Banana Stand Holdings Pty Ltd and Ors v Good Bean Coffee Distributors Pty Ltd and Anor [2019] QDC 54

DISTRICT COURT OF QUEENSLAND CITATION: Banana Stand Holdings Pty Ltd and Ors v Good Bean Coffee Distributors Pty Ltd and Anor [2019] QDC 54 PARTIES: BANANA STAND HOLDINGS PTY LTD (ACN 609 750 110) as trustee for THE SAULTRY FAMILY TRUST (ABN 16 876 885 679) (first plaintiff) KATHERINE DEE SAULTRY & BENJAMIN JOHN SAULTRY (second plaintiffs/respondents) v GOOD BEAN COFFEE DISTRIBUTORS PTY LTD (ACN 161 005 536) as trustee for THE GBCD TRUST (ABN 91 876 885 746) (first defendant/applicant) SHANE RYAN HEPBURN (second defendant) FILE NO: D194/18 DIVISION: Civil PROCEEDING: Application ORIGINATING COURT: District Court at Maroochydore DELIVERED ON: 18 April 2019 DELIVERED AT: Maroochydore HEARING DATE: 29 March 2019. Further submissions filed 5 April 2019. JUDGE: Cash QC DCJ ORDERS: 1. The application for summary judgment is dismissed. CATCHWORDS: PRACTICE – DISTRICT COURT PROCEDURE – QUEENSLAND – PRACTICE UNDER RULES OF COURT – COUNTERCLAIM – SUMMARY JUDGMENT – where defendant seeks summary judgment on counterclaim – applicable rule – whether no real prospect of defending counterclaim – whether no need for trial of the counterclaim. TRADE AND COMMERCE – COMPETITION, FAIR TRADING AND CONSUMER PROTECTION LEGISLATION – CONSUMER PROTECTION – MISLEADING OR DECEPTIVE CONDUCT OR FALSE REPRESENTATIONS – MISLEADING OR DECEPTIVE CONDUCT GENERALLY – where plaintiffs plead that, -- 1 of 5 -- 2 induced by and relying on representations made by the first and second defendants, the plaintiff purchased a business – where plaintiffs plead that the purchase was financed by the first defendant – where the plaintiffs plead that a deed of guarantee and indemnity was entered into relying upon representations made by the defendants – meaning of “collateral arrangement” – relief and remedies. Australian Consumer Law 2010 (Cth), s 18, s 243 Uniform Civil Procedure Rules 1999 (Qld), r 181, r 292 Agar v Hyde (2000) 201 CLR 552, 575-576 [57] Dangerfield & Anor v Sam Coco Pty Ltd & Ors [2000] QSC 464 [29] Dey v Victorian Railways Commissioners (1949) 78 CLR 62, 91 COUNSEL: T C Somers for the applicant/first defendant S R D Blaxland for the respondent/second plaintiffs SOLICITORS: Griffiths Lawyers for the applicant/first defendant Simpson Quinn Lawyers for the respondent/second plaintiffs [1] In early 2016 the plaintiffs agreed to purchase a coffee bean distribution business owned and operated by the defendants.1 The plaintiffs did not have the purchase price of $425,000. Instead they accepted finance from the first defendant. As security for this finance the plaintiffs offered the business they were buying as well as the family home of the second plaintiffs. The plaintiffs also executed a deed of guarantee and indemnity promising to indemnify the first defendant against any loss suffered in the event of non-payment of the debt. [2] Repayments by the plaintiffs under the loan agreement fell into arrears. In July 2018 the defendants sent a letter to the plaintiffs seeking payment of the arrears. In September and October 2018 the defendants gave notice they intended to exercise what they assert is the power of sale accruing under the loan agreement and deed. In December 2018 the plaintiffs commenced proceedings claiming relief, including rescission or variation of the agreements, as a consequence of what they assert are breaches of the Australian Consumer Law (“ACL”). The plaintiffs claim that they entered into these arrangements, including the deed, because the defendants misrepresented the profitability of the business. [3] The defendants deny the claim. They also counterclaim, seeking the enforcement of the deed of guarantee and indemnity. It is in this context that the present application is made. The first defendant seeks summary judgment on the counterclaim against the second plaintiffs. Among the orders sought by the first defendant is the right to possess and sell the mortgaged property of the second plaintiffs. [4] Pursuant to rule 181 of the Uniform Civil Procedure Rules 1999 (Qld) the rules, with necessary changes, apply to a plaintiff by counterclaim as if they were a plaintiff in 1 There are three plaintiffs, a company and the two natural persons behind the company. Similarly the two defendants are a company and the natural person behind the company. -- 2 of 5 -- 3 an original proceeding. It follows that the present application is to be determined pursuant to rule 292, which would in these circumstances be adapted to read: “[r 292] Summary judgment for [counterclaiming defendant] 292 (1) A [counterclaiming defendant] may, at any time after a [plaintiff] files [an answer], apply to the court under this part for judgment against the [plaintiff]. (2) If the court is satisfied that – (a) the [plaintiff] has no real prospect of successfully defending all or a part of the [defendant’s counterclaim]; and (b) there is no need for a trial of the [counterclaim] or the part of the [counterclaim], the court may give judgment for the [defendant] against the [plaintiff] for all or the part of the [defendant’s counterclaim] and may make any other order the court considers appropriate.” [5] The relevant legal principles are those applicable to the determination of a plaintiff’s claim for summary judgment under this rule. To order summary judgment I must be satisfied both that there is no real prospect of the plaintiff defending the counterclaim and also that there is no need for a trial of the counterclaim. The words “no real prospect” do not require amplification. Summary judgment is only appropriate in the clearest of cases and where there is a high degree of certainty about the ultimate outcome of the proceeding if it went to trial in the ordinary way. If there are triable issues of fact or law it could not be said that there is “no need for a trial”. [6] In Agar v Hyde, Gaudron, McHugh, Gummow and Hayne JJ said:2 "Ordinarily, a party is not to be denied the opportunity to place his or her case before the court in the ordinary way, and after taking advantage of the