Dubois v Ong & Chew [2003] QSC 318

jjoosl &sc 3(Sr State Reporting Bureau Queensland Government Department of Justice and Attorney-General Transcript of Proceedings Copyright in this transcript is vested in the Crown. Copies thereof must not be made or sold without the written authority of the Director, State Reporting Bureau. SUPREME COURT OF QUEENSLAND CIVIL JURISDICTION CHESTERMAN J No 5191 of 2003 PHILIP JAMES DUBOIS and CHEE TEONG ONG and BEE LEE CHEW BRISBANE ..DATE 27/08/2003 JUDGMENT REVISED COPIES ISSUED State Reporting Bureau Date: 1 September, 2003 Plaintiff First Defendant Second Defendant WARNING: The publication of information or details likely to lead to the identification of persons in some proceedings is a criminal offence. This is so particularly in relation to the identification of children who are involved in criminal proceedings or proceedings for their protection under the Child Protection Act 1999, and complainants in criminal sexual offences, but is not limited to those categories. You may wish to seek legal advice before giving others access to the details of any person named in these proceedings. 1 Ith Floor, The Law Courts, George Street, Brisbane, Q. 4000 Telephone: (07) 3247 4360 Fax: (07) 3247 5532 -- 1 of 8 -- 27082003 T22/SAA18 M/T 3/2003 (Chesterman J) HIS HONOUR: The plaintiff seeks summary judgment against the < defendants in an amount which is said to be liquidated and for damages to be assessed. The plaintiff was the lessor of property at Sunnybank in Brisbane which was leased to a company owned effectively by the first and second defendants. j 0 They guaranteed the due performance of the lessee of the terms of the lease. The lease was assigned to another company. The assignee defaulted and I earlier today gave judgment against the guarantor of the assignee of the lease. The plaintiff also seeks to recover his losses from the guarantors, the first and second defendants who, as I said, gave guarantees in respect of the original lease. Four points are raised in response to the application for summary judgment. I will deal with the point first which, in my view, does give rise to a triable issue as far as the second defendant is concerned. She is the wife of the first defendant. She is a dentist by profession but claims that her execution of the lease occurred in such circumstances as to make it unconscionable for the plaintiff to proceed against her on the guarantee. She says in her affidavit that she signed the guarantee but has no recollection of doing so. She believes that her husband, the first defendant, would have asked her to sign and she would have acceded to his request. She says she did not read the documents and did not have them explained to her and received no legal advice about them. 2 JUDGMENT 60 -- 2 of 8 -- 27082003 T22/SAA18 M/T 3/2003 (Chesterman J) I am somewhat sceptical about the claims given the second defendant 1 s .profession and obvious education. Her first language is Chinese and most of her patients are, she says, Chinese or at least Asian. Be that as it may, she is eligible to practise dentistry in this State. She must keep abreast of recent developments in her profession, and no doubt they are given to her in English. She must have complied with the requirements for a specialist's registration as a dentist in Australia, and it would be surprising if she were not proficient in the English language. She does not say she is not . 1 10 20 It is also pointed out by Mr Bland, who appears for the plaintiff, that the defendants had acting for them a firm of solicitors who advised with respect to the transactions which resulted in the defendants' company taking lease of the premises and giving guarantees. It is said that the plaintiff therefore had reason to believe that the defendants, and the second defendant in particular, had reasonable basis for believing that the terms of the guarantee would have been explained to the second defendant by their solicitors, so that the requirement enunciated by the High Court in Garcia and National Australia Bank Limited [1998] 194 CLR 395 at 409 was complied with, that is that there was a competent indepe me and disinterested stranger who explained the terms of the transaction to the second defendant. Nevertheless, I am faced with the second defendant's assertion in her affidavit that she did not read the documents and they 3 JUDGMENT 60 -- 3 of 8 -- 27082003 T24/BP17 M/T 3/2003 (Chesterman J) were not explained to her. As I say, given the fact that there were solicitors acting for the defendants and it cannot be said there was a deficiency in their services, and given her obvious education and profession, I think the prospect of her making out her claim are not great but I cannot hold them to be unarguable. 10 That being the test, I will dismiss the application for judgment against the second defendant and give her leave to defend the action. As against the first defendant, the position is different. Dr Ong raises three points. The first is that the lease is invalid because it effected a subdivision of the premises subject to the lease and that the subdivision did not receive 30 the consent of the relevant local authority. That point seems to be conceded and is not in contest. The question that is in contest is whether the lack of consent makes the lease invalid. I do not think it does for the 40 reason that, as far as counsel can tell me, a consequence of breaching the provisions of the Local Government Planning and Environment Act 1990 which prohibits subdivision without consent is to expose the person who makes the subdivision liable to criminal sanction. I was not referred to any 5( section of the Act which in terms invalidated a dealing in property that occurred consequent upon a subdivision that occurred without consent. 