Commonwealth Bank of Australia v Jakeman Corporation Pty Ltd & Ors [2015] QDC 51

DISTRICT COURT OF QUEENSLAND CITATION: Commonwealth Bank of Australia v Jakeman Corporation Pty Ltd & others [2015] QDC 51 PARTIES: COMMONWEALTH BANK OF AUSTRALIA (Plaintiff) v JAKEMAN CORPORTATION Pty Ltd (First Defendant) AND BRIDGEMAN Pty Ltd (Second Defendant) AND BARRY LEE JAKEMAN (Third Defendant) AND KATHRYN ELLEN JAKEMAN (Fourth Defendant) AND JOHN MARTIN SPEEDY (Fifth Defendant) AND CECILE JOYCE SPEEDY (Sixth Defendant) FILE NO/S: 829/14 DIVISION: Civil PROCEEDING: Application DELIVERED ON: 06 March 2015 DELIVERED AT: Brisbane HEARING DATE: 26 February 2015 JUDGE: Bowskill QC DCJ ORDER: Judgment for the plaintiff CATCHWORDS: GUARANTEE AND INDEMNITY – Actions Against Surety -- 1 of 21 -- 2 – Generally – Claim for Money Owing – Where the Money Owing Arises by way of a Loan PROCEDURE - Courts and Judges Generally – Courts – Application for Summary Judgment – Where the Defendants Claim not to have Received Letters of Demand – Where Defendants Claim Plaintiff Failed to Respond to Purchase Advice - Where the Defendant’s Set Off is Barred by Contract Uniform Civil Procedure Rules 1999 (Qld) r 292 Bank of Western Australia v Salmon (No. 2) [2009] NSWSC 226 Capital Finance Australia Ltd v Airstar Aviation Pty Ltd [2004] 1 Qd R 122 Daewoo Australia Pty Ltd v Porter Crane Imports Pty Ltd [2000] QSC 50 Fancourt v Mercantile Credits Ltd (1983) 154 CLR 87 O’Brien v Bank of Western Australia Ltd [2013] NSWCA 71 State Bank of Victoria v Voss (unreported, Supreme Court of Victoria, O’Bryan J, 17 May 1991) COUNSEL: P. Ahern for the Applicant SOLICITORS: Gadens Lawyers for the Applicant J. Speedy self-represented for the Respondents [1] By application filed on 17 November 2014, the plaintiff seeks summary judgment against the first, second, third, fifth and sixth defendants (the defendants),1 pursuant to r 292 of the Uniform Civil Procedure Rules 1999 (UCPR). [2] The defendants were unrepresented at the hearing of the summary judgment application, but Mr Speedy, the fifth defendant, appeared in person and made submissions on his own behalf, and on the behalf of the defendants. [3] The plaintiff’s claim against the defendants is for moneys said to be owing by them, under guarantees and indemnities they provided in respect of a loan to Sandy Bay Villas Pty Ltd (Sandy Bay). [4] The following facts are not in dispute: (a) Sandy Bay entered into a home loan contract with the Bank of Western Australia Ltd (Bankwest) on 20 June 2008. 1 The first, second, third, fifth and sixth defendants have filed a joint defence. The fourth defendant has filed a separate defence, defending the plaintiff’s claim on different bases from those relied on by the first, second, third, fifth and sixth defendants. The plaintiff does not seek summary judgment against the fourth defendant. -- 2 of 21 -- 3 (b) In October 2012, the business of Bankwest was transferred to the plaintiff, under s 18 of the Financial Sector (Business Transfer and Group Restructure) Act 1999. In these reasons, I will simply refer to the plaintiff in respect of any arrangements with Bankwest. (c) Under the home loan contract, the plaintiff agreed to advance Sandy Bay the sum of $1,080,000. (d) The home loan contract was secured by: (i) a registered mortgage over property situated at 39/14 Okinja Road, Alexandra Headland (Lot 507 on SP 213884) (the property); and (ii) a commercial guarantee and indemnity from the first and second defendants (the corporate defendants), the enforceability and terms of which are not in dispute;2 and (iii) an individual limited guarantee from each of the third, fifth and sixth defendants (the individual defendants), the enforceability and terms of which are not in dispute.3 (e) On or about August 2013, Sandy Bay defaulted under the home loan agreement. [5] On 16 August 2013, a demand was made on Sandy Bay for payment of the full amount owing under the home loan contract (at that time, $1,099,028.91).4 That money was not paid by Sandy Bay.5 [6] On 27 August 2013, the plaintiff, by its solicitor, sent letters of demand to each of the corporate defendants,6 and the individual defendants,7 under the guarantees and indemnities, seeking payment of the unpaid balance under the home loan contract. The demands on the individual defendants are not in issue. The corporate defendants deny receipt of the demands (an issue to which I will return below).8 2 A copy of which is exhibit GSG-5 to the affidavit of Mr Di Gregorio filed on 17 November 2014. 3 A copy of which is exhibit GSG-6 to Mr Di Gregorio’s affidavit. In respect of the individual guarantees, I note that paragraphs 15, 16, 17 and 18 of the statement of claim (in which the giving of the individual guarantees by the individual defendants, and the relevant terms of them, are pleaded) are not addressed in the defence. By operation of r 166(1) of the UCPR, the allegations are therefore taken to be admitted. In any event, at the hearing of the application, the fifth defendant, Mr Speedy, confirmed that no issue is taken with the entry into the guarantees, the fact that they were executed, the terms of them, nor that there was default (transcript, page 1-24). 4 Exhibit GDG-7 to Mr Di Gregorio’s affidavit. 5 Paragraph 17 of Mr Di Gregorio’s affidavit. These matters are alleged in paragraphs 20 and 21 of the statement of claim. The response to those paragraphs in paragraph 11 of the defence is ambiguous and incomplete. They may also therefore be the subject of deemed admissions under r 166(1) UCPR. In any event, in the context of the present application, these matters are not controversial. 6 Exhibit GDG-8 (letter to Jakeman Corporation Pty Ltd) and exhibit GEG-9 (letter to Bridgeman Pty Ltd) to Mr Di Gregorio’s affidavit. 7 Exhibit GDG-10 (letter to Barry Lee Jakeman); exhibit GDG-11 (letter to John Martin Speedy); and exhibit GDG-12 (letter to Cecile Joyce Speedy). 