Dowdle v Pay Now For Business Pty Ltd [2008] QSC 224

SUPREME COURT OF QUEENSLAND CITATION: Dowdle v Pay Now For Business Pty Ltd [2008] QSC 224 PARTIES: DERRYN MAREE DOWDLE (plaintiff) v PAY NOW FOR BUSINESS PTY LTD ACN 088979533 (defendant) FILE NO: 4514 of 2005 DIVISION: Trial Division PROCEEDING: Application ORIGINATING COURT: Supreme Court of Queensland DELIVERED ON: 22 September 2008 DELIVERED AT: Brisbane HEARING DATE: 13 June 2008, 20 June 2008 JUDGE: Daubney J ORDER: 1. There will be summary judgment for the Defendant in respect of that part of the Plaintiff’s claim pleaded in paragraph 13 of the Further Amended Statement of Claim filed 8 April 2008 2. I will hear the parties as to the orders and directions necessary to advance this matter, and in respect of costs CATCHWORDS: PROCEDURE – SUPREME COURT PROCEDURE – QUEENSLAND – PROCEDURE UNDER RULES OF COURT – Summary judgment – where plaintiff and her husband, Mr Dowdle, separated for some years – where plaintiff provided mortgage over property to guarantee loan to Mr Dowdle – where Mr Dowdle was significantly indebted to defendant – where defendant refused to release mortgage over the property, asserting that plaintiff was, by virtue of ‘all monies’ clause, liable for whole of Mr Dowdle’s debt – where plaintiff has commenced proceedings for contravention of s 52 of the Trade Practices Act 1974 (Cth) and s 12DA of the Australian Securities and Investment Commission Act 2001 (Cth) – where questions raised as to the application of the principles considered in Garcia v National Australia Bank Ltd (1998) 194 CLR 395 – where defendant applies for summary judgment – whether plaintiff has no real prospect of succeeding on the claim – whether there is no need for a trial of the claim or part of the claim -- 1 of 14 -- 2 ANZ banking Group Ltd v Alirezai; Alirezai v ANZ Baking Group & Anor [2004] QCA 6 Commercial Bank of Australiasia Ltd v Amadio (1983) 151 CLR 447 Commonwealth Bank of Australia v Mehta (1991) 23 NSWLR 84 Elderslie Property management No 2 Pty Ltd v Dunn & Anor [2007] QSC 192 Garcia v National Australia Bank Ltd (1998) 194 CLR 395 Goodwin v National Bank of Australasia Ltd (1968) 117 CLR 173 Henjo Investments Pty Ltd v Collins Marrickville Pty Ltd (No 1) (1988) 79 ALR 83 Kingaroy Mall Pty Ltd v E & N Collins Pty Ltd [2008] QSC 66 Lyonnais Bank Nederland NV v Burch (1997) 1 All E.R 144 Yerkey v Jones (1939) 63 CLR 649 Australian Securities and Investment Commission Act 2001 (Cth) Trade Practices Act 1974 (Cth) Uniform Civil Procedure Rules 1999 (Qld) COUNSEL: J A Griffin QC with R J Clutterbuck for the plaintiff J Peden for the defendant SOLICITORS: Cleary & Lee for the plaintiff Flower & Hart for the defendant [1] Pay Now for Business Pty Ltd (“the Defendant”) has applied for summary judgment or, alternatively, the striking out of the Further Amended Statement of Claim filed by Mrs Derryn Dowdle (“the Plaintiff”) on 8 April 2008. Background [2] The Plaintiff is married to Mr Paul Dowdle (“Mr Dowdle”) but they have been separated for some years. [3] The Plaintiff was the registered proprietor of a house property at 149 Purcell Road, Westbrook (“the property”). The property was purchased in March 2002 with finance obtained from Suncorp Metway Limited (“Suncorp”). In October 2003 the Plaintiff sought to re-finance the Suncorp loan through Liberty Funding Pty Ltd (“Liberty”). Liberty then paid out the mortgage to Suncorp. [4] Prior to this arrangement with Liberty, Mr Dowdle had sought a loan of $50,000.00 from the Defendant. Mr Dowdle had previously borrowed monies from the Defendant and had also guaranteed loans from the Defendant to companies he was associated with. The Defendant refused to lend Mr Dowdle the $50,000.00 unless he could provide security. Mr Dowdle asked the Plaintiff whether she would assist in this regard. She agreed to stand as guarantor and provide a mortgage over the property. -- 2 of 14 -- 3 [5] When the Plaintiff re-financed the property with Liberty, she agreed to pay $20,000.00 of the amount advanced by Liberty towards the debt owed by Mr Dowdle to the Defendant. This payment left approximately $36,000.00 owing in respect of the $50,000.00 loan to Mr Dowdle. [6] In 2005 the Plaintiff sought to sell the house property. On 4 February 2005 she entered into a contract of sale for $450,000.00. The Defendant, however, refused to