Wong v Huisman
[2010] QSC 192
•2 June 2010
SUPREME COURT OF QUEENSLAND
CITATION:
Wong v Huisman [2010] QSC 192
PARTIES:
WONG, Marina
(plaintiff)
GLOBAL CEMENT AUSTRALIA PTY LTD
ACN 085 873 329 (Controller Appointed)
(second plaintiff)
v
HUISMAN, Anthony John
(first defendant)
HUISMAN, Vicki Lee
(second defendant)
ISON, Gregory Allan
(third defendant)
ISON, Lorraine(fourth defendant)
FILE NO/S:
SC No 12405 of 2008
DIVISION:
Trial Division
PROCEEDING:
Application
ORIGINATING COURT:
Supreme Court at Brisbane
DELIVERED ON:
2 June 2010
DELIVERED AT:
Brisbane
HEARING DATE:
20 January 2010, Supplementary written submissions
JUDGE:
Margaret Wilson J
ORDER:
1. that the first plaintiff’s claim be dismissed;
2. that the defendants pay the second plaintiff’s costs of and incidental to the application to dismiss the claim brought by the second plaintiff;
3. that the first plaintiff pay the defendant’s costs of and incidental to the proceeding, including their costs of the application for summary judgment, to be assessed on the standard basis.
CATCHWORDS:
PROCEDURE – COSTS – SECURITY FOR COSTS – PLAINITFF – where court had ordered second plaintiff to provide security for costs – where security not provided within time allowed and second plaintiff’s claim was stayed – where defendant brings application to dismiss second plaintiff’s claim pursuant to r 674 of the Uniform Civil Procedure Rules 1999 (Qld) – where solicitor for plaintiffs deposed that second plaintiff would provide security – where second plaintiff’s claim not dismissed
PROCEDURE – SUPREME COURT PROCEDURE – QUEENSLAND – PROCEDURE UNDER RULES OF COURT – SUMMARY JUDGMENT – where defendant brings application for summary judgment against first plaintiff pursuant to r 293 of the Uniform Civil Procedure Rules 1999 (Qld) – where defendants were owners and lessors of industrial premises – where second plaintiff was lessee of those premises and first plaintiff the wife of the sole director of second plaintiff – where it was a term of the lease that second plaintiff provide bank guarantee for the due performance of its obligations under lease, with the maximum liability of the bank being not less than the sum of the annual rent – where at request of first plaintiff, the Bank of Queensland provided a bank guarantee to secure second plaintiff’s obligations under the lease – where it was a condition of the guarantee facility that the first plaintiff agreed to pay the Bank any amount it paid the defendants pursuant to the guarantee – where second plaintiff has been in receivership since 20 February 2008 – where defendants called on guarantee and Bank paid them $194,000 – where first plaintiff paid Bank $194,000 – where plaintiffs contend that defendants called on the guarantee when not entitled to do so – where first plaintiff claims sum of $194,000 against the defendants as damages for breach of contract, or alternatively as moneys had and received – where second plaintiff has a right to claim against defendants – whether first plaintiff has a right to recover against defendants – whether first plaintiff has any real prospect of succeeding in claim in contract – whether r 293 of the Uniform Civil Procedure Rules 1999 (Qld) satisfied – whether summary judgment against first plaintiff should be granted
EQUITY – GENERAL PRINCIPLES – UNJUST ENRICHMENT – where first plaintiff claims $194,000 against the defendants as moneys had and received invoking unjust enrichment – where first plaintiff submits that defendants had been enriched by receipt of a benefit which they had gained at first plaintiff’s expense and that it would be unconscionable for them to retain that benefit – whether any wrong committed by defendants against first plaintiff – whether first plaintiff has any real prospect of succeeding in claim for moneys had and received
Uniform Civil Procedure Rules 1999 (Qld), r 293, r 674
Australia and New Zealand Banking Group Ltd v Westpac
Baltic Shipping Co v Dillon (1993) 176 CLR 344, cited
Banking Corporation (1988) 164 CLR 662, cited Australasian Conference Association Ltd v Mainline
Cargill International SA Antigua Geneva Branch v Bangladesh Sugar & Food Industries Corporation [1996] 2 Lloyd’s Rep 524, considered
Cargill International SA v Bangladesh Sugar and Food Industries Corp [1998] 1 WLR 461, cited
Constructions Pty Ltd (1978) 141 CLR 335, cited
Comdel Commodities Ltd v Siporex Trade SA [1997] 1 Lloyd's Rep 424, cited
David Securities Pty Ltd v Commonwealth Bank of Australia (1991) 175 CLR 353, considered
Deputy Commissioner of Taxation v Salcedo [2005] QCA 227, considered
Ideas Plus Investments Ltd v National Australia Bank Ltd [2006] WASCA 215, considered
O’Sullivan v National Australia Bank Ltd [1998] NSWSC 303, considered
Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221, citedRoxburgh v Rothmans of Pall MallAustralia Pty Ltd (2001) 208 CLR 516, cited
T C Somers for the applicant defendants.