usual interlocutory processes. The test to be applied has been expressed in various ways, but all of the verbal formulae which have been used are intended to describe a high degree of certainty about the ultimate outcome of the proceeding if it were allowed to go to trial in the ordinary way." (Footnote omitted.) [7] Their Honours cited Dey v Victorian Railways Commissioners (1949) 78 CLR 62 in support of this proposition. In that case Dixon J stated:3 “A case must be very clear indeed to justify the summary intervention of the court to prevent a plaintiff submitting his case for determination in the appointed manner by the court… Once it appears that there is a real question to be determined whether of fact or law and that the rights of the parties depend upon it then it is not competent for the court to dismiss the action as frivolous and vexatious and an abuse of process.” [8] The first defendant argues that its claim against the second plaintiffs cannot be defended: the second plaintiffs entered into the deed after receiving legal advice and understanding their obligations under the deed. The defendant submits that the deed stands separate to the agreement to buy the business and is not a “collateral arrangement” such as may be rendered void or be varied pursuant to section 243 of 2 (2000) 201 CLR 552 at 575-576 [57]. 3 (1949) 78 CLR 62 at 91. -- 3 of 5 -- 4 the ACL. The plaintiffs rely upon this provision to submit that in the event they prove the relevant misrepresentations it would be open to the court to vary or even set aside the deed. If it is arguable that the deed is subject to the ACL then it would be inappropriate to allow summary judgment. [9] Section 243 of the ACL provides (underlining added): “243. Kinds of orders that may be made Without limiting section 237(1), 238(1) or 239(1), the orders that a court may make under any of those sections against a person (the respondent) include all or any of the following: (a) an order declaring the whole or any part of a contract made between the respondent and a person (the injured person) who suffered, or is likely to suffer, the loss or damage referred to in that section, or of a collateral arrangement relating to such a contract: (i) to be void; and (ii) if the court thinks fit--to have been void ab initio or void at all times on and after such date as is specified in the order (which may be a date that is before the date on which the order is made); (b) an order: (i) varying such a contract or arrangement in such manner as is specified in the order; and (ii) if the court thinks fit--declaring the contract or arrangement to have had effect as so varied on and after such date as is specified in the order (which may be a date that is before the date on which the order is made); (c) an order refusing to enforce any or all of the provisions of such a contract or arrangement; (d) an order directing the respondent to refund money or return property to the injured person; (e) except if the order is to be made under section 239(1)--an order directing the respondent to pay the injured person the amount of the loss or damage; (f) an order directing the respondent, at his or her own expense, to repair, or provide parts for, goods that had been supplied by the respondent to the injured person; (g) an order directing the respondent, at his or her own expense, to supply specified services to the injured person; (h) an order, in relation to an instrument creating or transferring an interest in land, directing the respondent to execute an instrument that: (i) varies, or has the effect of varying, the first mentioned instrument; or (ii) terminates or otherwise affects, or has the effect of terminating or otherwise affecting, the operation or effect of the first mentioned instrument.” [10] The defendant submits that the deed is not a “collateral arrangement” as that term is used in the ACL. The term is not defined in the legislation. The defendant equates it to the familiar concept of a collateral contract and submits, correctly, that the deed in this case is not a collateral contract. But in my view the term “collateral arrangement” where it appears in section 243 of the ACL is arguably not limited to collateral contracts. I adopt the view expressed by Ambrose J in Dangerfield & Anor v Sam Coco Pty Ltd & Ors [2000] QSC 464 [29] where his Honour said (referring to an earlier but similar statutory provision): -- 4 of 5 -- 5 “A “collateral arrangement” under s 87 does not necessarily or even probably have the attributes of a “collateral contract” at law. It is the plaintiffs’ case that they were really induced to acquire the interest of the Valentines in the franchise agreement by the pleaded misrepresentations and misleading and deceptive conduct on the part of all defendants. Their assumption as guarantors of the obligations to perform the franchise agreement when they acquired the interest of the Valentines in it and their agreement to become principal contracting parties arguably empowers the court under s87 (f) and (g) to refuse to enforce the provisions not merely of the franchise agreement but also the provisions of the deed of termination as an arrangement “collateral to” that agreement.” [11] The determination of both the claim and counterclaim will involve consideration of the power of the court to act under section 243 of the ACL. It is at least arguable that the deed is a “collateral arrangement” as that term is used in the ACL. I do not have the necessary high degree of certainty as to the ultimate outcome of this consideration for there to be summary judgment. [12] The defendant also relied upon what they assert is the “affirmation” of the contract evidenced by the plaintiffs’ delay in commencing these proceedings. Such may be a consideration in whether or not rescission of the contract is appropriate. I do not have the high degree of certainty about the outcome of this matter necessary to conclude that summary judgment is appropriate. [13] In the circumstances the defendant’s application for summary judgment will be dismissed. I will hear the parties as to costs. -- 5 of 5 --