release its mortgage, asserting that the Plaintiff had, by the execution of the guarantee and mortgage in its favour, rendered herself liable not only for the $50,000.00 loan, but for all of the debt owed to the Defendant by Mr Dowdle and the companies with which he was associated. As at 24 February 2003, when the deed of guarantee between the Plaintiff and the Defendant was entered into, Mr Dowdle’s debt to the Defendant allegedly stood at $311,751.00. By letter of 3 March 2005, the Defendant’s solicitors indicated that Mr Dowdle (and, as guarantor, the Plaintiff) was, at that time, indebted to the Defendant in the amount of $1,330,817.21. The Defendant contends that the Plaintiff is liable for this amount by virtue of ‘all monies’ clauses contained in the guarantee and mortgage. The commencement of these proceedings [7] The Plaintiff was obliged to discharge her debt to Liberty on 15 May 2005. She failed to do so (on her account, this was attributable to the Defendant’s failure to release its mortgage until the $1,330,817.21 had been paid). Accordingly, Liberty went into possession of the property and subsequently sold it. Settlement was effected on 8 August 2005. [8] On 3 June 2005, the Plaintiff commenced proceedings against the Defendant. Her current pleading is a Further Amended Statement of Claim filed 8 April 2008 (“FASOC”). She seeks a declaration that her liability under the guarantee does not extend to the $1,330,817.21 owed by Mr Dowdle to the Defendant, compensation under s 87 of the Trade Practices Act 1974 (Cth) (“TPA”) and damages representing the value of the house property as well as moving costs. The present application [9] The present application is for summary judgment under the Uniform Civil Procedure Rules 1999 (Qld) (“UCPR”). It is important to approach such applications with care,1 remembering that it is necessary, by the terms of r 293 for the court to be satisfied both:- (a) that the plaintiff has no real prospect of succeeding on all or part of the plaintiff’s claim; and (b) that there is no need for a trial of the claim or part of the claim. [10] The Plaintiff’s claim, as presently pleaded, has two primary limbs. First, she contends that on a proper interpretation of the mortgage contract and guarantee her liability is restricted to the $50,000.00 advanced less the amount repaid. Second, she asserts that the Defendant’s conduct was misleading or deceptive in contravention 1 See my observations previously in Kingaroy Mall Pty Ltd v E & N Collins Pty Ltd [2008] QSC 66 and Elderslie Property management No 2 Pty Ltd v Dunn & Anor [2007] QSC 192. -- 3 of 14 -- 4 of s 52 of the TPA and s 12DA of the Australian Securities and Investment Commission Act 2001 (Cth) (“ASIC Act”). [11] I will consider each of these aspects of the Plaintiff’s case in turn. The Construction issue [12] The Plaintiff contends2 that, properly constructed, the guarantee and mortgage required the Plaintiff to pay only $36,000 and not the $1,330,817.21 contended for by the Defendant. [13] The deed of guarantee dated 24 February 2003 between the Plaintiff and the Defendant included the following provision: 2. GUARANTEE Guarantee and Indemnity For the consideration, the Guarantor:- (a) guarantees to the beneficiary:- (i) payment by the Borrower of all moneys the Borrower owes the Beneficiary at any time, including all amounts:- (A) The Beneficiary has paid or become liable to pay for any reason:- • to or on behalf of the Borrower; or • at the express or implied request of the Borrower; or • because of any act or omission of the Borrower; or • because of any act or omission of the Beneficiary at the express or implied request of the Borrower; and (B) whether existing, future, actual or contingent; (C) the Borrower is or may become actually or contingently liable to pay to the Beneficiary, alone or jointly with any other person (ii) performance by the Borrower of all the Borrower’s other obligations to the beneficiary at any time, including all obligations:- (A) which have arisen:- 2 At paragraph 13 of her FASOC -- 4 of 14 -- 5 • at the express or implied request of the borrower; or • because of any act or omission of the Borrower; or • because of any act or omission of the Beneficiary at the express or implied request of the Borrower; and (B) under any Related Security; (C) whether existing, future, actual or contingent; (D) for