M Steele for the respondent plaintiffs.
SOLICITORS:
Woods Prince Lawyers for the applicant defendants.
Patane Lawyers for the respondent plaintiffs.
JMARGARET WILSON: This is an application by the defendants for:
(a) summary judgment against the first plaintiff; and
(b) an order dismissing the second plaintiff’s claim.
Application against second plaintiff
The application to dismiss the second plaintiff’s claim was made pursuant to the rule 674 of the Uniform Civil Procedure Rules 1999 which provides –
"If the court orders the plaintiff to give security for costs –
(a) the time set by these rules or by an order of the court for another party to take a step in the proceeding does not run until the security is given; and
(b)if security is not given under the order- the proceeding is stayed so far as it concerns steps to be taken by the plaintiff; and
(c) the court may, on the defendant's application, dismiss all or part of the proceeding."
On 22 July 2009 Justice P Lyons ordered the second plaintiff to provide security for costs in the amount of $51,598.50 by 22 August 2009. The security was not provided within the time allowed by his Honour, and the second plaintiff’s claim was accordingly stayed.
When the application came before me, the solicitor for the plaintiffs deposed on information and belief that the second plaintiff would provide the security by 20 February 2010.
On 20 January 2010 I declined to dismiss the second plaintiff’s claim.
Application against first plaintiff
The defendants’ application for summary judgment against the first defendant has been brought pursuant to rule 293 of the UCPR which provides –
"(1) A defendant may, at any time after filing a notice of intention to defend, apply to the court under this part for judgment against a plaintiff.
(2) If the court is satisfied –(a) the plaintiff has no real prospect of succeeding on all or a part of the plaintiff's claim; and
(b) there is no need for a trial of the claim or the part of the claim;
the court may give judgment for the defendant against the plaintiff for all or the part of the plaintiff's claim and may make any other order the court considers appropriate."
In Deputy Commissioner of Taxation v Salcedo[1] Williams JA, with whom the other members of the Court of Appeal agreed, said:
"Summary judgment will not be obtained as a matter of course and the judge determining such an application is essentially called upon to determine whether the respondent to the application has established some real prospect of succeeding at a trial; if that is established then the matter must go to trial."[2]
[1][2005] QCA 227.
[2][2005] QCA 227 at [17].
The facts
The defendants were owners and lessors of industrial premises at Hemmant. The second plaintiff, then a distributor of wholesale cement, was the lessee of those premises. The first plaintiff is the wife of the sole director of the second plaintiff. It was a term of the lease that the second plaintiff provide a bank guarantee for the due performance of its obligations under the lease, with the maximum liability of the bank being not less than the sum of the annual rent from time to time.
