Bells Securities Pty Ltd v Wickham Developments Ltd [2001] QCA 204

SUPREME COURT OF QUEENSLAND CITATION: Bells Securities P/L v Wickham Developments Ltd & Anor [2001] QCA 204 PARTIES: BELLS SECURITIES PROPRIETARY LIMITED ACN 077 236 170 (plaintiff/respondent) v WICKHAM DEVELOPMENTS LIMITED ARBN 010 915 027 (first defendant/appellant) ROBERT BRIAN LATHAM WICKHAM (second defendant/appellant) FILE NO/S: Appeal No 7446 of 2000 SC No 4962 of 2000 DIVISION: Court of Appeal PROCEEDING: General Civil Appeal ORIGINATING COURT: Supreme Court at Brisbane DELIVERED ON: 1 June 2001 DELIVERED AT: Brisbane HEARING DATE: 16 May 2001 JUDGES: McMurdo P, Thomas and Williams JJA Separate reasons for judgment of each member of the Court, each concurring as to the orders made ORDER: Appeal dismissed with costs CATCHWORDS: TRADE PRACTICES AND RELATED MATTERS – CONSUMER PROTECTION – MISLEADING, DECEPTIVE OR UNCONSCIONABLE CONDUCT – CHARACTER AND ATTRIBUTES OF CONTRACT – REPRESENTATIONS - AS TO FUTURE MATTERS – where respondent loaned appellant company money on the security of a registered mortgage – where appellant sought extension – statement by a then director of respondent that he would recommend rollovers provided certain conditions existed, and that the company would accept his recommendations – director ceasing to hold office - whether predictions of future conduct of the respondent – conditions not satisfied – no breach of any predictions PROCEDURE – PRACTICE UNDER RULES OF COURT – SUMMARY JUDGMENT – GENERALLY – whether the -- 1 of 6 -- 2 alleged representations were triable issues under the Trade Practices Act ss51 A, 52 and 87 (1A) Trade Practices Act 1974 (Cth), ss 51A, 52 and 87 (1A) Uniform Civil Procedure Rules 1999 (Qld), r 291 Byers v Dorotea Pty Ltd (1986) 69 ALR 715, considered Cloverdell Lumber Co Pty Ltd v Abbott [1924] 34 CLR 122, considered General Credits (Finance) Pty Ltd v Grimm [1978] Qd R 449, considered Queensland Truss and Frame Pty Ltd v Grenadier Constructions No 2 Pty Ltd [1992] 2 Qd R 428 Wallingford v Mutual Society [1880] 5 AC 685 COUNSEL: L D Bowden for the appellants M D Martin for the respondent SOLICITORS: Broadbent Radich Sampson for the appellants Bells Solicitors for the respondent [1] PRESIDENT: I agree with the reasons for judgment of Thomas JA and with the proposed order. [2] THOMAS JA: This is an appeal by the defendants against summary judgment for $4.25 million granted by Helman J on 3 August 2000. The judgment was in respect of money owed by the defendant Wickham Developments Ltd under a registered mortgage and in respect of the liability of its director, Mr Wickham, pursuant to a guarantee. [3] I do not propose to rehearse the principles upon which summary judgment applications should be determined. The relevant rules of court are now in Part 2 of Chapter 9 of the Uniform Civil Procedure Rules.1 Subject to the particular requirements of those rules, the principles developed in leading cases concerned with such applications remain relevant.2 However, I leave open the question whether there remains any onus upon a defendant to establish that there is a question in dispute that ought to be tried, as the evidence as a whole permits a clear conclusion in the present case. [4] Numerous points were raised at first instance which were said to reveal triable issues, by which I mean issues which deserve to go to trial. These included breach of contractual promise, false representations, equitable estoppel and breach of the Trade Practices Act. On appeal Mr Bowden (for the appellants) focused his argument upon alleged breach of s 52 of the Trade Practices Act with further reference to ss 51A and 87(1A) of that Act. Mr Bowden conceded that if a triable 1 Rule 291 et seq. 2 See Wallingford v Mutual Society [1880] 5 AC 685, 704; Cloverdell Lumber Co Pty Ltd v Abbott [1924] 34 CLR 122, 133; General Credits Finance Pty Ltd v Grimm [1978] Qd R 449, 463; Queensland Truss and Frame Pty Ltd v Grenadier Constructions No 2 Pty Ltd [1992] 2 Qd R 428. -- 2 of 6 -- 3 issue were not raised under that section he would have difficulty in supporting the other issues. [5] It will be necessary to present a short summary of the evidence. [6] In August 1997 the respondent loaned the appellant company $1.435 million on the security of a registered mortgage, and the other appellant Mr Wickham guaranteed that the company would perform the terms of the mortgage. Further advances of $1 million were made in September 1997, November 1997 and February 1998 bringing the total principal to $4.35 million. [7] The representation upon which the appellants seek to rely is said to have been made in May 1998 by Mr Morgan (who was then a director of the respondent) to Mr Mifsud (who was the general manager of the appellant). Prior to the meeting there existed some difference of opinion between the parties as to the adequacy of the security which secured the various loans. According to Mr Mifsud he mentioned that he was looking, as one option, at selling a motel "for investment purposes to individuals", for which a prospectus would have to be issued - a process which would probably take six