which the Borrower is or may become actually or contingently liable to the Beneficiary alone or jointly with any other person; (b) Indemnifies the Beneficiary against all losses, damages, costs and expenses incurred by the Beneficiary or for which the Beneficiary may be or become liable as a direct or indirect result of:- (i) the Borrower defaulting in the performance of the Borrower’s Obligations; or (ii) the Guarantor defaulting in the performance of the Guarantor’s obligations, including all loss, damages, costs and expenses resulting from the enforcement or attempted enforcement, or preservation or attempted preservation of the Beneficiary’s rights, including legal costs and expenses on a full indemnity basis. [14] The mortgage relevantly provided: “2. TERMS OF REPAYMENT ETC The Mortgagor will pay to the Mortgagee in the manner agreed in writing between the Mortgagor and the Mortgagee and in the absence of any agreement in writing on demand:- 2.1 All moneys now or in the future owing or payable by the Mortgagor to the Mortgagee (which expression for the purposes of this clause includes any corporation related to the Mortgagee within the meaning of Section 50 of the Corporations Act); and also 2.2 All moneys now or in the future advanced or paid by the Mortgagee to for or for the accommodation of or on behalf of the Mortgagor either alone or jointly with any other person or otherwise owing or payable now or in the future by the Mortgagor either alone or -- 5 of 14 -- 6 jointly with any other person to the Mortgagee on any account; and also 2.3 All moneys which the Mortgagee pays or becomes liable to pay to for or for the accommodation of or on behalf of the Mortgagor either alone or jointly with any other person either by advances or by reason of the Mortgagee accepting or endorsing or paying or discounting any order draft cheque promissory note bill of exchange or other engagement or entering into any bond indemnity or guarantee or otherwise incurring liabilities for or for the accommodation of or on behalf of or at the request express or implied of the mortgagor either alone or jointly with any other person whether such orders draft cheques promissory notes bills of exchange or other engagements mature or not; and also 2.4 All moneys already lent or advanced or which the Mortgagee lends or advances or is or becomes in any way liable to lend or advance to for or for the accommodation of or on behalf of any other person on the order or request express or implied or under the authority of the Mortgagor acting either alone or jointly with any other person; and also 2.5 All moneys becoming payable by or on behalf of the mortgagor either alone or jointly with any other person for discounts stamp duties postage commissions charges exchanges re-exchanges and expenses according to the usage and course of business of the Mortgagee; and also 2.6 All moneys which the mortgagee is or will be entitled to debit and charge to the account of the mortgagor either alone or jointly with any other person whether under any security or document now or in the future held by the Mortgagee from or relating to the Mortgagor either alone or jointly with any other person or under the conditions or provisions in this mortgage contained or otherwise; and also 2.7 All moneys which the mortgagor either alone or jointly with any other person whether directly or indirectly or contingently or otherwise or whether by way of damages or otherwise presently is or in the future may become liable to pay to the Mortgagee under or on any document or negotiable or other instrument or by reason of any other matter or thing or as a result of or under any transaction or event; and also 2.8 Interest on all moneys referred to in this clause at the rate or respective rates agreed in writing. Interest will accrue from day to day and will be computed from the day or respective days of the moneys being paid or disbursed or becoming owing. At the end of every quarter ending on the last days of March, June, September and December in each year or on other days determined by the Mortgagee the interest accrued due will be capitalised; and also -- 6 of 14 -- 7 2.9 without limiting the generality of this clause all moneys and interest now or in the future to become owing or payable by the mortgagor to the mortgagee by virtue of the Deed of Guarantee and Indemnity