At the request of the first plaintiff, the Bank of Queensland provided a bank guarantee on 6 July 2004. It provided (inter alia):
" BANK GUARANTEE
BENEFICIARY: Anthony John & Vicki Lee Huisman and Gregory Allan & Lorraine Ison
3/99 Cambridge Parade
Manly QLD 4179CUSTOMER:
Name: Marina Lai Yee Wong
Address: U56/17 Marlow Street
Woodridge QLD 4114MAXIMUM AMOUNT: $194,000.00
EXPIRY DATE: N/A
1.In consideration of the Beneficiary, at the request of the Customer and the Bank, agreeing to accept this Bank Guarantee as security for the monetary obligations of Global Cement Australia Pty Ltd ACN 085 873 329 under its lease of the premises at 120 Gosport Street, Hemmant from the Beneficiary (‘the Contract’), the Bank unconditionally undertakes to pay on demand any sums which may be demanded by the Beneficiary on or prior to the Expiry Date to a maximum of the Maximum Amount, on presentation and surrender of this Bank Guarantee to the Bank by the Beneficiary.
…
3.Any payments demanded by the Beneficiary must be paid by the Bank in accordance with the terms of this Bank Guarantee and without further reference to the Customer. This clause applies even if the Customer has notified the Bank not to make payment under the Bank Guarantee."
As between the first plaintiff and the bank, it was a condition of the guarantee facility that the first plaintiff pay the bank any amount it paid the defendants pursuant to the guarantee.
The second plaintiff has been in receivership since 20 February 2008.
The defendants called on the guarantee, and the bank paid them $194,000. It required the first plaintiff to pay it $194,000, which she did.
The plaintiffs contend that the defendants called on the Guarantee when they were not entitled to do so. The first plaintiff claims the sum of $194,000 against the defendants as damages for breach of contract, or alternatively as moneys had and received.
The first plaintiff’s claim in contract
The first plaintiff’s claim in contract has been pleaded as follows:
"Bank Guarantee
30.On or about 6 July 2004 Bank of Queensland Limited granted a bank guarantee to the Defendants at the request of the First Plaintiff and in consideration of the Defendants accepting the Bank Guarantee as security for the monetary obligations of the Second Plaintiff under the Lease (‘the Bank Guarantee’).
Particulars
The Bank Guarantee was contained in a written instrument dated 6 July 2004.
31.The Defendants accepted the Bank Guarantee in satisfaction of clause 22.1 of the Lease.
32.There was no other basis for the provision of the Bank Guarantee than for the satisfaction of clause 22 of the Lease.
33.The defendants at all times knew that the only reason for the provision of Bank Guarantee was for the satisfaction of clause 22 of the Lease.
34.It was an express term of the Bank Guarantee, inter-alia, that the Bank unconditionally undertakes to pay on demand any sums which may be demanded by the Defendants to a maximum amount of $194,000.00.
35.The first plaintiff agreed with the Bank to pay the Bank any amount paid by the Bank to the defendants pursuant to the Bank Guarantee.
36.The defendants knew, or ought to have known, that:
(a) the first plaintiff had requested the Bank to provide the Bank Guarantee;
(b) the first plaintiff provided security to the Bank for the performance of the Bank Guarantee; and
(c) the first plaintiff had agreed to pay to the Bank any amount paid by the Bank to the defendants pursuant to the Bank Guarantee.
37.At the hearing of this matter the Plaintiffs will rely upon the full terms, true meanings and effect of the Bank Guarantee and by reference incorporates the whole of that document into this pleading.
38.By agreeing with the first plaintiff to accept the Bank Guarantee in satisfaction of clause 22 of the Lease, the defendants entered into a contract of guarantee with the first plaintiff.
39.There were terms of the contract of guarantee that:
(a) the first plaintiff would guarantee the performance by the second plaintiff of the second plaintiff’s obligations under the Lease;
(b) the first plaintiff would guarantee the second plaintiff’s obligations by arranging for the Bank to provide the Bank Guarantee;
(c) the defendants would call on the Bank Guarantee only to the extent necessary to satisfy clause 22.2 of the Lease
52.In breach of the contract of guarantee referred to in paragraph 38 of this amended statement of claim the defendants called upon the Bank Guarantee other than as necessary to satisfy clause 22.2 of the Lease.
53.By reason of the defendants’ breach of the contract of guarantee with the first plaintiff, the first plaintiff has suffered loss and damage in the amount of $194,000, being the amount the first plaintiff was required to, and did, pay the Bank as a result of the Bank paying $194,000 to the defendants pursuant to the Bank Guarantee."
