments made prior to 18 May 2012 is statute-barred under s 14 of the Limitation Act1969. There seems to be several reasons why this defence is unavailable.

40. First, no pleading of s 14 of the Limitation Act 1969 is contained in the defence to cross-claim, nor was any application made to amend.

41. Secondly, Mr and Mrs Trent bear the burden of proof in relation to establishing that the claim is out of time. I have no evidence of the time the loan was repaid, other than it was between 2009 and 2013. It was for Mr and Mrs Trent to prove that any payments were made before the asserted limitation date of 18 May 2012.

42. Thirdly, the obligations in the Guarantee were pursuant to a deed, which is outside the ambit of s 14 of the Limitations Act 1969. [25]

    25. S 14(1)(a).

43. Fourthly, it is not evident that a cause of action in contribution by Mr Bolton and Ms Shumack arose when the bank loan was repaid, since ordinarily the payment must discharge the liability of the party paying, or at least pay more than the surety’s share before a right of action arises. [26] That did not occur with the payment by Mr Bolton and Ms Shumack to discharge the earlier loan. In those circumstances, a payment would merely serve as a set‑off or credit in the event that the liability to NAB was eventually wholly discharged, as it now is.

    26. Endnote 14, and [34] herein.

37. It follows that I am satisfied that Mr Bolton and Ms Shumack are entitled to set-off the payment made to discharge the liability of the AJ Roberts company. To deny that set-off would wrongly take an unduly technical approach to the right of contribution. The underlying principle is that the guarantors should contribute equally to the debts of the debtor secured by the guarantee, not merely to one of those debts.

38. The proper amount to be credited to Mr Bolton and Ms Shumack is considered later in this judgment. [27]

    27. See [59]-[62] herein.

I. PAYMENTS FOR INSURANCE POLICY

46. Mr Bolton and Ms Shumack specify “Co Surety MLC Policy Half of $44,000” in the defence. The verified amended cross-claim at paragraph 19 pleads:

“Between September 2009 and 2016 $45,000 was paid for this policy, but The Cross Claimants derive no benefit. The policy is a life policy on Kenneth Bolton but the company and [Mr Trent] are beneficiaries.”

47. Evidence to a similar effect is given in Ms Shumack’s affidavit at paragraph 49. But the circumstance that the company was a beneficiary of the life policy shows that there was a benefit to Mr Bolton and Ms Shumack: if Mr Bolton died, the policy would provide the company with funds that would discharge or assist to discharge loans guaranteed by Mr Bolton and Ms Shumack. In any event, the circumstance that Mr Bolton was not a beneficiary does not enliven a cause of action against Mr and Mrs Trent.

48. To impact on Mr and Mrs Trent’s contribution claim, it is necessary that Mr Bolton and Ms Shumack made the payments to MLC and they were obliged to do so under the Guarantee. As to the second item, there was evidence that this “key man insurance” was a term of the loans provided by NAB. [28] Even though the payment was not made to NAB, it was an obligation which the AJ Roberts company owed to NAB, the fulfilment of which was guaranteed by the guarantors in cl 6.1 of the Guarantee. That may be sufficient to satisfy this second requirement for a “co-ordinate liability” to arise.

    28. See affidavit of Pauline Shumack, 11/10/19, p 6.

49. However, the evidence of payment by Mr Bolton and Ms Shumack is less persuasive.

50. It is a matter not alleged in the pleadings, but Ms Shumack’s affidavit does assert “that between September 2009 and 2016 we paid $45,000 in premiums”. However, Ms Shumack’s affidavit of 23 August 2019 includes documents [29] indicating that payments were made by the AJ Roberts company from December 2006 to December 2013 and from 2015 the bank statements in evidence [30] show payments made from the AJ Roberts company bank account in November 2015. In those circumstances, I am persuaded on the balance of probabilities that the AJ Roberts company made the insurance payments. Payment by the Company does not, without more, enliven any right in Mr Bolton and Ms Shumack to contribution.

    29. Annexure L.

    30. Annexure M.

51. For the reasons given in respect of the discharge of the NAB loan, the arguments of Mr and Mrs Trent that “it is a claim of the Company”, “a claim against the Company” [31] , “the liability is on the Company” [32] or that some part of it is statute-barred, [33] are not persuasive. There was, in my view, a “co-ordinate liability”[34] to pay the premiums, at least in circumstances of default. But the evidence that the payment was made by the AJ Roberts company defeats any claim by Mr Bolton and Ms Shumack for contribution in respect of this payment.

    31. PWS, 16/10/19, [27].

    32. PWS, 16/10/19, [28].

    33. PWS, 16/10/19, [29].

    34. Cf contrary to PWS at [28].

J. DIRECTOR LOAN

52. Mr Bolton and Ms Shumack assert in the defence that “Director loan at 2015 was $6,500”. [35] The cross-claim records that Mr Trent “drew a loan of $5,000 from the company using the online banking facilities”. [36] This loan is evidenced by Ms Shumack’s evidence at paragraph 53 of her affidavit, and by Annexure Q to that affidavit. The annexure indicates that Mr Trent was advanced $5,000 from the company on 22 February 2007, but indicates that the advance was in “repayment” of a loan. The balance sheet for 2013 does not indicate any assets in terms of loans to directors, let alone a loan to Mr Trent. In my view, there is insufficient evidence to establish that Mr Trent owed funds to the AJ Roberts company. If he did, there would remain a question of how any debt owed by Mr Trent to the company could impact on his right to contribution from Mr Bolton and Ms Shumack. Rather, the recovery of that loan debt would be a matter for the liquidators.