8 Paragraph 11 of the defence. -- 3 of 21 -- 4 [7] Also on 27 August 2013, the plaintiff commenced the process of enforcing its rights under the mortgage, by serving a notice of exercise of power of sale on Sandy Bay.9 The property was sold in January 2014 for $920,000.10 [8] The plaintiff seeks to recover the shortfall from the defendants, between the total amount owing under the home loan contract, and the proceeds from the sale of the property. At the hearing, the plaintiff relied upon an affidavit of Nicola Jane Adamson, sworn 26 February 2015, which deposes that the amount owing, as at 26 February 2015, was $269,203.09. By its claim, the plaintiff also seeks interest from 1 February 2014 at the rate of 17.06%, pursuant to clause 5 of the corporate guarantees and clause 6 of individual guarantees, respectively, and costs. [9] These proceedings were commenced on 10 March 2014. [10] The defendants oppose the grant of summary judgment on the grounds that they have a proper defence to the plaintiff’s claim against them, and seek to have their day in court, to argue the merits of their defence, rather than the “guillotine motion”, to use Mr Speedy’s phrase, of summary judgment. The Defence [11] By their defence, the defendants deny the plaintiff’s entitlement to the relief it seeks, on three bases. [12] The first concerns only the corporate defendants, and is that they did not receive the letters of demand from the plaintiff, sent on 27 August 2013. [13] The second, and main basis on which the plaintiff’s claim is denied, is that the bank failed to take into account an earlier offer to purchase the property, addressed in paragraph 17 of the defence, as follows: “17. The named Defendants say that they generally deny the sum demanded by the Plaintiff, Particulars of which are as follows: (a) On the 13th May 2013, prior to the named Defendants making any default with the Plaintiff, the named Defendants communicated with ‘Andrew’ of the Plaintiff, via email sent to [email protected]. This communication is outlined as follows: “Andrew, further to our conversation last week, attached find further negotiations related to sale of the above unit. As stated our long standing tenant is the buyer, he and his wife love the unit and do not want to move. The offer is currently $880,000.00 plus furniture $50,000.00 – Total $930,000.00. I am hoping to get a further offer of say another $100k. I will keep you informed. Regards John Speedy.” (b) Earlier on the 13th May 2013, John Speedy, the Fifth Defendant on behalf of the named Defendants in this Defence, sent an email to the prospective purchaser above: 9 Exhibit GDG-22 to Mr Di Gregorio’s affidavit. 10 Paragraph 26 of Mr Di Gregorio’s affidavit. -- 4 of 21 -- 5 particulars of which are as follows: “Trevor, Yes, we are still very interested in selling Unit 39 to your good self, however we have a $200,000.00 shortfall between Bank debt and your offer. The Bank have stated that they are prepared to settle if the difference is below $75,000.00k. Lets put our thinking caps on and see if we can come up with a solution. Regards.” (c) The named Defendants did not receive a response to the email of the Fifth Defendant to Andrew Stewart of the Plaintiff. (d) The named Defendants had no further communication with the Plaintiff, save and except a letter of the 5th January 2014 enclosing by way of service a Notice of Completion of Sale. (e) The named Defendants were not aware that the Plaintiff took possession of the property. No notice whatsoever was given to them. (f) The Plaintiff required the long standing tenant to provide vacant possession, without notice to the named Defendants. (g) The Plaintiff, without notice to the named Defendants sold the property as Mortgagee in Possession. The named Defendants have not received any Court Document, or Document of any nature as to the taking of possession of this property and or its sale, save and except for below. (h) The named Defendants are experienced property developers and have developed and sold many properties, particulars of which will be supplied at the trial of this matter. The named Defendants say that the Plaintiff took no notice of the offer to purchase the subject property in the sum of $980,000.00. (i) On the 15th January 2014, the named Defendants received a letter from the Solicitors for the Plaintiff enclosing a Notice of Completion of Sale under the Property Law Act 1974, section 85. That document discloses that the Plaintiff sold the property without notice, for the sum of $920,000.00. A figure of $60,000.00 less than the offer that the named Defendants had obtained and advised to Andrew Stewart of the Plaintiff. In addition, the named Defendants, offered the balance of the secured monies to the Plaintiff. (j) On the 27th May 2013, John Speedy on behalf of the named Defendants sent an email to Andrew Stewart of the Plaintiff which reads as follows: “Andrew, We have now negotiated what we believe to be a Final Price with our Tenant for the purchase of the above Unit. Final offer $880,000.00, Under separate agreement Purchase of Furniture $100.000.00, Total $980,000.00. As previously discussed coverage of the short fall of approx, $100,000/00 to be way of personal loans (50%) Barry Jakeman & John Speedy. I would appreciate it if you might give me a call to discuss this matter in detail and the way forward”. True copies of these -- 5 of 21 -- 6 emails from both the Plaintiff and the named Defendants will be tendered at the trial of this matter.” [14] Thirdly, in a claim by way of set off, the defendants plead that at the time when the plaintiff took possession of the property, “furniture, the possessions of the named Defendants remained in the property…”,11 and that the plaintiff has taken possession of the particularised items without an account and/or notice to the defendants. The defendants seek “an account from the plaintiff as to whereabouts of their goods and chattles [sic]” and “reserve their rights to seek relief against the Plaintiff in debtinue [sic]”. Summary Judgment – Relevant Principles [15] Rule 292(2) of the UCPR provides as follows: “If the court is satisfied that – (a) the defendant has no real prospect of successfully defending all or 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.” [16] As White JA (with whom de Jersey CJ and McMurdo P agreed) observed, in Coldham- Fussell v Commissioner of Taxation (2011) 82 ACSR 439 at [98]: “[98] The key expressions are ‘no real prospect’ in respect of the defence of a claim and ‘there is no need for a trial of the claim’. Other expressions have been proffered in an attempt to describe the task of the court in language which is thought to be of more assistance. Rule 292 is expressed in clear and plain language. It requires no judicial gloss to understand its meaning. What those phrases mean is best understood, in the time honoured way, on a case by case basis, informed by judgment about the relevant legal principles. In Deputy Commissioner of Taxation v Salcedo12 the President described the rule as ‘clear and unambiguous language’.13 Justice Williams 11 A list of which is set out in paragraph 2, on the fourth page of the defence, under the heading “and by way of set off”, as follows: “High quality curtains, drapes and blinds to all windows of the level two of the Sky home. An outdoor table setting including 8 chairs and two sun lounges. High quality bedding and bed bases to the four bedrooms of the subject property. 