Assuming (for the purpose of this application) that the defendants called on the bank guarantee when they were not entitled to do so, then the second plaintiff may recover the amount paid under it from the defendants. Its entitlement to do so is based on the contract between it and the defendants. See O’Sullivan v National Australia Bank Ltd[3] and Cargill International SA Antigua Geneva Branch v Bangladesh Sugar & Food Industries Corporation.[4]
[3][1998] NSWSC 303.
[4][1996] 2 Lloyd’s Rep 524.
In O’Sullivan v NAB the State Superannuation Board was the lessor of premises of which Frogs for Fitness Pty Ltd was the lessee. Frogs for Fitness was controlled by O’Sullivan. The lessor required a guarantee for the rent, and O’Sullivan arranged with NAB to provide one. The lessor’s interest was assigned to Nesova Pty Ltd. Frogs for Fitness fell into arrears with the rent, and Nesova called on the guarantee. The bank paid it the amount it demanded ($254,436) although the rent actually owing was much less ($42,725). When the bank foreshadowed recovery proceedings against O’Sullivan, he took pre-emptive action by commencing proceedings for a negative declaration. The proceedings between the bank and O’Sullivan were settled, but a cross-claim by Frogs for Fitness against Nesova to recover the overpayment remained. Justice Young dismissed an application to strike out the cross-claim being satisfied that Frogs for Fitness’s claim was not demurrable. He said –
"All I am deciding at the present is that the contractual obligation of a person to furnish a security entitles that person in its own name to sue for an overpayment under the guarantee."
He had earlier observed that O’Sullivan might be able to make a claim against Frogs for Fitness in contract, trust or otherwise,
"so that any moneys recovered by Frogs for Fitness [would] in fact flow through it like a conduit to the ‘real owner’."
Counsel for the applicant defendants relied on another passage in the judgment in support of his submission that the overpayment in the present case is recoverable by the first plaintiff against the defendants. The passage he relied upon is as follows:
"Mr Aitken for Nesova says that ordinarily in the scenario painted above, the National Australia Bank would have the obligation to pay the full amount of the guarantee to Nesova, and if there were any surplus, then the surplus would have to be paid back to the person who provided the money; see Australasian Conference Association Ltd v Mainline Constructions Pty Ltd.[5] The real question is, says Mr Aitken, who is the party who provided the funds? He says the answer to that question must be ‘O'Sullivan’.
Mr Aitken relies for that proposition on the decision of Morison J in Cargill International SA Antigua Geneva Branch v Bangladesh Sugar & Food Industries Corp.[6] After referring to the Mainline case his Lordship said, ‘I take the view that if there has been a call on a bond which turns out to exceed the true loss sustained, then the party who provided the bond is entitled to recover the overpayment. It seems to me that the account party may hold the amount recovered in trust for the bank, (where, for example, the bank had not been paid by him) but that does not affect his right to bring the claim in his own name. In the normal course of events, the bank will have required its customer to provide it with appropriate security for the giving of the bond, which would be called upon as soon as the bank was required to pay. ... In principle, I take the view that the account party is always entitled to receive the overpayment since his entitlement is founded upon the contract between himself and the beneficiary.’ This decision was approved by the English Court of Appeal in Comdel Commodities Ltd v Siporex Trade SA.[7] Furthermore, the Court of Appeal dismissed an appeal from Morison, J's decision. The appeal is reported as Cargill International SA v Bangladesh Sugar and Food Industries Corp.[8] The appellate court did not spend time on this particular point.[9]
I accept all these submissions, but with respect, I do not consider that they operate so as to make the present cross claim demurrable.”
[Emphasis added]
[5](1978) 141 CLR 335, 349.
[6][1996] 2 Lloyd's Rep 524, 530
[7][1997] 1 Lloyd's Rep 424, 431
[8][1998] 1 WLR 461.
[9][1998] 1 WLR 46, 465.
