Commonwealth Bank of Australia v Super Property Group Pty Ltd & Ors [2024] QDC 124

DISTRICT COURT OF QUEENSLAND CITATION: Commonwealth Bank of Australia v Super Property Group Pty Ltd & Ors [2024] QDC 124 PARTIES: COMMONWEALTH BANK OF AUSTRALIA ABN 48 123 123 124 (Plaintiff) v SUPER PROPERTY GROUP PTY LTD (formerly known as J.A. INDUSTRIES 3 PTY LTD) ACN 123 906 918 in its own right and as trustee for the Abouslaibi Family Trust (First Defendant) P & J INDUSTRIES (QLD) PTY LTD ACN 165 341 784 in its own right and as trustee for the P & J Industries (Qld) Trust (Second Defendant) JOHN ABOUSLAIBI (Third Defendant) AYONAVA MUKERJI in his own right and as trustee for the CMA Mukerji Family Trust (Fourth Defendant) PAUL DAVIES (Fifth Defendant) FILE NO/S: 2684/23 DIVISION: Civil PROCEEDING: Application ORIGINATING COURT: District Court at Brisbane DELIVERED ON: 9 August 2024 DELIVERED AT: Brisbane HEARING DATE: 1 August 2024 JUDGES: Jarro DCJ ORDER: 1. The fourth defendant’s application for leave to withdraw admissions is granted. -- 1 of 9 -- 2 2. The plaintiff’s application for summary judgment is granted. 3. I will hear the parties about the precise form of the order and costs. CATCHWORDS: PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – ENDING PROCEEDINGS EARLY – SUMMARY DISPOSAL – SUMMARY JUDGMENT FOR PLAINTIFF OR APPLICANT – where the plaintiff seeks summary judgment under r 292(2) of the Uniform Civil Procedure Rules 1999 (Qld) – where the plaintiff brought proceedings against the defendants for enforcement of guarantees – where the defendants’ primary defence is that the guarantees are not binding in circumstances where the defendants failed to sight or sign the full documents – whether the defendants have any real prospect of defending the plaintiff’s claim – whether there is a need for a trial of the claim or part of the claim. LEGISLATION: Property Law Act 1974 (Qld), ss 45(1), (2) Uniform Civil Procedure Rules 1999 (Qld), r 292(2) CASES: Deputy Commissioner of Taxation v Salcedo [2005] 2 Qd R 232 Dunlop Pneumatic Tyre Co Ltd v Selfridge & Co Ltd [1915] AC 847 De Marco v Power [2020] QDC 186 Hutchinson v Equititour Pty Ltd [2011] 2 Qd R 99 HG & R Nominees v Fava [1997] 2 VR 368 Jin Resources (Aus) Pty Ltd v Nicols (2022) 11 QR 292 LK Bros Pty Ltd v Collins [2004] QSC 26 Mackay Sugar Ltd Quadrio [2015] QCA 41 Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165 Willmott v McLeay [2013] QCA 84 COUNSEL: NJ Derrington for the plaintiff SK Long for the fourth defendant DC Kissane for the fifth defendant SOLICITORS: Gadens Lawyers for the plaintiff Arrow White for the fourth defendant G.O.A.T Legal for the fifth defendant [1] The plaintiff principally seeks summary judgment against the fourth and fifth defendants pursuant to r 292 of the Uniform Civil Procedure Rules 1999 (Qld) (“UCPR”) said to have arisen as a consequence of the enforcement of guarantees between the parties in respect of borrowings by a company known as Superform (Qld) Pty Ltd (in liq) (“Superform”), of which the fourth and fifth defendants were directors. -- 2 of 9 -- 3 [2] Rule 292(2) of the UCPR provides as follows: “(2) If the court is satisfied that – (a) the defendant has no real prospect of successfully defending 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 plaintiff against the defendant for all or the part of the plaintiff’s claim and may make any other order the court considers appropriate.” [3] The test to be applied is identified in the rule itself, that is whether the defendants have no real prospect of succeeding and there is no need for a trial. The test contemplates a consideration of whether there is a real, as opposed to fanciful, prospect of success: Deputy Commissioner of Taxation v Salcedo [2005] 2 Qd R 232 at [47]. In Willmott v McLeay [2013] QCA 84 at [15]-[17], Holmes JA concluded that even where the requirements of r 292(2) are met, the Court retains the ultimate discretion in deciding whether it will award summary judgment. I respectfully adopt what Barlow KC DCJ has observed in De Marco v Power [2020] QDC 186 at [5] that “the power to order summary judgment must be exercised with great care and only if it is clear that there is no real question to be tried”. [4] The onus to make out a case for summary judgment will always rest with the applicant. But, if the applicant makes out a prima facie case for judgment, an evidentiary onus may shift to the respondent to, at least, establish that a defence raised (on which it would bear the onus) has a real prospect of success or that there is some need for a trial: see, for example, Hutchinson v Equititour Pty Ltd [2011] 2 Qd R 99 at [31]. [5] In the present instance, the plaintiff contends that there is no real defence by the fourth and fifth defendants to its claim and judgment should be entered against each of them. The application is opposed. The fourth defendant contends that the plaintiff has not demonstrated a prima facie case entitling it to the relief sought and that even if that were so, there is