Centrepoint Alliance Ltd v S R Contracting Pty Ltd & Ors Pty Ltd [2009] QSC 388

SUPREME COURT OF QUEENSLAND CITATION: Centrepoint Alliance Ltd v S R Contracting Pty Ltd & Ors Pty Ltd [2009] QSC 388 PARTIES: CENTREPOINT ALLIANCE LIMITED (ACN 052507 507) (plaintiff) v SR CONTRACTING PTY LTD (ACN 121 452 195) (first defendant) SEA FARM & RESOURCES PTY LTD (ACN 114 589 945) (second defendant) BRIAN BENJAMIN RUSSELL (third defendant) FILE NO/S: BS 4216 of 2009 DIVISION: Trial Division PROCEEDING: Application for summary judgment ORIGINATING COURT: Supreme Court at Brisbane DELIVERED ON: 4 December 2009 DELIVERED AT: Brisbane HEARING DATE: 28 August 2009 JUDGE: Martin J CATCHWORDS: CONTRACT – GUARANTEE & INDEMNITY – ACTIONS AGAINST GUARANTORS – CONSIDERATION – CONSTRUCTION AND EFFECT – MISREPRESENTATION – Where the plaintiff lent money to the first and second defendant – Where the first and second defendants defaulted under loan agreement – Where a guarantee in the form of a deed was executed by the third defendant – Where plaintiff sought to enforce guarantee against third defendant – Where third defendant’s defence alleges plaintiff failed to mitigate loss – Where third defendant alleges guarantee is unenforceable for lack of consideration – Where third defendant alleges misrepresentation by plaintiff – Where plaintiff seeks summary judgment against the third defendant - Whether plaintiff failed to mitigate loss – Whether the guarantee is enforceable – Whether plaintiff made a misrepresentation – Whether summary judgment against the third defendant should be granted. -- 1 of 3 -- 2 ORDER: Judgment is given for the plaintiff in the amount of $342,372.05 together with interest in the amount of $59,806.58 from 1 April 2009 to today. COUNSEL: C.C. Heyworth-Smith for the applicant A. Evans for the respondent/third defendant SOLICITORS: Forbes Dowling for the applicant HWL Ebsworth Lawyers for the respondent/third defendant [1] This is an application for summary judgment brought by the plaintiff against the third defendant on the basis of a guarantee having been given by the third defendant with respect to the liability of the first and second defendants. [2] In September 2007 the first and second defendants sought finance from the plaintiff to fund insurance premiums. An advance of $295,035.95 was made by the plaintiff to the first and second defendants for that purpose. [3] In October 2007, January 2008 and February 2008 the first and second defendants failed to make payments in accordance with the finance arrangements. [4] In December 2008 the plaintiff decided to commence a recovery action or winding up proceedings against the first and second defendants. At about the same time, the third defendant, acting on behalf of the first and second defendants, sought an extension of time from the plaintiff. That extension was granted. [5] In consideration of the plaintiff’s not commencing or filing any winding up proceedings against the first and second defendants, the third defendant agreed to provide a guarantee. That guarantee was executed in the form of a deed and, by it, the third defendant agreed to guarantee the payment by the first and second defendants to the plaintiff. [6] It is not in contest that: (a) the first and second defendants defaulted; (b) the plaintiff issued a certificate of the amount owing; and (c) the plaintiff issued a demand for the amount owing. [7] The certificate referred to above was one which drew its force from the guarantee executed by the third defendant. Clause 2.6.6 of the guarantee provided that a certificate under the hand of a director or manager of the plaintiff would be conclusive evidence of the amount of the guaranteed moneys due by the third defendant to the plaintiff. [8] The third defendant originally filed a notice of defence and counterclaim. That document was the product of Mr Russell himself and it did not comply in any way with the rules. [9] In an affidavit by the third defendant, a proposed amended defence and counterclaim is exhibited. The original defence and counterclaim is deleted in its entirety and a new pleading is proposed to take its place. -- 2 of 3 -- 3 [10] In that proposed defence, the third defendant raises as defences the following matters: (a) the plaintiff failed to mitigate its loss by not ensuring that the insurance policy was cancelled and thus enabling the balance of the premium to be refunded; (b) that the guarantee is not binding because the plaintiff gave no consideration for it. [11] In addition, the third respondent proposes to bring a counterclaim, pleading that the plaintiff represented to the third defendant, by way of a loan application form provided to him in his capacity as a director of the first defendant, that the first and second defendants appointed the plaintiff as their attorney to deal with the insurance. The third defendant then pleads that he believed the insurance policy would be cancelled by the plaintiff and the premium refunded to the plaintiff and that the representation was, therefore, misleading because the plaintiff did not take reasonable steps to cancel the insurance policy and obtain a refund [12] With respect to the first matter raised by the defendant, the material is clear that the insurer had refused and continued to refuse to refund any premium to the plaintiff or to either of the first and second defendants. [13] There was no provision in the insurance policy for a refund of the premium in the manner sought by the first and second defendants and, notwithstanding lengthy negotiation, the insurer refused to make any refund. This was not a case of the plaintiff having failed to take action; it was clear at all times that the insurer would not make a refund and could not be required to do so. [14] The second point raised by the defendant is that there was no consideration for the guarantee. The first, and obvious, response to that is that the guarantee is in the form of a deed and therefore consideration is not required. In any case, the consideration was that the plaintiff would not take action against the first and second defendants. [15] The third matter in the counterclaim is premised upon the same erroneous view with respect to a refund of premiums as the first ground. There is nothing in that. [16] Had there been any substance in the defendant’s claims with respect to refunds of premium, they would have been met by clause 2.8 of the deed of guarantee which allowed the plaintiff to enforce the guarantee against the third defendant without first instituting any proceeding or claims against either the borrower or any other person or exercising any rights against any asset whatsoever. In other words, the plaintiff need not and could not be required to seek any refund. [17] The third defendant has no real prospect of defending the claim or succeeding on its counterclaim. There is no need for a trial of the proceedings. The plaintiff is entitled to summary judgment on the claim and on the third defendant’s counterclaim. [18] I give judgment in the amount of $342,372.05 together with interest in the amount of $59,806.58 from 1 April 2009 to today. -- 3 of 3 --