months. Mr Morgan thereupon approved a rollover of the present loan for a further six months (to February 1999). The affidavit continues: "Mr Morgan inquired of me as to what would happen if the prospectus did not eventuate. I said that we would then need further roll-overs for another 3 years. Mr Morgan said 'provided that the security is there and that we were not in default, he would recommend all necessary roll-overs'. Mr Morgan was very clear with me as to effect of his recommendation. He said 'If I recommend the roll-over it will go through. If I oppose a roll-over then there is no chance of it proceeding.'" [8] A few months later (in August 1998) the loan, the principal of which was now $4.25 million, was rolled over for a further 12 months. That is to say, the principal became repayable on 28 August 1999. At some later stage during that 12 month period Mr Morgan was replaced by Mr Smith as director of the respondent company. In July 1999 negotiations took place between the parties for a further rollover. On 5 July the respondent's solicitors gave notice that in the event that the loan was not repaid on 28 August 1999 it would claim a higher rate of interest, and would serve notice of exercise of power of sale. [9] In the ensuing correspondence, the closest that the appellant company came to suggesting any prior arrangement for extension was the statement, in its solicitor's letter of 14 July, that "our client has always been advised that providing that all interest payments are made, and that it is not in default of the loan, the rollover of the facility would be a matter of formalisation only". The respondent's solicitors responded on the same day, denying any agreement that the loan facility could simply be rolled over at the end of a 12 month period. They indicated that before that could happen there would need to be a new application for finance and that various other matters were necessary including updated valuations. The appellant then applied for an extension. By letter of 20 July the respondent's solicitors agreed to grant the request on certain conditions, one of which was an up-to-date valuation as to the current market value and the forced sale value of the security property, with all conditions to be satisfied on or before 28 August 1999. On 26 July 1999 -- 3 of 6 -- 4 the appellant signed the acceptance form that accompanied the offer of extension. Delays occurred in obtaining a valuation, and none eventuated by the due date (28 August 1999). In the meantime the appellant had attempted to obtain finance from another source and had unsuccessfully sought a month's extension from the respondent. [10] On 2 September the respondent caused Notices of Default to be given to the appellant company accompanied by Notice of Exercise of Power of Sale and Demand for Possession. On 7 September the appellant forwarded a valuation report. The respondent replied by requiring default to be remedied by 4 October 1999. The appellant then wrote apologising for any inconvenience it had caused and indicated that it wished to proceed with the loan and undertook to satisfy outstanding requirements as soon as possible. It enclosed the application fee of $5000 which had been one of the conditions earlier stipulated by the respondent as a condition of granting a renewal. [11] On 30 September 1999, following a conversation in which Mr Smith had indicated that the valuation was not to the respondent's satisfaction, the appellant's solicitor wrote confirming that "in view of the information provided by your Mr Smith, our client no longer wishes to proceed with the rollover". An extension of 60 days, without penalty interest, was then requested "so as to give our client the opportunity to arrange alternate funding". [12] On the face of it the appellant elected not to proceed with that particular rollover and the parties rights are those that existed prior to July 1999 when attempts were commenced to arrange the rollover. On this basis the principal of $4.25 million was repayable on 28 August 1999. That was the view taken by Helman J and, with respect, it seems to be correct. [13] Subsequently in January 2000 an extension was offered on higher interest, but this was not accepted. Over this period the respondent continued to pay interest but made no payment of principal. Further unsuccessful attempts were made by the appellant to refinance, and in due course the respondent proceeded with the present claims against the appellants. [14] Mr Bowden (for the appellant) submitted that the statements attributed to Mr Morgan were predictions as to the future conduct of the respondent. In turn, Mr Martin (for the respondent) submitted that the statements were mere personal statements by Mr Morgan. In my view neither submission is a correct characterisation of what transpired. The statements essentially concerned Mr Morgan's role, and were premised upon the circumstance of what the appellant could expect from the company while Mr Morgan remained in that role. There was no promise or assurance that Mr Morgan would remain indefinitely in that role but certain expectations would be generated during