In Cargill the plaintiffs agreed to sell 12,500 tonnes of sugar to the defendants. The plaintiffs’ obligations were supported by a performance bond given to the defendants in the form of a bank guarantee equivalent to ten per cent of the value of the sugar. The bond was liable to be forfeited if the plaintiffs failed to fulfil any terms and conditions of the contract and if any loss or damage occurred to the defendant due to default of the plaintiffs. The defendant alleged circumstances in which it was entitled to forfeit the performance bond. The issues for decision were, on the assumption that the plaintiffs were in breach of contract, whether the defendant was entitled to make a call for the full amount of the performance bond if the breaches of contract had caused it (a) no loss; or (b) some loss less than the amount of the performance bond or (c) some loss equal to or greater than the amount of the performance bond; and whether, in the event that the defendant obtained payment under the performance bond, it was entitled to retain all of the moneys received by it, or only such moneys as were equal to the amount of the loss suffered by it or some other and if so what other amount. Mr Justice Morison held that the plaintiffs were entitled to recover the amount of the overpayment from the defendant pursuant to the underlying contract between them for the sale of the sugar. He said:[10]
"As a matter of general principle ... in the light of the commercial purpose of such bonds, the authorities to which I have referred and the textbook comments, I take the view that if there has been a call on a bond which turns out to exceed the true loss sustained, then the party who provided the bond is entitled to recover the overpayment. It seems to me that the account party may hold the amount recovered in trust for the bank, (where, for example, the bank had not been paid by him) but that does not affect his right to bring the claim in his own name. In the normal course of events, the bank will have required its customer to provide it with appropriate security for the giving of the bond, which would be called upon as soon as the bank was required to pay. On the facts of this case, no question of a trust or agency will arise. In principle, I take the view that the account party is always entitled to receive the overpayment since his entitlement is founded upon the contract between himself and the beneficiary."
[10][1996] 2 Lloyd’s Rep 524, 530.
Returning to the passage in the judgment of Justice Young, if what his Honour meant was that the overpayment would be recoverable by O’Sullivan against Nesova, then, with respect, what he said is not supported by the decision in Cargill. And, of course, it was not part of the ratio of his Honour’s decision.
Those cases support the second plaintiff’s right to claim against the defendants. They do not provide a basis on which the first plaintiff may recover against the defendants.
It is apparent on the face of the bank guarantee and from the bank’s letters to the defendants that it was issued at the request of the first plaintiff. However, the obligation to provide a bank guarantee rested with the second plaintiff, and there is nothing to suggest that it was of any moment to the defendants that it was issued at the bequest of the first plaintiff. The mere fact that the defendants had knowledge that the bank had given the guarantee at the request of the first plaintiff did not give rise to any contract between the defendants and the first plaintiff.
There is no evidence of the defendants’ having "agreed with the first plaintiff to accept the bank guarantee in satisfaction of clause 22 of the lease" on the terms alleged in paragraph 39 or otherwise. Clause 1 of the bank guarantee, which begins–
"In consideration of the Beneficiary [the defendants], at the request of the Customer [the first plaintiff] and the Bank, agreeing to accept this Bank Guarantee for the monetary obligations of Global Cement Australia Pty Ltd [the second plaintiff]…"
refers not to an agreement between the defendants and the first plaintiff, but rather to an agreement between the defendants and the second plaintiff.
In Ideas Plus Investments Ltd v National Australia Bank Ltd[11] Steytler P considered an analogous factual scenario. He observed –
"… if these facts were sufficient to give rise to a contract between …[the issuing bank’s customer] and …[the beneficiary], then, on every occasion in which a lender/beneficiary required the procurement of a letter of credit there would arise by implication a contract between the lender/beneficiary and the person who happened to procure the issue of the letter of credit, affecting the way that the lender/beneficiary could exercise its rights under the letter of credit. There is, so far as I am aware, no authority to support that proposition, which seems to me to be unsustainable on ordinary contractual principles."
[11][2006] WASCA 215.
In short, I consider that the first plaintiff does not have any real prospect of succeeding in her claim in contract.