8 bedside tables and lamps. Dining room table, of high quality with 8 chairs. Wall unit. Buffet. Four seat lounges with coffee tables both in the home theatre room and the lounge living room. A number of rugs and cushions. Three Digital Television sets. A feature free standing lamp. A study work desk and executive chair. Two cabinets with shelves for Televisions. A leather lounge suite for the main bedroom. Ten paintings and statues, particulars of which, the value of will be provided at the trial of this matter. Four breakfast bar stools. One two door stainless steel fridge, with icemaker. A Bar fridge. Cooking utensils and cutlery including an electric jug, toaster and a complete fry pan set. Crockery setting for eight people. A washing machine and clothes dryer.” 12 [2005] 2 Qd R 232; [2005] QCA 227. 13 At [2]. See also Williams JA at [11]-[17] and Atkinson J at [47]. -- 6 of 21 -- 7 quoted with approval observations of Lord Woolf MR in Swain v Hillman14 considering the English Rule 24.2 upon which r 292 was based: The words ‘no real prospect of succeeding’ do not need any amplification, they speak for themselves. The word ‘real’ distinguishes fanciful prospects of success or … they direct the court to the need to see whether there is a ‘realistic’ as opposed to ‘fanciful’ prospect of success.”15 [17] That passage appears in [11] of Williams JA’s reasons in Salcedo.16 At [13], his Honour quoted with approval Lord Hobhouse in Three Rivers District Council v Bank of England (No 3) [2003] 2 AC 1 at 282, who said: “The criterion which the judge has to apply under Part 24 is not one of probability; it is absence of reality”. [18] Rule 292 is also to be applied keeping in mind the purpose of the UCPR, articulated in r 5, to facilitate the just and expeditious resolution of the real issues in civil proceedings at a minimum of expense.17 [19] That of course does not detract from the well-established principle that the exercise of powers to summarily terminate proceedings must always be attended with caution.18 As Gaudron, McHugh, Gummow and Hayne JJ said in Agar v Hyde (2000) 201 CLR 552 at 575-576: “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.” [20] In this matter, for the reasons explained below, in my view the defendants have no real prospect of successfully defending the plaintiff’s claim, and there is no need for a trial of the claim, such that the discretion under r 292(2) is enlivened. In the circumstances, I am satisfied that it is appropriate to exercise my discretion to give judgment for the plaintiff against the defendants. The Corporate Guarantees [21] The guarantee and indemnity given by the corporate defendants relevantly includes the following clauses:19 “Extent of your obligations 1.1 By signing this guarantee and indemnity, you could become liable to pay us: 14 [2001] 1 All ER 91 at 92 (Swain). 15 Footnotes in the original. 16 Deputy Commissioner of Taxation v Salcedo [2005] 2 Qd R 232 (Salcedo). 17 Bernstrom v National Australia Bank Ltd [2003] 1 Qd R 469 at [38]; Salcedo at [3], [17] and [45]; Coldham-Fussell v Commissioner of Taxation at [101]; Thomas v Balanced Securities Ltd [2012] 2 Qd R 482 at [69]. 18 Spencer v Commonwealth (2010) 241 CLR 118 at [24] per French CJ and Gummow J and at [60] per Hayne, Crennan, Kiefel and Bell JJ. 19 Exhibit GDG-5 to Mr Di Gregorio’s affidavit. -- 7 of 21 -- 8 (a) under the guarantee in clause 2; (b) under the indemnity in clause 3; (c) costs and other expenses under clause 4; and (d) interest under clause 5. … 1.2 You are liable for all the obligations under this guarantee and indemnity both separately on your own and jointly with any one or more other persons named in this guarantee and indemnity as guarantor. … Guarantee 2.1 You unconditionally and irrevocably guarantee payment to us of the guaranteed money.20 If the debtor [Sandy Bay] does not pay the guaranteed money on time and in accordance with any arrangement under which it is expressed to be owing then you agree to pay the guaranteed money to us on demand from us (whether or not we have made demand on the debtor). 2.2 The guarantee in clause 2.1 is a continuing obligation and extends to all of the guaranteed money. Indemnity 3.1 You unconditionally and irrevocably indemnify us against, and you must therefore pay us on demand for, liability, loss or costs we suffer or incur if: (a) the debtor does not, is not obliged to, or is unable to, pay us the guaranteed money in accordance with any arrangement under which it is expressed to be owing; (b) you are not obliged to pay us an amount under clause 2; or (c) we are obliged, or we agree, to pay an amount to a trustee in bankruptcy or liquidator (or a bankrupt person or insolvent company) in connection with a payment by you or the debtor … You as principal debtor agree to pay us on demand a sum equal to the amount of any such liability, loss or costs. … Our Costs and Other Expenses 4.1 You must pay us for: 20 Defined in clause 26 to mean, relevantly, “at any time, all money which the debtor owes us or will or may owe us in the future, including under an arrangement with us…”. -- 8 of 21 -- 9 (a) our reasonable costs21 in arranging, administering (including giving and considering consents, variations, discharges and releases, producing title documents or enforcing, attempting to enforce or taking any other action in connection with our rights) and terminating this guarantee and indemnity; and (b) all taxes, fees, and charges payable in connection with this guarantee and indemnity and any transaction (such as a payment or receipt) under it, and any interest, penalties, fines and