any period while he was the manager. I do not think it could be reasonably assumed that he would remain there indefinitely, or that matters would necessarily be the same with another manager. Furthermore, the proviso "provided that the security is there", was a matter upon which some difference of opinion already existed between the parties. It left open to Mr Morgan and to the respondent the right to decline a rollover unless satisfied that there was adequate security when the rollover was requested. -- 4 of 6 -- 5 [15] Taken at its highest for the appellant company, the statement still could not be taken as an assurance of a grant of further rollovers upon request, or that they would be granted regardless of time limits for the satisfaction of the terms of the existing mortgage. In the events that happened the appellant did not provide the necessary valuation to enable assessment of the security until after expiry of the time when repayment of the principal fell due. [16] In short, the representations attributed to Mr Morgan are essentially his assurances in relation to recommendations that he would make and of the efficacy of such recommendations if proper security existed and the appellant company was not in default. Even if these statements are taken as tantamount to a promise that the company would grant a rollover if those matters were satisfied, no breach is shown on the company's part of such a promise or prediction. I do not think that on any reasonable interpretation of Mr Morgan's statements, given the preceding dealings with the parties, it could reasonably be held that a representation with respect to a future matter was made by a corporation and that the corporation did not have reasonable grounds for making it. [17] Mr Bowden sought to place reliance upon the reversal of the onus of proof on the issue of "reasonable grounds for making the representation".3 Leaving aside the question whether a representation was made with respect to a future matter so far as any act of the corporation was concerned, the evidence (as presented by both parties) reveals reasonable grounds for making the representation to the extent to which any act of the company was involved in it. [18] A further aspect should be mentioned, although I do not understand Mr Bowden to have placed any reliance upon it. To the extent to which the respondent failed to adduce evidence to support the boast of Mr Morgan that if he recommended a rollover it would go through, and if he opposed it there would be no chance of it proceeding, in the absence of further evidence it might be deemed prima facie to be a misleading statement. However, it is not possible in the circumstances of the present case that a misleading representation of that kind could lead to any damages being awarded in favour of the appellant or of any defence arising that could nullify the respondent's rights under the mortgage. It became irrelevant upon Mr Morgan's disappearance from the scene. The appellant did not suffer damage and at the time at which he asserts a remedy under s 87(1A) of the Trade Practices Act is not likely to suffer any loss or damage by reason of that aspect of the representation,4 even assuming it to be misleading. [19] It may also be noticed in passing that the appellant's conduct in his dealings with the respondent seems in the main to have been inconsistent with any belief in or any reliance upon what is now asserted, namely, a virtually unconditional promise or prediction that all necessary rollovers would be granted. Furthermore, the appellant's election not to proceed further with the rollover on 30 September 1999 also goes against the appellant's claims for relief under the Trade Practices Act, although this factor is not of itself necessarily decisive.5 3 Section 51A(2) of the Trade Practices Act. 4 Section 87(1A) of the Trade Practices Act. 5 Byers v Dorotea Pty Ltd (1986) 69 ALR 715, 730. -- 5 of 6 -- 6 [20] So far as the other issues of contract, false representations and equitable estoppel are concerned, it is enough to say that there is no reason to think that the appellant had any right, equitable or otherwise, to require a further rollover to be granted or to restrain the respondent from proceeding to exercise its rights under the mortgage. I conclude that on the evidence before Helman J no issue was raised which required the matter to go to trial and that summary judgment was correctly granted. [21] Finally, mention should be made of a further ground, raised for the first time on appeal, whereunder the appellant claimed that the respondent was precluded from exercising its rights because no notice had been given under s 96 of the Property Law Act 1974. It is enough to state that the issues which would require such a notice to be given were litigated between the parties before Holmes J on 13 October 2000, and were decided adversely to the appellant. Order [22] The appeal should be dismissed with costs. [23] WILLIAMS JA: I have had the advantage of reading the reasons for judgment prepared by Thomas JA and I agree with what he has written. The appeal should be dismissed with costs. -- 6 of 6 --