an entire defence to the plaintiff’s claim. Not unlike the fourth defendant, the fifth defendant contends that, in light of his amended defence, it could not be suggested that he has no real prospect of succeeding at trial. [6] For the reasons that follow, I am satisfied that the plaintiff has made out a prima facie case for judgment on its claim, and I exercise the discretion to grant summary judgment because the defendants have no real prospect of succeeding in their defences and there is no need for a trial of the plaintiff’s claim. Even in light of the philosophy of the UCPR and the further factual and legal matters said to arise by the fourth and fifth defendants, in my view, these matters lie against the third defendant in the existing third party proceeding and should be dealt with separately, such that the plaintiff should not be deprived of its claim summarily. -- 3 of 9 -- 4 Brief Facts [7] The following facts do not appear to be overly controversial between the parties (and therefore have largely been adopted from the plaintiff’s written outline of argument) namely that: (a) The third, fourth and fifth defendants became directors of Superform in 2013. In April 2015, the third defendant ceased to be an appointed director. (b) In 2016, the plaintiff provided Superform with a lending facility of $200,000. That facility was signed by the fourth and fifth defendants on behalf of Superform on 5 December 2016, a condition of which was that the third, fourth and fifth defendants execute guarantees concerning the obligations of Superform in favour of the plaintiff. (This allegation has been admitted by the fourth and fifth defendants). (c) Further it has been pleaded by the plaintiff that the fourth defendant’s guarantee occurred on 26 June 2019, whereas the fifth defendant’s guarantee occurred on 22 December 2016. Subject to the contention that neither the fourth nor fifth defendant saw the entirety of their respective guarantees, they accept they each signed a document. (d) In 2019, Superform sought and obtained an increase in its facility. On 19 June 2019, an agreement to achieve that increase was executed on behalf of Superform by the fourth and fifth defendants. It was a condition of the increase that the fourth and fifth defendants give guarantees up to the new limit. The fourth and fifth defendants (again subject to their contention that they were only provided with the signature pages, and not the entire document) signed extensions to the guarantee. (e) In 2020, the plaintiff increased the limits of the facility to $2,000,000. The fourth and fifth defendants signed the new loan agreement on behalf of Superform (pleaded as the “Superform Agreement”) on 20 February 2020, being what the plaintiff has pleaded as the fourth defendant’s “first extension” and the fifth defendant’s “second extension”. Each defendant (again subject to the contention that they only had the signing pages, and not the entire document) accepts that they signed the extension. It was a condition of the increased facility that the extended guarantees be provided. (f) The plaintiff advanced money to the first defendant under the extended facilities. One was repaid and closed. (g) On 1 August 2022, Superform was placed into liquidation. (h) On 1 June 2023, the plaintiff demanded that the fourth and fifth defendants comply with their obligations under the extended guarantees as funds remained owing. The demands were not complied with. Plaintiff’s Prima Facie Case [8] Whilst the fourth defendant has contended the Court cannot be certain about the amount sought on behalf of the plaintiff in its pleading (including the interest component calculated) pursuant to the Superform Agreement (which did not come into effect until February 2020) and the guarantee involving the fourth defendant (said to be an acceptance of an offer dated 7 June 2019), I am satisfied the plaintiff is -- 4 of 9 -- 5 entitled on the face of it to the primary relief sought because the evidence has summarily demonstrated through the financial records that advances were made, and further through, the demands for payment and certification from the plaintiff (pursuant to clause 19 of the guarantees) that the debt remains due. On 21 June 2024, shortly prior to the filing of this application, I have been satisfied that amount (including principal and interest) was $579,328.75. [9] As a consequence, the relevant question on this application is whether there is material to suggest that there is a real prospect of a pleading defence succeeding or a need for a trial. Fourth Defendant’s Defence [10] At the commencement of the hearing of this application, I was satisfied the fourth defendant should be given leave to withdraw his admissions to a number of paragraphs in his defence. I indicated to the parties that I would hear from them in relation to costs. I plan to do so following this judgment. [11] According to the fourth defendant’s amended defence, the fourth defendant denies that he is bound by the guarantee (being the one of 