expenses in connection with them. … 4.3 You indemnify us against, and you must therefore pay us on demand for, liability, loss or costs (including consequential or economic loss) we suffer or incur: (a) if you default under this guarantee and indemnity; or (b) in connection with any person exercising, or not exercising, rights under this guarantee and indemnity. … Interest 5.1 You must pay interest on any amount under clauses 3 or 4 which is due for payment. The interest accrues daily from (and including) the due date up to (but excluding) the date of actual payment and is calculated on actual days elapsed and a year of 365 days (even in a leap year). You must pay interest owing under this clause 5 on demand from us. 5.2 The rate of interest applying to each daily balance is the rate specified by us from time to time or (if no rate is specified) 2% above the highest interest rate applying to the guaranteed money on that day. 5.3 Each month (or any other period we choose), we may add to the amount you owe us any interest under this clause 5 which has not been paid. You will then be liable for interest under this clause 5 on the total amount. 5.4 If any amount you must pay under this guarantee and indemnity becomes covered by a court order, you must pay interest on that amount as a separate obligation. The interest accrues from and including the date we first ask you for the amount until but excluding the date that amount is paid. This obligation is not affected by the court order. The rate is the rate that applies under clause 5.2 or the rate in the court order (whichever is higher). … Your rights are suspended 21 Defined in clause 26 to include “charges and expenses; and costs, charges and expenses in connection with advisers (in the case of legal advisers on a full indemnity basis or solicitor and own client basis, whichever is higher). -- 9 of 21 -- 10 9. As long as any of the guaranteed money remains unpaid, you may not, without our consent: (a) reduce your liability under this guarantee and indemnity by claiming that you or the debtor or any other person has a right of set-off or counterclaim against us; … Payment in full 13.1 You must pay us the guaranteed money in full without set-off, counterclaim or deduction. … Notices and other communications 14.1 Notices, certificates, consents, approvals and other communications in connection with this guarantee and indemnity must be in writing. Communications from us may be signed by any person authorised by us. If you are a company, communications from you must be signed by a director or another person we approve. 14.2 They may be: (a) given personally (if they are for you and you are a company, to one of your directors; if they are for us, to one of our employees at the office where you arrange this guarantee and indemnity or any other office we tell you); (b) left at the address last notified; (c) sent by prepaid post to the address last notified; (d) sent by fax to the fax number last notified; (e) given in any other way permitted by law. 14.3 They take effect from the time they are received unless a later time is specified in them. 14.4 If they are sent by post, they are taken to be received three days after the date of posting. … When must you pay? 16.1 A demand may be made at any time and from time to time. However, if a special condition restricting the time when we can make a demand on you is attached to this guarantee and indemnity, we may only make a demand as set out in that special condition.22 16.2 You must pay any amount payable to us under this guarantee and indemnity by 12 noon (local time) on the date which we specify. 22 The details of the corporate guarantees state there are no special conditions. -- 10 of 21 -- 11 … How we may exercise our rights 19.1 We may exercise a right or remedy or give or refuse our consent in any way we consider appropriate, including by imposing conditions. 19.2 We may claim against you under this guarantee and indemnity before we enforce other rights or remedies: (a) against the debtor or any other person; or (b) under another document such as a guarantee or mortgage, charge or other security. …” The Individual Guarantees [22] The details of the individual guarantees identify the guaranteed agreement as the “Agreement between the debtor [Sandy Bay] and us constituted by acceptance of an offer from us dated 20/06/2008” and record that: 23 “The maximum amount we can require you to pay in connection with the guaranteed agreement is:  $1,080,000; plus  interest, fees, costs and other expenses payable by the debtor under the guaranteed agreement; plus  if the Consumer Credit Code applies to this guarantee and indemnity, all amounts payable under clause 4 – ‘Enforcement expenses’; or  if the Consumer Credit Code does not apply to this guarantee and indemnity, all amounts payable under clause 5 – “Our costs and other expenses” and all amounts payable under clause 6 – ‘Interest’.”24 [23] Like the corporate guarantees, the individual guarantees provide: (a) that each of the individual guarantors are liable both separately on their own, and jointly with the other guarantors (clause 1.2); (b) for a continuing guarantee until all guaranteed money25 has been paid in full (clause 2.1); 23 Exhibit GDG-6 to Mr Di Gregorio’s affidavit at pp 90-91. 24 It was not suggested the Consumer Credit Code applies. 25 Defined in clause 27 to mean “all amounts payable by the debtor under the guaranteed agreement and includes any amount which will or may be payable in the future. The maximum guaranteed money is described in the Details under ‘Maximum amount’.” -- 11 of 21 -- 12 (c) for liability for costs and other expenses, in equivalent terms (clauses 5.1 and 5.3); (d) for liability for interest, in equivalent terms (clause 6); (e) for suspension of the guarantors’ rights, in the following terms: “11. As long as any of the guaranteed money remains unpaid, you may not, without our consent: (a) reduce your liability under this guarantee and indemnity by claiming that you or the debtor or any other person has a right of set-off or counterclaim against us (except to the extent you have a right of set-off granted by law which we cannot exclude by agreement); ...” (f) for payment in full, in the following terms: “14.1 Except to the extent you have a right of set-off granted by law which we