dated on or about the date of this Mortgage between the Mortgagee as beneficiary and Mortgagor as guarantor. AND whether the money and interest are owing or payable by the Mortgagor in its capacity as a trustee or in several capacities as trustee or absolutely or otherwise.” [15] Despite the mortgage documentation making no specific mention of the sums previously advanced to Mr Dowdle, there does not seem to be any doubt as to the construction of the above clauses. Each is an ‘all monies’ clause, conventionally understood, which on its face makes the Plaintiff liable in respect of any amounts owed by Mr Dowdle to the Defendant. The Plaintiff submits that the ‘all monies provisions, on their proper construction, should only apply in respect of a previous advance of $2,500.00 as this amount was the only indebtedness specifically referred to in the loan agreement documentation. However, there is nothing in either ‘all monies’ provision which is consistent with such a limitation. The Plaintiff’s guarantee is for “payment…of all moneys the Borrower owes [the Defendant] at any time”. There is no indication that the operation of this provision is limited to amounts specifically mentioned in the loan documentation. Indeed, to read the clause as so limited would render the ‘future’ aspect which is referred to in clause 2.1(a)(i)(B) entirely ineffectual; future indebtedness is, by definition, not usually able to be precisely ordained. Similar considerations apply to the obligation under clause 2.1 of the mortgage. [16] Accordingly, I do not, on the material before me, consider the Plaintiff to have any real prospect of succeeding on the case she advances in relation to the construction of these clauses, nor is this aspect of her claim of such a character that a trial of the matter would be required. The Trade Practices Act case [17] The Plaintiff also seeks relief under the TPA and pursuant to s12DA of the ASIC Act. The great majority of the FASOC is directed towards this aspect of the claim. [18] The Plaintiff contends, at paragraph 7 of the FASOC, that she was only aware of Mr Dowdle’s indebtedness to the extent of the $50,000.00 and that she believed her guarantee to be to be limited to that amount. [19] By paragraph 19 of the FASOC, the Plaintiff alleges that the failure by the Defendant to advise her of the existence of Mr Dowdle’s further indebtedness constituted conduct which was misleading or deceptive or likely to mislead or deceive. [20] A failure to advise, such as the one pleaded by the Plaintiff, may amount to misleading or deceptive conduct only where the circumstances of a particular case give rise to an obligation to disclose relevant facts.3 This obligation, however, need not equate precisely with a duty to disclose as it ordinarily arises either in common 3 Henjo Investments Pty Ltd v Collins Marrickville Pty Ltd (No 1) (1988) 79 ALR 83 at 95 per Lockhart J. -- 7 of 14 -- 8 law or in equity;4 there is no need to show the existence of a particular relationship, such as that on foot between a solicitor and their client or a principal and agent.5 Rather: “Silence is to be assessed as a circumstance like any other. To say this is certainly not to impose any general duty of disclosure; the question is simply whether, having regard to all the relevant circumstances, there has been conduct that is misleading or deceptive or that is likely to mislead or deceive.”6 [21] There are, however, a number of particular considerations in the situation where a party guarantees the obligations of another. In Commercial Bank of Australiasia Ltd v Amadio7 , Gibbs CJ noted that a contract of guarantee is not uberrimae fidei and cited the following passage from Goodwin v National Bank of Australasia Ltd8 : “a bank which takes a guarantee ‘is only bound to disclose to the intending surety anything which has taken place between the bank and the principal debtor ‘which was not naturally to be expected’, or as it was put by Pollock M.R., in Lloyds Bank Ltd v. Harrison ‘the necessity for disclosure only goes to the extent of requiring it where there are some unusual features in the particular case relating to the particular account which is to be guaranteed’” (references omitted). The Chief Justice then observed: “The reason why a creditor is bound to reveal to an intending surety anything in the transaction between himself and