26 June 2019) and what the plaintiff has described as the first extension (allegedly executed on 20 February 2020) because his signature appears in circumstances where he only had the signature pages produced to him and not the entirety of the relevant documents. The single pages were produced to him by the third defendant, against whom the fourth and fifth defendant maintain third party proceedings against. [12] Further, the fourth defendant asserts that he was not afforded the opportunity to read the full copy of each document. Additionally, he says that the plaintiff did not engage in any direct communications with him with respect to the guarantee, nor was his signature witnessed by the person said to have witnessed the guarantee. He also maintains that the Superform Agreement as pleaded in the statement of claim did not come into existence until 20 February 2020, and therefore he cannot be bound by the guarantee and the first extension. [13] It was submitted that as to the issue of whether the fourth defendant is bound by the guarantee or the first extension, that this will require disclosure and evidence as to how and when the documents were provided to the fourth defendant and consideration at trial of evidence concerning the circumstances of the execution of the guarantee and the first extension. In any event, it was contended that it could not be deposed of at this summary stage. As I have already indicated, the fourth defendant, as with the fifth defendant, have brought a third party proceeding against the third defendant, so perhaps those matters could best be left for a more fulsome litigation as between those relevant parties and not necessarily the plaintiff. [14] The plaintiff’s position is that even if the matters raised by the fourth defendant are accepted at trial, it affords no defence to the claim. Firstly, the plaintiff relies upon the authority of Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165 at [41]-[44], [46] and [47] that, in the absence of fraud or other special circumstances, the act of signing a contract binds a person regardless of whether they have read it. The law does not require a person who signs a contract to have the whole document in front of them. It is sufficient that a party executed the relevant part intending to be bound: Mackay Sugar Ltd Quadrio [2015] QCA 41 at [18]-[20], [28]-[31]. It was -- 5 of 9 -- 6 highlighted that the evidence of the fourth defendant (and the fifth defendant) is that they knew that they were signing the guarantees and the extension documents, even though the complete documents were not in front of them at the time they signed it. Therefore, that is sufficient for the relevant guarantees to be enforced as a contract. [15] The second argument advanced on behalf of the plaintiff relates to the fourth defendant’s contention that he did not have legal advice or understand the guarantee. However, the plaintiff submits that is irrelevant because even if those facts were accepted, a defence could not be afforded to the fourth defendant: cf HG & R Nominees v Fava [1997] 2 VR 368 at 398-9. [16] In light of the authorities, particularly Toll and Mackay Sugar, I am persuaded by the position advanced by the plaintiff and have formed the view that there is no real prospect of a defence succeeding or the need for a trial. That is because: (a) It matters not that the fourth defendant did not have the entire documents in front of him at the time he elected to sign the signature pages. That to me demonstrated the fourth defendant’s willingness to enter into an agreement with the plaintiff. (b) Toll and Mackay Sugar cannot in these circumstances be distinguished to the position which faces the fourth defendant (and indeed the fifth defendant). The plaintiff’s reliance upon Toll and Mackay Sugar involve the statements of principle in each of them that is that if a party signs a document intending to be bound, but does not look at what the terms are, even if they do not know what the terms are, they are nevertheless bound. I accept that the factual circumstances may be slightly different in the present application as opposed to the facts in the authorities, but that does not make them distinguishable to the extent sought to be relied upon by the defendants to argue that they have a defence or that their defence at least is a triable matter or one which requires further consideration on its merits before determination at this early juncture. (c) Both defendants were unable to furnish any authority to advance their defence that the guarantees are not enforceable such that the statements of principles in Toll and Mackay Sugar remain. (d) There was no evidence produced by the fourth defendant to suggest that he in fact called for the entirety of the documents. Rather it seems as though he was prepared to rely upon the advice/instruction given to him by the third defendant. That matter does not concern the plaintiff’s involvement. As I have indicated earlier, this is properly the subject of a third party proceeding