cannot exclude by agreement (such as under a Code) you must pay us the guaranteed money in full without set-off, counterclaim or deduction.” (g) for service of notices, in similar terms (clause 15); (h) for “when you must pay” in similar terms (clause 17); (i) for “how we may exercise our rights” in equivalent terms (clauses 19.1 and 19.2). Non-Receipt of the Letter of Demand by the Corporate Defendants [24] The first ground of defence relied upon affects only the corporate defendants; it is not contended that the individual defendants did not receive the letters of demand. [25] The defendants say, in paragraph 11 of the defence, they “will provide evidence at the trial of this matter via a third party, being the Accountant of the Guarantor that the alleged demand was not received”. [26] No evidence from the accountant was relied upon at the hearing of the summary judgment application. However, for the reasons which follow, the availability of such evidence would not have affected the outcome. [27] The liability under the corporate guarantee is one to pay “on demand” (clauses 2.1, 3.1, 4.1 and 5.1). [28] Clause 14.2 of the corporate guarantee (set out above) provides for a document such as a demand to be sent by prepaid post to the address last notified (cl 14.2(c)) or given in any other way permitted by law (cl 14.2(e)). [29] Relevantly to the latter, s 109X(1)(a) of the Corporations Act 2001 (Cth) provides for a document to be served on a company by, inter alia, leaving it at, or posting it to, the company’s registered office. -- 12 of 21 -- 13 [30] The evidence demonstrates that letters of demand dated 27 August 2013 were sent, by express post, on 27 August 2013 to: (a) the first defendant, Jakeman Corporation Pty Ltd,26 at: (i) 562 Grandview Road, Pullenvale, Qld, 4069;27 and (ii) Suite 8, 476 Canterbury Road, Forest Hill, Vic, 3131;28 and (b) the second defendant, Bridgeman Pty Ltd, 29 at: (i) PO Box 10604, Adelaide Street BC, Brisbane, Qld, 4000; and (ii) Suite 8, 476 Canterbury Road, Forest Hill, Vic, 3131.30 [31] I was not taken, by the plaintiff, to evidence of what the “address last notified” for each of the corporate defendants was. Nevertheless, as is apparent, the demands were posted to the registered office of each of them, consistently with cl 14.2(e) and s 109X of the Corporations Act 2001. [32] The plaintiff’s evidence includes the “tracking summary” from Australia Post in relation to the mailing of each of these letters by express post, which records, relevantly, that: (a) the letter sent to the first defendant at Suite 8, 476 Canterbury Road, Forest Hill, Victoria, was delivered on 29 August 2013 at 11.30;31 (b) the letter sent to the first defendant at 562 Grandview Road, Pullenvale, Queensland, was delivered on 29 August 2013 at 17:00;32 (c) the letter sent to the second defendant at Suite 8, 476 Canterbury Road, Forest Hill, Victoria, was delivered on 29 August 2013 at 11.30;33 and (d) the letter sent to the second defendant at PO Box 10604, Adelaide Street, BC, Brisbane, Queensland, was delivered on 29 August 2013 at 06:18.34 [33] Apart from this evidence of delivery, by operation of clause 4.4 of the corporate guarantees, the documents are “taken to be received three days after the date of posting”.35 26 Exhibit GDG-8 to Mr Di Gregorio’s affidavit (letter dated 27 August 2013); paragraph 4 and exhibits MRG-1 and MRG-2 to the first affidavit of Mitchell Grady filed 2 December 2014 (court document 11) (Mr Grady’s first affidavit). 27 This is the address of the third defendant, Barry Lee Jakeman, who at this time was a director and secretary of the first defendant: see exhibit MRG-1 to the second affidavit of Mitchell Grady filed 2 December 2014 (court document 13) (Mr Grady’s second affidavit) (see also exhibit GDG-10 to Mr Di Gregorio’s affidavit). 28 The registered office of Jakeman Corporation Pty Ltd (exhibit MRG-1 to Mr Grady’s second affidavit). 29 Exhibit GDG-9 to Mr Di Gregorio’s affidavit (letter dated 27 August 2013); paragraph 5 and exhibits MRG-3 and MRG-4 to Mr Grady’s first affidavit. 30 The registered office of Bridgeman Pty Ltd (exhibit MRG-2 to Mr Grady’s second affidavit). 31 Exhibit MRG-1 to Mr Grady’s first affidavit at p 4. 32 Exhibit MRG-2 to Mr Grady’s first affidavit at p 9. 33 Exhibit MRG-3 to Mr Grady’s first affidavit at p 14. 34 Exhibit MRG-4 to Mr Grady’s first affidavit at p 19. -- 13 of 21 -- 14 [34] As the High Court observed in Fancourt v Mercantile Credits Ltd (1983) 154 CLR 87 at 96, in relation to a legislative provision providing for service other than personal service (including by post)36: “[such provisions] contemplate the possibility of something less than actual receipt by the person to be served. As was observed by Tindal CJ in Bishop v Helps in relation to a comparable provision, although leaving notices at a place of abode or sending them through the post involve the possibility of non-receipt by the intended recipient: ‘It was probably considered that the public convenience would be promoted by the present provision, and that its advantages would greatly outweigh the inconvenience which, in some few cases, might possibly arise from it.’ Nevertheless, proof of the use of any one of the methods of service provided by s 42(1) constitutes proof of service for the purpose of the Hire-Purchase Act…”37 [35] Notwithstanding the adoption of a permitted means of service (such as by post), service will be ineffective if there is proof of non-delivery.38 However, as the Court in Fancourt v Mercantile Credits also observed, at 97: “… delivery may be different from receipt by the intended recipient and, provided that delivery is not disproved, the fact of non-receipt does not displace the result that delivery is deemed to have been effected at the time at which it would have taken place in the ordinary course of the post.” [36] The same principles apply in respect of equivalent contractual provisions, such as clauses 14.2 and 14.4.39 [37] The plaintiff’s evidence establishes delivery of the demands on the corporate defendants. [38] The plaintiff correctly notes that, having established delivery, the evidentiary onus shifts to the defendants, in so far as this issue is concerned.40 [39] There is no proof of non-delivery; merely an assertion in the defence of non-receipt at the registered office (but neither evidence, nor any assertion, of non-receipt at the alternative addresses to which the demands to each of the corporate defendants were posted). Even if that assertion had been supported by evidence, evidence of non- 35 A deeming provision reflective of s 39A(1) of the Acts Interpretation Act 1954 (Qld) and s 29(1) of the Acts Interpretation Act 1901 (Cth). 