the debtor which the surety would expect not to exist is that a failure to make disclosure in those circumstances would amount to an implied representation that the thing does not exist: see Lee v. Jones; London General Omnibus Co. Ltd. v. Holloway; Union Bank of Australia Ltd v Puddy. A surety who guarantees a customer’s account with a bank will not expect that the customer has not been overdrawn or that the bank is satisfied with the customer’s credit, for the probable reason why the bank requires the guarantee is that the customer has been overdrawing his account, and wishes to do so again, and that the bank is no satisfied with his credit.” … “It would be commercially unreal to suggest that a bank has a duty to reveal to a surety all the facts within its knowledge which relate to the transactions and financial position of a customer in any case where those transactions are out of the ordinary. The obligation is to reveal anything in the transaction between the banker and the customer which has the effect that the position of the customer is different from that which the surety 4 Commonwealth Bank of Australia v Mehta (1991) 23 NSWLR 84 at 88 per Samuels JA. 5 Henjo Investments Pty Ltd v Collins Marrickville Pty Ltd (No 1) (1988) 79 ALR 83 at 95 per Lockhart J 6 Demagogue Pty Ltd v Ramensky (1992) 39 FCR 31 at 32 per Black CJ. 7 (1983) 151 CLR 447 8 (1968) 117 CLR 173 at 175 per Barwick CJ -- 8 of 14 -- 9 would naturally expect, particularly if it affects the nature or degree of the surety’s responsibility.” 9 [22] More recently, in ANZ banking Group Ltd v Alirezai, McMurdo P observed: “Guarantees are not contracts of the utmost good faith automatically requiring the creditor’s full disclosure of all material facts. The general rule is that a bank is not obliged to disclose to a surety matters affecting the credit of the customer whose debt is to be guaranteed. Even if a company is in grave financial difficulties, consistently exceeding its overdraft limit with its cheques dishonoured, a creditor is not ordinarily required to disclose these facts to the surety. … If the creditor knows or would reasonably believe the surety to be acting upon a particular assumption of fact and knows that the assumption is unfounded, the creditor’s failure to disclose the truth may amount to a representation that the assumption is well founded: Union Bank of Australia v Puddy” (citations omitted). [23] It is, then, clear that the Defendant’s silence in relation to the existing indebtedness of Mr Dowdle will only amount to a misrepresentation if it can be said that the Plaintiff would, as a result of the Defendant’s silence, have naturally assumed that a particular state of affairs, contrary to that which actually existed, was in play. If the Plaintiff is unable to establish this, it cannot be said that the Defendant expressly or impliedly represented that the Defendant had no further indebtedness10 and, in turn, there could be no conclusion that the Defendant engaged in misleading or deceptive conduct, or conduct which was likely to mislead or deceive. [24] There is no dispute between the parties that, at the time the Plaintiff entered into the mortgage contract, Mr Dowdle had liabilities to the Defendant significantly in excess of the $50,000.00 loan then advanced. In truth, Mr Dowdle owed the Defendant some $361,000.00. In light of the significant disproportion between the amount advanced to Mr Dowdle, and the amount already owing, it is conceivable that, to adopt the language of Gibbs CJ, the Defendant would, at trial, be found to have withheld information such that the nature and degree of Mrs Dowdle’s responsibility was materially different from that which she would naturally expect. It may also be possible for the Plaintiff to establish at trial that the Defendant knew or ought reasonably to have known that the Plaintiff was acting on the assumption that Mr Dowdle’s debt was limited to the $50,000.00 and that the Defendant’s failure to disclose his true indebtedness amounted to misleading or deceptive conduct. The evidence relating to these considerations is, at present, not entirely satisfactory. Nevertheless, these are matters that could be more thoroughly elucidated in the course of a trial of the matter. I am not, therefore, satisfied that there is no need for a trial of the Plaintiff’s claim under the TPA and/or the ASIC Act. The relationship between the Plaintiff and Mr Dowdle 9 Commercial Bank of Australiasia Ltd v Amadio (1983) 151 CLR 447 at 455. 