between the fourth defendant and third defendant. In other words, it does not, nor should it, involve litigation with the plaintiff. (e) Similarly with respect to the claim that the fourth defendant’s signature was not witnessed at the time he signed the document, in light of the authorities relied upon by the plaintiff being Toll and Mackay Sugar, that does not afford a proper defence. In the absence of fraud or special circumstances, presumably the fourth defendant was aware of the nature and the effect of providing his signature because he knew that it was towards securing monies from the plaintiff to Superform. (f) There was no evidence led by the fourth defendant that he sought to obtain legal advice with respect to the full documentation and its effect. It is also -- 6 of 9 -- 7 unclear on the material to resist the application that the fourth defendant sought to be availed of the opportunity to read the full copy of each document prior to its execution. (g) The reliance placed on the Superform Agreement not coming into existence until 20 February 2020, at the time the fourth defendant provided his extension to the guarantee is misplaced because the fourth defendant intended to be bound by the advances provided by the plaintiff. (h) Overall, it is my impression that in any event the fourth defendant intended to create legal relations with the plaintiff in order to guarantee the obligations of Superform. He was bound to it regardless of whether or not he read the entire document. (i) Moreover, whilst I accept that on the present facts there is no suggestion of fraud or other special circumstances by the fourth defendant involving the plaintiff, it seems to me those matters potentially involve the third defendant and should not deprive the plaintiff of its success on the claim. [17] There should be judgment against the fourth defendant. Fifth Defendant’s Defence [18] In his amended defence, the fifth defendant, like the fourth defendant, has pleaded that he signed only a single page of the guarantee. In any event, the single page signed by the fifth defendant predated the Superform Agreement and made no reference to it. It is also contended that the document which he signed did not satisfy the mandatory requirements of ss 45(1) or (2) of the Property Law Act 1974 (Qld) (“PLA”) as it was not sealed and was not witnessed, with the effect that no deed was created. Additionally, the fifth defendant relies upon what has been asserted as the plaintiff’s failure to comply with a number of clauses of the Code of Banking Practice 2013 (“the Code”) (specifically clauses 31.2, 31.5 and 31.13), with the effect that the alleged guarantee was not binding or is otherwise unenforceable to the extent that it may have related to the Superform Agreement. He also claims that he is not bound because there was an absence of consideration to support the alleged guarantee and any agreement would have been void for uncertainty. [19] In response and in addition to the arguments contended by the plaintiff in respect to the fourth defendant regarding Toll as well as Mackay Sugar (which I have accepted), the plaintiff has submitted the following: (a) In response to the fifth defendant’s contention that the guarantee is not binding because it was not supported by consideration, a deed does not require consideration (see Dunlop Pneumatic Tyre Co Ltd v Selfridge & Co Ltd [1915] AC 847 at 853). In any event, the guarantee has contractual force because consideration has moved from the promisee at the request of the promisor (i.e. it moved from the plaintiff at the request of the fifth defendant). The facility granted to Superform was conditional on the guarantee being executed and the fifth defendant requested that grant by signing the guarantee. That is sufficient consideration to give rise to a binding contract (Dunlop at 853 and Jin Resources (Aus) Pty Ltd v Nicols (2022) 11 QR 292 at [67]). -- 7 of 9 -- 8 (b) As to the fifth defendant’s reliance upon the proposition that the guarantee is ineffective in light of the application of s 45 of the PLA. Since it was not sealed or witnessed, s 45 in the form relied upon had not commenced when the guarantee was signed in this respect and it has long been the case that a deed does not in fact need to be sealed: PLA s 45(2) as at December 2016. Similarly, even if it were accepted at trial that any witnesses were not present, the guarantee, having been supported by consideration, is binding as a contract: see for example LK Bros Pty Ltd v Collins [2004] QSC 26 at [20]. (c) As to the fifth defendant’s contention that there were various breaches of the Code, this contention lacks any credibility and even if the fifth defendant’s evidence was accepted on this point at trial, it does not matter because: (i) there is no evidence to establish that there is even an arguable basis to contend that the provisions of the Code upon which the fifth defendant relies are engaged; (ii) even if those provisions were engaged the only breach alleged which could