    35. Defence particulars.

    36. At [9] on p 8/13.

53. Accordingly, I am not satisfied that the transaction on 22 February 2007, evidenced by Annexure Q, has any impact on the rights of contribution between Mr and Mrs Trent and Mr Bolton and Ms Shumack.

K. DIFFERENCE IN DIRECTOR’S WAGES OF $9,000

54. This matter is alleged in the defence in the particulars after paragraph 49. The amended cross-claim pleads facts concerning the wages in paragraphs 20 to 23, but it is difficult to ascertain the nature and detail of the claim. By 30 June 2014, [37] the AJ Roberts company account showed that Mr Bolton and Ms Shumack were owed $91,565 in loans made by them to the AJ Roberts company, although this is different to the amount and type of liability alleged. In any event, there is no evidence that these loans arose by reason of an obligation to NAB made under the Guarantee, or that there was any obligation by Mr Bolton and Ms Shumack to make these loans. It follows that the evidence does not establish that there was a “co-ordinate liability”. This claim is therefore rejected.

    37. See Exhibit 5.

L. UNPAID RENT OF $23,000

55. Ms Shumack submitted that rent was payable by a third party, the yard owner of the premises that AJ Roberts had leased, in respect to some part of the leased premises. Assuming that to be so, it is difficult to understand how that enlivens a right to recover by Mr Bolton and Ms Shumack against Mr and Mrs Trent. Rather, it might entitle the liquidators to recover the unpaid rent from the yard owner. The circumstance that Mr Trent may have said things to the yard owner that created difficulties in the AJ Roberts company recovering such a debt is not enough of itself to give Ms Shumack a cause of action against Mr Trent. This claim is therefore dismissed.

M. LOSS OF SALE OF CONTAINERS

56. Ms Shumack contended that certain containers belonged to her and Mr Bolton but that they were unable to contain because they contained plasterboard and other waste building materials as shown in the photographs on the final pages [38] of the annexure to her 23 September 2019 affidavit. There was no evidence that the waste materials belonged to Mr or Mrs Trent. Rather, there was evidence that he had no role in placing waste in the containers. Nor was there any evidence concerning the value of the containers with or without the waste plasterboard in them. I was not satisfied that any claim against Mr and Mrs Trent arose from the waste materials in the containers.

    38. 163/163.

N. OTHER MATTERS

57. Another claim of Mr Bolton and Ms Shumack was in respect of the costs order awarded in the Supreme Court. But by the close of submissions, Ms Shumack accepted that these proceedings were not the appropriate vehicle to challenge the costs order and no relief was pressed in that regard.

58. Other claims were raised but it was hard to discern how they could impact upon Mr Trent. Mr Bolton and Ms Shumack did not always with clarity separate their own entitlements from potential entitlements of the AJ Roberts company, or separate their potential claims in a liquidation from claims against Mr and Mrs Trent. I was not persuaded that any other basis existed to resist the claim of Mr and Mrs Trent, or reduce Mr Bolton’s and Ms Shumack’s liability to them.

O. QUANTUM

59. The only claim established by Mr Bolton and Ms Shumack is in respect of the repayment of a loan of $43,000. There may have been interest on the loan paid by Mr Bolton and Ms Shumack - repayments are evidenced to be $2,000 a month but for an uncertain period - but satisfactory evidence of any interest amount is absent.

60. If this debt were borne equally, Mr and Mrs Trent would bear half of this repayment amount, or $21,500. If the loan was paid out in the period 2009 to 2013, then a question arises as to whether interest on the $21,500 should be allowed at the court rates from the midpoint, say 30 June 2011. Mr Bolton and Ms Shumack did not assert or plead any claim for interest and I have found that the payment did not give rise to a claim in contribution at the time it was paid, because at that time Mr Bolton and Ms Shumack had not overpaid their share of the guarantors’ liability to the NAB. Paying a greater share of one debt only is insufficient to enliven a claim, as I indicated earlier. [39] Thirdly, no claim of any entitlement to a share of the loan repayment was made on Mr and Mrs Trent prior to these proceedings.

    39. See endnote 14, and [34] and [43] herein.

61. For these reasons, I am not satisfied that interest should run on the half share of the earlier loan agreement.

62. The deduction of the amount of $21,500 must be from the principal amount of contributions sought by Mr and Mrs Trent, being $52,378.55, or half of $104,757.09. A judgment in favour of Mr and Mrs Trent should thus be $52,378.55 minus $21,500, or $30,878.55, plus interest on that sum at court rates from 13 December 2018 until 11 December 2019, an amount of $1,658.98. Mr and Mrs Trent are entitled to judgment in the sum of $32,537.53.

P. COSTS

63. After further submissions, I was not persuaded that any conduct of the parties in connection with the liquidator should impact upon the appropriate costs order. However, the judgment sum is less than the amount of $40,000 referred to in UCPR 42.35. That rule provides that in these circumstances:

“An order for costs may be made, but will not ordinarily be made, unless the District Court is satisfied the commencement and continuation of the proceedings in the District Court, rather than the Local Court, was warranted.”

64. Accordingly, ordinarily no costs order would be made. However, I will allow either party to make or renew an application for an order in respect of costs in particular because the plaintiffs have sought an opportunity to get some instructions about the matter. Such an application by either party in respect of an order about costs should be made by email to my associate identifying the order sought. If that occurs, a date will be allocated in the new term for a costs argument.

Q. ORDERS

65. The orders are:

1. Judgment for the plaintiffs against the defendants in the sum of $32,537.53.

2. Cross-claim otherwise dismissed.

3. Any application in respect of a costs order must be notified by email to my associate by noon on Friday, 20 December 2019, and indicate the costs order sought.

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Endnotes

Decision last updated: 18 March 2020