36 Relevantly, s 42(1)(b) and (c) of the Hire Purchase Act 1959 (Qld), which permitted service of a notice or document “by leaving it at his place of abode or business …” or “by posting it addressed to him at his last known place of abode or business”, respectively. 37 Footnote omitted. 38 Fancourt v Mercantile Credits (1983) 154 CLR 87 at 96-97. 39 See O’Donovan & Phillips, The Modern Contract of Guarantee (Thomson, Lawbook Co, looseleaf) at [10.1810] referring, inter alia, to State Bank of Victoria v Voss (unreported, Supreme Court of Victoria, O’Bryan J, 17 May 1991) (Lexis Nexis case number BC9102938, relevantly at pp 8-12) and Bank of Western Australia v Salmon (No. 2) [2009] NSWSC 226 at [12] (per Kirby J). 40 Queensland Pork Pty Ltd v Lott [2003] QCA 271 at [34] and [41]; LCR Mining Group Pty Ltd v Ocean Tyres Pty Ltd [2011] QCA 105 at [22]. -- 14 of 21 -- 15 receipt would not be sufficient to displace the fact that delivery is deemed to have occurred 3 days after 27 August 2013, under clause 14.4. [40] In so far as this issue is concerned, it affords the corporate defendants no prospect of successfully defending the plaintiff’s claim. Failing to Take into Account an Earlier Offer to Purchase the Property [41] Further to paragraph 17 of the defence (set out at paragraph [13] above), at the hearing, Mr Speedy submitted in this regard that, prior to August 2013, when the default occurred, the plaintiff failed to respond in a professional manner to the defendants’ advice to it that they had a purchaser for the property, and their requests to enter into an agreement for payment of the shortfall by personal loans from the defendants (or some of them). As a result, the defendants lost the opportunity to complete the sale to that purchaser and the amount of the shortfall has been increased significantly. [42] There is in evidence before me email correspondence between representatives of the plaintiff (Bankwest at that time) and Mr Speedy,41 which reveals the following: (a) In an email chain commencing on 5 March 2013 (exhibit GDG-13), Trevor Blake (who was one of the tenants of the property) emailed John Speedy, offering to purchase the property for $880,000, plus a separate agreed price for the furniture of $50,000. The offer was to remain open until 12 March 2013.42 (b) John Speedy responded, by email on the same date, indicating he “will get back to you when Barry [Jakeman] returns [from China] and we have had time to discuss your offer”, but stating “[a]s you are aware our asking price is $1,100,000”.43 (c) Apart from a short email saying “Thanks John” sent by Trevor Blake on 6 March 2013, the next email in the chain is from Trevor Blake to John Speedy on 13 May 2013 saying “Jude and I ready to purchase a property but before we do wondered if you were still interested in selling as we have not heard back from you?”.44 (d) John Speedy responded that same day, saying “we are still very interested in selling Unit 39 to your good self, however we have a $200,000 shortfall between bank debt and your offer”.45 (e) Also on 13 May 2013, John Speedy forwarded the above email chain to Andrew Stewart of Bankwest, referring to the offer originally made (of $880,000 plus furniture $50,000) and saying “I am hoping to get a further offer of say another $100K. I will keep you informed”.46 (f) In a separate email chain (exhibit GDG-14), starting on 27 May 2013, John Speedy emailed Andrew Stewart of Bankwest saying “we have now negotiated what we believe to be a Final Price with our Tenant for the purchase of the above Unit”, and describing that in terms of a “final offer” of $880,000 and, under 41 Exhibits GDG-14 to GDG-21 to Mr Di Gregorio’s affidavit. 42 Exhibit GDG-13 at p 117. 43 Exhibit GDG-13 at p 117. 44 Exhibit GDG-13 at p 116. 45 Exhibit GDG-13 at p 116. 46 Exhibit GDG-13 at p 116. -- 15 of 21 -- 16 “separate agreement”, “purchase of furniture” for $100,000. The email also states “As previously discussed coverage of the short fall of approx. $100,000 to be by way of personal loans (50%) Barry Jakeman and John Speedy. I would appreciate it if you could give me a call to discuss this matter in detail and the way forward”.47 (g) Andrew Stewart emailed John Speedy, on 26 June 2013, replying to the 27 May 2013 email, saying “Just checking in to see how things were going around the sale of Karmasea. Have you made it to contract yet?”.48 (h) The next email chain commences on 16 July 2013 (exhibit GDG-15), with an email from Stephen Ainsworth of Bankwest to Mr Speedy and Barry Jakeman, advising that he is now the person managing the loan in respect of the property; noting the current balance of the loan is DR$1,092,701.56 and that “the loan is $12,70156 [sic, $12,701.56] in arrears”; referring to Mr Speedy’s email of 27 May 2013, and asking “Has a contract of sale for the property, and the furniture, been executed? If so, please furnish us with a copy of same immediately. Upon receipt, we will discuss with you arrangements to repay the expected shortfall on the loan following sale of the property.”49 (i) Mr Speedy then replied, on 21 July 2013, to both Andrew Stewart and Stephen Ainsworth, in the following terms:50 “As previously advised, in conjunction with our JV partners were the developers of Karmaseas Apartments. Part of the finalisation of the JV partnership required Barry Jakeman & myself to purchase the fully furnished Display Suite Skyhome Unit no. 39, the market value of the Skyhome at time of settlement was $1,550,000 (incl furniture) On Sandy Bay villas was the entity used for the purchase of the Skyhome which Bankwest financed in May 2008. Initially our long term tenant’s rent of $1,100.00 per week covered Bankwest’s monthly interest. Due to the GFC our tenant had to terminate the lease. Despite costly advertising and marketing we could not attract a tenant for rent of $1,100 per week or a buyer for the Skyhome. In February 2012 to minimise our financial exposure we accepted a Rent offer of $650 per week for the fully furnished 4 Bedroom Skyhome. In March 2013 our tenant telephoned me and discussed the possibility of purchasing the Skyhome Unit at Karmasea. 