10 See Westpac Banking Corporation v Robinson (1993) 30 NSWLR 668 at 695 per Clarke JA -- 9 of 14 -- 10 [25] In the course of argument, the parties’ attention was drawn to the possibility that this might be a case in which the principles considered in cases such as Garcia v National Australia Bank Ltd11 and, more recently, ANZ banking Group Ltd v Alirezai; Alirezai v ANZ Baking Group & Anor12 are applicable. [26] The majority of the High Court in Garcia confirmed the existence of “….well recognised and long established principles which would preclude enforcement of a guarantee in some cases where the creditor has not disclosed to the intending surety some features of the transaction.”13 [27] In Garcia, a wife had executed a mortgage over the home she owned jointly with her then husband. This mortgage secured all monies owing as well as any liabilities accruing under future guarantees given by either the husband or the wife in favour of the creditor. Some time after this guarantee was given the marriage ended and the wife sought to have the guarantees declared ineffective. The creditor made a cross- claim for possession of the mortgaged property and payment of a sum which it had demanded pursuant to one of the guarantees. [28] In reaching its conclusion that the guarantee should not be enforced against the wife, the majority reviewed the Court’s earlier decision in Yerkey v Jones14 , and determined that Garcia was a case of the second category considered therein, namely one in which “there is no undue influence but there is a failure to explain adequately and accurately the suretyship transaction which the husband seeks to have the wife enter for the immediate economic benefit not of the wife but of the husband.”15 Their Honours said: “The principles applied in Yerkey v Jones do not depend upon the creditor having, at the time the guarantee is taken, notice of some unconscionable dealing between the husband as borrower and the wife as surety. Yerkey v Jones begins with the recognition that the surety is a volunteer: a person who obtained no financial benefit from the transaction, performance of the obligations of which she agreed to guarantee… It holds further, in the second kind of case, that to enforce it against her if it later emerges that she did not understand the purport and effect of the transaction of suretyship would be unconscionable (even though she is a willing party to it) if the lender took no steps itself to explain its purport and effect to her or did not reasonably believe that its purport and effect had been explained to her by a competent, independent and disinterested stranger. And what makes it unconscionable to enforce it in the second kind of case is the combination of circumstances that: (a) in fact the surety did not understand the purport and effect of the transaction; (b) the transaction was voluntary (in the sense that the surety obtained no gain from the contract the performance of which was guaranteed); 11 (1998) 194 CLR 395 12 [2004] QCA 6 13 (1998) 194 CLR 395 at 410 per Gaudron, McHugh, Gummow and Hayne JJ 14 (1939) 63 CLR 649 15 Garcia v National Australia Bank Ltd (1998) 194 CLR 395 at 404 per Gaudron, McHugh, Gummow and Hayne JJ -- 10 of 14 -- 11 (c) the lender is to be taken to have understood that, as a wife, the surety may repose trust and confidence in her husband in matters of business and therefore to have understood that the husband may not fully and accurately explain the purport and effect of the transaction to his wife; and yet (d) the lender did not itself take steps to explain the transaction to the wife or find out that a stranger had explained it to her.”16 [29] In the present case the Defendant conceded that the Plaintiff was acting as a volunteer, but disputed whether the other three circumstances which give rise to the necessary unconscionability were applicable. [30] In particular, the Defendant submitted that there was nothing to indicate that the Plaintiff did not understand the ‘purport and effect’ of the guarantee. Moreover, in respect of the requirement in (d) above, they made reference to the fact that the plaintiff received explanations of the transaction from both a solicitor and a financial advisor. [31] The Defendant