impugn the enforceability of the extended guarantee is the alleged breach of clause 13.13 (which relates to future credit contracts); (iii) that clause was plainly not breached because the facility upon which the plaintiff sues was not, at the time of the execution of the fifth defendant’s extended guarantee, a future credit contract; and, (iv) as to the fifth defendant’s assertion that the guarantee is uncertain, to the contrary the guarantee identified the obligations guaranteed and when money was due. [20] It is my view that the fifth defendant has no real prospect of a pleaded defence succeeding and has not demonstrated the need for a trial. That is because of the following features: (a) My views relating to the fourth defendant’s arguments in terms of reliance upon only signing the relevant signature page and not having the entire document/s in front of him equally applies to the fifth defendant in that the fifth defendant was bound to the contract by his signature regardless of whether or not he had access to the entire document or indeed had read it, consistent with the authorities of Toll and Mackay Sugar. In circumstances where I am satisfied that the defendants could have left the meeting without signing the signature page in order to consider the issue further but elected to sign the signature page, I have formed the impression that both assented to a contract of which both were aware. (b) Further, like the fourth defendant, there was no evidence led by the fifth defendant to indicate that he in fact called for any of the documents. Again, it seems to me that any grievance he has arises with the third defendant and not the plaintiff and I am disinclined to deprive the plaintiff of its action. (c) The fifth defendant’s reliance upon the single page predating the Superform Agreement or it making no reference to it is misplaced because the document executed by the fifth defendant on 20 February 2020 plainly acknowledged a guarantee limited to $2,000,000. The fifth defendant therefore intended to be bound to the terms of that document, such that any reliance upon the -- 8 of 9 -- 9 unenforceability due to the application of the PLA does not afford him a defence to the plaintiff’s claim consistent with the authorities Toll and Mackay Sugar. The plaintiff acted upon the guarantee and having been supported by consideration it is in my view binding as a contract. (d) As has been highlighted to me, a deed does not in fact need to be sealed: PLA s 45(2). (e) The fifth defendant (as well as the fourth defendant) signed the loan documents. The cause of action is premised in contract irrespective of whether it is described as a deed. It therefore does not undermine the legal efficacy of the document. (f) Unlike the plaintiff’s reliance upon the authorities of Dunlop and Jin Resources (Aus) Pty Ltd, the fifth defendant was unable to reference any authorities to support his contention that a guarantee is not binding because it is not supported by consideration. (g) The reliance upon the asserted breaches of the Code do not matter, even if it was accepted at trial, because the clauses do not relate to enforceability of the guarantee, save for clause 13.13, but that relates to a future credit contract. Here there was no future credit contract entered into between the fifth defendant and the plaintiff. (h) The object of clause 13.13 of the Code is to protect against the execution of a future credit contract where that has not been dealt with in the original guarantee and notice is not given of that fact. However, that was not the situation here. What occurred is that the fifth defendant increased his liability in respect of the guarantee in February 2020, thus giving rise to a new guarantee in respect of the increased sum, that sum being $2,000,000, the consequence of which in my view does not require a trial because it is a question of construction. [21] Accordingly there should be judgment against the fifth defendant. Conclusion [22] The plaintiff is entitled to summary judgment against the fourth and fifth defendants because I am satisfied the defendants have no real prospect of successfully defending all or part of the claim and there is no need for a trial of the claim. That is not to say that the fourth and fifth defendant have no real prospect of succeeding against their claim raised against the third defendant. That however is the subject of third party proceedings which, in my view, given the strict wording of r 292 of the UCPR should not trouble the plaintiff at this summary juncture. The authorities, in particular Toll and Mackay Sugar, make it abundantly clear as has occurred here that even though the defendants had only one page in front of them, they are still bound to the agreement as a whole. There being no contrary authorities to advance the defendants’ position, I have ultimately formed the view that the plaintiff must be successful such that the application is allowed. [23] I will hear from the parties as to the form of the order and costs. -- 9 of 9 --