47 Exhibit GDG-14 at pp 119-120. 48 Exhibit GDG-14 at p 119. 49 Exhibit GDG-15 at p 123. 50 Exhibit GDG-15 at p 122. -- 16 of 21 -- 17 On the 5 March 2013 offers of $880,000 for the unit and $50,000 for the furniture were received. We confirmed our asking price was $1,100,000, the same day. On 27 May I confirmed by email to Andrew Stewart we had agreed a final price for the sale of the Unit of $980,000. (2 Contracts) Also stating ‘As previously discussed coverage of the short fall of approx. $100k to be by way of personal loans etc’ I confirmed to our tenant on Friday 21 June 3.53 pm the contracts would be ready to sign Tuesday 25 June 2013. At 4.22pm our tenant withdrew his offer. Our investigations reveal our tenant has purchaser [sic] a Penthouse for $1,080,000 which settles in late August. After interviewing 4 Real Estate agents on 12 July 2013 we appointed Amber Werchon Property Mooloolaba to sell the Skyhome for $980,000. In conclusion, we were not able to complete the sale to our tenant, our agent indicated she has a number of interested parties and price point for upmarket units on the Sunshine Coast are rising. Please call if you wish to discuss in full any aspect of the above. We are currently expecting an upturn in of core business which will enable use [sic] to make good the outstanding interest payments.” (j) Stephen Ainsworth responded to Mr Speedy the next day, on 22 July 2013, saying “[n]oting that the sale fell through around one month ago it would have been prudent to notify the Bank of this earlier, especially with the expected loan shortfall upon sale, and the escalating arrears position. Clearly, time is of the essence in this matter and the Bank remains cognisant of the need to minimise further interest and costs”, and also requesting to make arrangements for an updated valuation of the property, as the “unit has not been valued by the Bank since 2008”.51 (k) Exhibit GDG-16 includes a follow up email from Stephen Ainsworth to Mr Speedy on 29 July 2013, seeking a response to his email of 22 July; and an email from Mr Speedy on 31 July 2013, apologising “for not getting back to you earlier”, and advising the letting agent’s details for access to the unit.52 (l) Then on 7 August 2013, Stephen Ainsworth emailed Mr Speedy and Mr Jakeman, advising that “[w]e have now received the valuation report for the abovementioned property. The valuation indicates the expected shortfall on the loan, after sale of the property, will be significantly higher than $100,000 you had originally envisaged”. Mr Ainsworth further advises that “[w]ith the arrears on 51 Exhibit GDG-15 at p 121. 52 Exhibit GDG-16 at pp 124 and 126 -- 17 of 21 -- 18 the loan continuing to escalate, the Bank is of the view that it would prefer to take over and manage the sale process of the property. In this regard, and with a view to keeping costs to a minimum, we ask whether you will be prepared to voluntarily surrender possession of the property to the Bank…”.53 (m) What follows, in GDG-18 to GDG-21 is email correspondence in relation to the surrender of possession of the property to the plaintiff, and related matters, in respect of which I note only the following: (i) On 9 August 2013, Mr Speedy emailed Stephen Ainsworth saying, amongst other things, “We are disappointed but understand and agree to Bankwests position as exercising its power of sale as stated in your emails dated 7 & 8 August 2013”. 54 (ii) On 19 August 2013, Mr Speedy emailed Stephen Ainsworth saying: “Attached find the signed voluntary surrender form with my previous request for a Detailed report every 2 week added”.55 (iii) Correspondence between Mr Speedy and Stephen Ainsworth about the tenant vacating the property.56 (iv) The correspondence continues up until 28 October 2013, with Stephen Ainsworth advising Mr Speedy that “[t]he Bank will now proceed to enter into vacant possession of the property”, and to that end will have a locksmith contact Mr Speedy’s sales agent to attend to changing the locks.57 (n) All of the email correspondence between Mr Speedy and the Bankwest representatives referred to above was copied to Mr Jakeman, save for the email chain comprising GDG-20. [43] This correspondence does not support the defendants’ contentions. Among other things: (a) The allegations in paragraphs 17(d), 17(e) and 17(f) of the defence are plainly incorrect. As to paragraph 17(d), it is apparent there were numerous communications between the plaintiff’s representatives and Mr Speedy, at least in the period up to 28 October 2013, when the evidenced emails end. As to paragraphs 17(e) and (f), the correspondence reveals not only were Mr Speedy and Mr Jakeman aware the plaintiff was taking possession of the property, but they executed voluntary surrender forms, and assisted with the process in terms of arrangements with the tenant and agent. (b) Contrary to the submission put by Mr Speedy at the hearing, the potential sale to the tenant did not fall through because of any action (or inaction) on the part of the bank. In the lengthy email set out at paragraph [42(i)] above Mr Speedy said he “confirmed to our tenant on Friday 21 June 3.53pm the contracts would be ready to sign Tuesday 25 June 2013. At 4.22pm our tenant withdrew his offer”. 53 Exhibit GDG-17 at p 128. 54 Exhibit GDG-19 at p 132. 55 Exhibit GDG-19 at p 130. 56 Exhibit GDG-19 at p 136 and p 137 and exhibit GDG-21 at p 141. 