also contended that the circumstances of this case, in which the Plaintiff and Mr Dowdle were separated at the time of the loan, are not such that the Defendant should be “taken to have understood that, as a wife, the surety may repose trust and confidence in her husband”. Mr and Mrs Dowdle’s relationship [32] The Plaintiff and Mr Dowdle, while still legally married, were separated at the time the guarantee was proffered. [33] The Defendant, in its submissions before me, raised the possibility that this separation could be fatal to the application of the Garcia principle to the present case. The thrust of the submission in this regard was that the Plaintiff cannot claim to have reposed trust and confidence in Mr Dowdle ‘as a wife’ at a time at which they were separated. [34] This case does not call for me to opine on the ambit of the Garcia principles to relationships other than marriage. Rather, the Defendant would have me determine summarily that the Garcia principles, which applied while the wife and husband cohabited, ceased to apply on their separation. [35] I would not be prepared to find, on a summary basis, that the fact that Mr and Mrs Dowdle had separated is necessarily fatal to reliance on the Garcia principles. Whilst in many circumstances, separation is likely to bring to an end the relationship of trust and confidence that exists between parties to a marriage, this is not necessarily always so. One can readily conceive of an “amicable separation” in which there continues to be a close relationship involving a significant degree of trust (Equally, I should add, one can easily conceive of a married couple who continue to reside together but whose relationship is, in fact, poisonous and completely devoid of trust and confidence.) Furthermore, a separation is, by definition, not irreversible. For the law to assume that the trust that exists between a married couple automatically dissolves the moment 16 Ibid at 408-409 per Gaudron, McHugh, Gummow and Hayne JJ -- 11 of 14 -- 12 cohabitation ends would be artificial. Are the courts to assume, in the case of temporary separations, that the Garcia principle applies one week while the parties are cohabiting, but ceases the next when they are not, only to revive a month later when the parties are wholly or partially reconciled? This aspect of the relationship between the Plaintiff and Mr Dowdle clearly requires investigation at trial. Mrs Dowdle’s understanding of the transaction [36] It was not disputed that the Plaintiff received independent advice in relation to the guarantee from both a solicitor and a financial advisor prior to executing the guarantee documentation. Accordingly, the Defendant contends that the Plaintiff cannot establish: a) that she did not understand the purport and effect of the transaction; and b) that the Defendant had not taken steps to explain the guarantee (or ensure that an appropriate third party explained the guarantee) to the Plaintiff. [37] When making further written submissions in relation to the application of Garcia and Alirezai, the Plaintiff sought leave to read a further affidavit in the proceedings. By this affidavit, the Plaintiff swears that at the time she was asked to execute the security documentation she was not aware that her husband had debts over and above the $50,000 referred to in the loan agreement. She further deposes that she would not have entered into the guarantee if she had been aware that by entering into the guarantee and mortgage she was guaranteeing an amount larger than $50,000.00. [38] The material before me indicates that, although the plaintiff received independent advice, those advising the Plaintiff were not aware of the extent of the defendant’s indebtedness which, at the time of the guarantee, stood at some $361,000. This, on the Plaintiff’s submission, prevented her from properly appreciating the purport and effect of the guarantee. [39] In support of this proposition, the Plaintiffs directed me to the decision of the English Court of Appeal in Lyonnais Bank Nederland NV v Burch17 a case in which a junior employee guaranteed an overdraft by her employer. The bank had advised that the guarantee was unlimited in time and amount, but not that her employer’s indebtedness was some ₤250,000. [40] In those circumstances Nourse LJ made the following comments: “I agree with the recorder that it was not enough for Ms Burch to be told repeatedly that the mortgage was unlimited in time and amount. She could not assess the significance of that without being told of the extent of API’s current borrowings and current limit. She might have thought that the limit was only being extended from ₤10,000 to ₤30,000. Had she known that API’s failure could have exposed her, on the figures then current, to the loss of her home and a personal debt of ₤200,000 on top, her reaction would have been very different.” 