The first plaintiff’s claim for moneys had and received
The first plaintiff’s claim for moneys had and received invokes unjust enrichment. It has been pleaded as follows:
"51. In the premises:
(a)The defendants were enriched by the payment to them of $194,000 pursuant to the Bank Guarantee;
(b)the enrichment was at the first plaintiff’s expenses; and
(c)the enrichment was unjust because:
(i)the second plaintiff did not fail to perform its obligation under the Lease;
(ii)the defendants did not suffer any loss by reason of any failure by the second plaintiff to perform its obligations under Lease;
(iii)the defendants were for that reason not entitled to call upon the Bank Guarantee in the amount of $194,000, or any amount; and
(iv)there was no basis for the defendants to call upon the Bank Guarantee in the amount of $194,000 or any amount."
In David Securities Pty Ltd v Commonwealth Bank of Australia[12] Mason CJ and Deane Toohey Gaudron and McHugh JJ confirmed that in Australian law unjust enrichment is not a definitive legal principle according to its own terms rather than just a concept. They said -
[12](1991) 175 CLR 353 at 378
"The two decisions of this Court just mentioned reject that approach. In Pavey & Matthews Deane J. stated:[13]
[13]Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221 at 256-257.
‘To identify the basis of such actions as restitution and not
genuine agreement is not to assert a judicial discretion to do
whatever idiosyncratic notions of what is fair and just might dictate.
... That is not to deny the importance of the concept of unjust
enrichment in the law of this country. It constitutes a unifying legal
concept which explains why the law recognizes, in a variety of
distinct categories of case, an obligation on the part of a defendant
to make fair and just restitution for a benefit derived at the expense
of a plaintiff and which assists in the determination, by the ordinary
processes of legal reasoning, of the question whether the law should, in justice, recognize such an obligation in a new or developing category of case’.Accordingly, it is not legitimate to determine whether an enrichment is unjust by reference to some subjective evaluation of what is fair or unconscionable. Instead, recovery depends upon the existence of a qualifying or vitiating factor such as mistake, duress or illegality. As this Court stated in Westpac Banking Corporation:[14]
[14]Australia and New Zealand Banking Group Ltd v Westpac Banking Corporation (1988) 164 CLR 662 at 673.
‘In other words, receipt of a payment which has been made under a
fundamental mistake is one of the categories of case in which the
facts give rise to a prima facie obligation to make restitution, in
the sense of compensation for the benefit of unjust enrichment, to the person who has sustained the countervailing detriment’."
Counsel for the first plaintiff submitted that in this case the defendants had been enriched by the receipt of a benefit which they had gained at the first plaintiff’s expense, and that it would be unconscionable for them to retain that benefit. The unconscionability was said to arise:[15]
[15]Supplementary Submissions on Behalf of the Plaintiffs filed 22 January 2010 (court document number 39), para 21.
"(a)because of a failure of basis, or the consideration behind the agreement. In the High Court decision in Roxburgh v Rothmans of Pall Mall,[16] Gleeson CJ, Gaudron and Hayne JJ said:
‘Failure of consideration is not limited to non-performance of a contractual obligation, although it may include that. The authorities…show that the concept embraces payment for a purpose which has failed as, for example, where a condition has not been fulfilled, or a contemplated source of affairs has disappeared.’
(b)because of a wrong committed by the defendants, including breach of the contract pleaded between the first plaintiff and the defendants, or breach of the contract of lease between the second plaintiff and the defendants.[17]"
[16](2001) 208 CLR 516 at 525.
[17]See eg discussion in Restitution Law in Australia, 2nd ed., Mason, Carter, Tolhurst, Butterworths, 2008, at [1833].
I do not accept these submissions even in principle. Any enrichment of the defendants was an enrichment at the second plaintiff’s expense, not the first plaintiff’s. Further, any failure of basis or consideration (in the broad sense in which consideration is used in this context[18]) was a failure of basis or consideration in the relationship between the second plaintiff and the defendants. There is no basis for a finding of any wrong committed by the defendants as against the first plaintiff.
[18]See Baltic Shipping Co v Dillon (1993) 176 CLR 344 at 375.
Conclusion
A defendant’s application for summary judgment against a plaintiff is not granted lightly. But in the circumstances of this case I am satisfied that the test in rule 293 of the UCPR has been satisfied.
Accordingly, there should be an order dismissing the first plaintiff’s claim against the defendants.
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