4 JUDGMENT 8£ -- 4 of 8 -- 27082003 T24/BP17 M/T 3/2003 (Chesterman J) It seems to me that that is an important consideration and that if transactions and dealings in property were to be invalidated or held to be of no legal effect, the Act would say so expressly. I am reinforced in the view I take of this matter by the decision of the Court of Appeal in Benmar Properties Pty Ltd v. Makucha [1996] 1 Queensland Reports 578 which seems to cover this very situation; that where leases are registered, as this one was, that the relevant provision of the Local Government Act prohibiting subdivision without consent did not operate to invalidate a lease that had in fact been granted and registered. i 10 20 The next point taken by Dr Ong is that the plaintiff represented to him that, in the event that, as happened, there was an assignment of the lease to a new company, that it was 30 to that new company, the assignee of the lease, that the plaintiff would look for payment in the event it defaulted before seeking payment from Dr Ong under the terms of his guarantee. It is said that the representation gives rise to a promissory estoppel or a contravention of section 52 of the Trade Practices Act which will sound in damages or a set-off for the amount claimed against the first defendant. The representation is contained in a letter of 14 July 1999 from the plaintiff to the first defendant. It reads relevantly: "My solicitor, Annie O'Connor, has been speaking to Norm Weeks, the accountant for Dr Downs, who has advised that you have agreed, subject to my consent of course, that the lease of the premises will be assigned to a company 5 JUDGMENT 60 -- 5 of 8 -- 27082003 T24/BP17 M/T 3/2003 (Chesterman J) related to Mr Weeks and/or Dr Downs and that you are to 1 be released from all obligations under the existing lease. Chris, I would like to be of assistance to you on this occasion but all indications are that the assignee of the lease or the new lessee as the case is to be, is a two-dollar company and that the only bank guarantee may be available for a limited time. I will therefore not be able to release you but, in the event of default, would obviously call on any bank guarantee or personal guarantees of the assignee first.” 10 Dr Downs was the principal behind the company which took the assignment of the lease. I have earlier today given judgment against him on the guarantee he gave in respect of the assignment of the lease in favour of the plaintiff. It is a matter of construction whether the representation, which is in writing, has the effect contended for by the first defendant, namely that the plaintiff would exhaust all its remedies against the assignee or a guarantor of the assignee before pursuing Dr Ong on his guarantee. 30 I do not think that that construction is a possible one. It involves reading into it more than appears in its terms. What happened in fact was that the plaintiff did call first upon Dr Downs to make payment when the assignee defaulted. Dr Downs 40 did not pay; the assignee was incapable of payment. It was insolvent, I was told. Tne plaintiff has pursued Dr Downs to judgment and has obtained judgment. That action was commenced before the 50 action against the defendants in this action. That seems to me all that the plaintiff promised to do, to seek to be paid first from the guarantor of the assignee or by the assignee itself. There was nothing in the letter which obliged or 6 JUDGMENT 60 -- 6 of 8 -- indicated the plaintiff would exhaust its remedies against Dr Downs before turning to seek payment from the first defendant. It may be now that that is how Dr Ong reads the letter but that is not what it says. It follows that, in my view, there was no representation giving rise to a promissory estoppel and no statement or representation that was misleading or deceptive. The third point which was said to arise was that Dr Ong, the first defendant, is not bound by the terms of the guarantee which he admits he signed because he did not understand the effect of it. In the absence of some mental disability or lack of ordinary comprehension, I do not understand the law would permit such a defence to succeed. In any event, it is apparent from Dr Ong ' s affidavit, that he did understand that the guarantee made him liable in the event that the assignee defaulted. His understanding was that he was to obtain an indemnity from the assignee or the directors or shareholders of the assignee. That did not happen but it is clear from what the first defendant says in his affidavit that he understood that there was or would be an ongoing liability in him in respect of the term of the assigned lease which he thought he would be protected from by, as I say, a guarantee from Dr Downs. In the circumstances, I am not satisfied that the first defendant has an arguable defence to the claim against him and 27082003 T24/BP17 M/T 3/2003 (Chesterman J) 1 10 20 30 40 50 7 JUDGMENT 60 -- 7 of 8 -- 27082003 T24/BP17 M/T 3/2003 (Chesterman J) I give judgment against the first defendant for the sum of * $17,596.16 together with interest of $2256.17 being the rent and outgoings to 10 December 2002 and interest from then to now and otherwise I give judgment for damages to be assessed in respect of the period subsequent to 10 December 2002. 10 I further order that the first defendant pay the applicant's costs of and incidental to the action and this application to be assessed on the standard basis. The costs of the application against the second defendant will be costs in the cause between her and the plaintiff. I will make orders in terms of paragraphs (d) to (n) , excepting (j) of Mr Bland's draft, which I will initial. 40 50 JUDGMENT 60 -- 8 of 8 --