17 (1997) 1 All E.R 144 as cited with approval in by the Full Court of the South Australian Supreme Court in Micarone & Anor v Perpetual Trustees & Ors [1999] SASR 265 -- 12 of 14 -- 13 [41] A similar view was taken by Swinton Thomas LJ who said: “It is true that the bank, by letters dated 9 and 16 July 1990, advised Ms Burch that the charge was unlimited in time and amount and advised her that she should take independent legal advice. What the bank failed to tell her, and undoubtedly should have told her, was the extent of the company’s present indebtedness and, even more important, that she was exposing herself to a potential liability of ₤270,000 which would, of course, involve the loss of her home.” [42] This position is reflected in the remarks of Wilson J in Alirezai18 : “The issue was whether (assuming it had knowledge of the appellant’s being in a position of special disadvantage or possibly so) the bank could rebut the prima facie unfairness or unconscientiousness of its proceeding with the transactions by reliance on the certificates of independent advice. In essence the advice Mr Kennedy gave the appellant was that the securities extended to present and future obligations of the debtor to the Bank and that he stood to lose his land if the debtor defaulted. I cannot accept that the appellant executed the mortgages “with full knowledge and understanding of their content and the circumstances under which he was undertaking the liabilities” when he had no information from which he could assess the magnitude of the risk he was undertaking. The Bank had not itself supplied the appellant or his solicitor with relevant information or taken any steps to ascertain that they had such information; it had no reason to presume that either of them had any such information. In the circumstances the certificates of independent advice may not have been sufficient to rebut the presumption of unfairness or unconscientious conduct on the part of the Bank, even though the appellant granted the mortgages contrary to the strong advice of his solicitor not to do so.” [43] Wilson J’s remarks were made in the context of assessing whether a lender had acted unconscientiously in the sense described in Amadio. They seem, however, equally apposite to an enquiry as to whether a party to a marriage, when acting as surety, specifically understood the purport and effect of the guarantees they were giving. Again, these issues clearly require investigation at trial. [44] On account of my findings in relation to the Plaintiff’s case, as well as the possible application of the Garcia principles, I am unable to be satisfied both that the Plaintiff has no reasonable prospect of success and that there is no need for a trial of all or part of the claim. The application for summary judgment should be dismissed. The Plaintiff’s pleading [45] The Defendant had, in late 2007, sought further and better particulars of, relevantly, part of the Plaintiff’s then pleading which asserted (in particulars to the then paragraph 18(a)) an obligation on the Defendant to inform the Plaintiff of the true position of Mr Dowdle’s indebtedness. The Defendant complained before me about the Plaintiff’s failure to provide further particulars of the facts, matters and circumstances relied on by the Plaintiff in support of the asserted existence of such 18 [2004] QCA 6 at [109] -- 13 of 14 -- 14 an obligation. By the FASOC, however, the Plaintiff amended her pleading to delete paragraph 18(a), and a cognate allegation does not seem to appear elsewhere in the amended pleading. Conclusion [46] There will be summary judgment for the Defendant in respect of that part of the Plaintiff’s claim pleaded in paragraph 13 of the FASOC. [47] Otherwise, I will hear the parties as to the orders and directions necessary to advance this matter, and in respect of costs. -- 14 of 14 --