57 Exhibit GDG-21 at p 140. -- 18 of 21 -- 19 From this it appears Mr Speedy was not waiting for a response from the bank before proceeding with the sale – but, unfortunately, the sale did not proceed because the tenant withdrew their offer. It is noteworthy also that, in this email, of 21 July 2013, Mr Speedy raises nothing by way of complaint with the conduct of Bankwest’s representatives up to this point, and any effect this had on his ability to proceed with a contract with the tenant. [44] I have addressed these facts in detail, having regard to the matters raised in the defence, the fact the defendants were not legally represented, and in acknowledgment of the submissions made by Mr Speedy at the hearing of the application. [45] However, the fundamental difficulty for the defendants in any event – putting aside the factual situation as revealed by the correspondence - is the operation of the suspension and payment in full clauses in both the corporate guarantees (clauses 9(a) and 13.1) and the individual guarantees (clauses 11(a) and 14.1), which are set out at paragraphs [21] and [23] above. [46] These clauses are unambiguous. The effect of them is to preclude the defendants from setting off any claim they may consider they have against the plaintiff against their liability for the monies guaranteed. If they have such a claim, it must be dealt with independently of this proceeding.58 [47] The purpose of the clauses is to prevent the guarantors from relying on any set-off which they might have to delay the bank’s claim for money owing under the guarantees.59 In The “Fedora” [1986] 2 Lloyd’s Rep 441 at 444, the English Court of Appeal pointed out: “…(1) that the commercial purpose of the transaction is that, upon default by the borrower the bank should be paid quickly, and (2) that the natural meaning of the words is that all set-offs and counterclaims are excluded. The natural meaning of the words is not that all set-offs and counterclaims ‘other than set-offs and counterclaims for negligence or breach of the bank’s duties as mortgage’ are excluded.” [48] The very complaint the defendants, by Mr Speedy, say they want the opportunity to make against the plaintiff – that the failure by the bank to respond to communications prevented a sale from proceeding from which the indebtedness could be discharged – was raised in Westpac Banking Corporation v Matich.60 As Giles CJ said, in that case:61 “… It is well established that a guarantor may bargain away his rights to complain about the conduct of the creditor. That usually arises when the complaint is that the creditor’s conduct exacerbated or prevented the lessening of the guarantor’s liability, but there is no reason why a provision of the guarantee in appropriate terms should not have the effect of 58 Capital Finance Australia Ltd v Airstar Aviation Pty Ltd [2004] 1 Qd R 122 at [10] and [17] per Holmes J. 59 Daewoo Australia Pty Ltd v Porter Crane Imports Pty Ltd [2000] QSC 50 at [18]. 60 An unreported decision of Giles CJ, in the commercial division of the NSW Supreme Court, 21 November 1997, referred to in O’Brien v Bank of Western Australia Ltd [2013] NSWCA 71 at [72]- [74]. 61 See the passage quoted in O’Brien v Bank of Western Australia Ltd, above, at [73]. -- 19 of 21 -- 20 precluding the guarantor from raising an estoppel by reason of the creditor’s conduct.” [49] In the context of clauses of this kind, an important distinction is drawn between a defence that impeaches the validity of guarantee itself, and a defence that impeaches the exercise of rights under the guarantee.62 [50] The defendants’ defence (and the set off dealt with below) falls into the latter category. There is no challenge to the validity of the guarantees; nor any claim that liability under the guarantees has not arisen (the default by Sandy Bay being admitted). [51] Accordingly, the defendants’ contentions in paragraph 17, as further articulated by Mr Speedy at the hearing, do not afford the defendants any basis for defending the plaintiff’s claims in this proceeding. Set Off in Respect of Furniture etc Left at the Property [52] At the hearing, Mr Speedy described the property as a “skyhome”, which was part of a larger development, and was used as the “display suite”. For that purpose, it was fitted out quite extensively, with the furniture and fittings listed in paragraph two on the fourth page of the defence. 63 [53] As already noted, the defendants allege the plaintiff took possession of those items without notice to them, and without accounting to the defendants for them, and foreshadow a claim for relief against the plaintiff in that regard in detinue. [54] There are a number of factual matters raised by the plaintiff, in its written submissions, in relation to this issue, including: the absence of evidence that the furniture and fittings were the property of the defendants (rather than Sandy Bay, the owner of the property); the express provision in the contract of sale of the property by the plaintiff that “nil” chattels were included;64 and correspondence between the plaintiff and Sandy Bay, in the context of the plaintiff taking possession of the property, requiring arrangements to be made for removal of items left at the property within a certain time, failing which they would be treated as abandoned.65 [55] It is not necessary for me to address those matters here. As in the case of the defence just dealt with, the defendants are also prevented from raising this claim in defence of, or in reduction of the plaintiff’s claim in this proceeding, because they contracted not to (in clauses 9(a) and 13.1 of the corporate guarantees and clauses 11(a) and 14.1 of the individual guarantees). [56] Once again, if the defendants have a claim against the plaintiff as foreshadowed in their “set-off”, upon which I do not express a view, it must be dealt with independently of this proceeding. 62 Capital Finance Australia Ltd v Airstar Aviation Pty Ltd, above, at [17]; O’Brien v Bank of Western Australia Ltd, above, at [75] (referring to St George Bank Ltd v Field [2007] NSWSC 902 at [18]) and [88]-[91]. 63 See footnote 11 above. 64 See exhibit GDG-24 to Mr De Gregorio’s affidavit at p 149. 65 Exhibit GDG-23 to Mr De Gregorio’s affidavit at p 145. -- 20 of 21 -- 21 [57] It follows that the defendants have no real prospect of successfully defending the plaintiff’s claim, and there is no need for a trial of the claim, because this conclusion flows from the contractual effect of the corporate and individual guarantees, the validity of which is not impugned, and does not depend on any disputed issues of fact.66 In the circumstances, it is appropriate that judgment be given for the plaintiff against the first, second, third, fifth and sixth defendants, for the plaintiff’s claim, including interest to the date of judgment and the costs of the proceeding. [58] On the publication of these reasons, I will the give the plaintiff an opportunity to update the calculation of the amount outstanding under its claim to the date of judgment. 66 Filmana Pty Ltd v Tynan [2013] QCA 256 at [69]. -- 21 of 21 --