Berck, Berck & Urch v Whitsunday Island Developments Pty Ltd [1995] QSC 268

IN THE SUPREME COURT OF QUEENSLAND Writ No. 1638 of 1994 Brisbane Before the Hon. Justice Mackenzie [Berck & Others v. Whitsunday Island Developments Pty Ltd] BETWEEN LIONEL NEIL BERCK, MARGARET OTILLIE BERCK AND JOHN FRANCIS URCH Plaintiffs AND v. WHITSUNDAY ISLAND DEVELOPMENTS PTY LTD Defendant JUDGMENT - (MACKENZIE J.) Judgment delivered 1 /11 /1995 CATCHWORDS PRACTICE - summary judgment - whether judgment is properly based on a compromise-whether judgment open on basis that writ sought to enforce personal covenant under mortgage to pay principal due - whether defendant can establish a serious question to be tried. Counsel: L. Boccabella for plaintiffs Solicitor for defendant Solicitors: Anderson Brady for plaintiffs William Redmond for defendant Hearing date: 30 October 1995 -- 1 of 7 -- -- 2 of 7 -- IN THE SUPREME COURT OF QUEENSLAND Brisbane Writ No. 1638 of 1994 Before the Hon. Mr Justice Mackenzie BETWEEN: LIONEL NEIL BERCK, MARGARET OTILLIE BERCK AND JOHN FRANCIS URCH Plaintiffs v. AND WHITSUNDAY ISLAND DEVELOPMENTS PTY LTD Defendant JUDGMENT - MACKENZIE J. Judgment Delivered 1 November 1995 An action was commenced on the 18 October 1994 for recovery of possession of a special lease pursuant to a Registered Bill of Mortgage. A summons seeking summary judgment for $2.38 million together with interest and costs was taken out on 17 January 1995. Subsequently on 30 May 1995 a Notice of Motion seeking judgment for that sum together with interest either under the Common Law Practice Act or at the rate of 15 percent under the mortgage was sought. An amended Notice of Motion seeking to recover $2.38 million was filed on 11 July 1995. The contract provided for a series of payments on specific dates. Clause 1 of the mortgage required the mortgagee to pay the principal sum on the earlier of the date on which the mortgagee demanded payment after the occurrence of any of the events of default specified in Clause 28 or the date set out in the agreement. It is common ground that acts of default occurred and that a Notice of Demand was made. The judgment summons filed on 17 January 1995 was adjourned successively to 23 -- 3 of 7 -- 2 February 1995 when it was adjourned further to 24 May 1995 to allow the respondent time to obtain finance. Terms of settlement of 23 February 1995 required the payment of the moneys by 23 May 1995. When the respondent failed to pay by that date the summons was further adjourned and a further agreement dated 30 May 1995 was made requiring payment by 3 July 1995. It was successively adjourned to 12 July 1995 but payment was not made. On 20 July 1995 negotiations occurred and draft terms of settlement were discussed. Drafts went back and forth between the solicitors but there is no evidence in the form of a final document duly executed before me. According to the first terms of settlement document dated 23 February 1995 the application for summary judgment was to be settled on terms that certain moneys expenses and interest were paid by 23 May 1995. If default was made in payment the respondent would consent to judgment for $2.38 million together with interest and costs. The second terms of settlement document dated 30 May 1995 was expressed not to prejudice any right of the applicant's pursuant to the mortgage save that the applicants would forebear from enforcing the mortgage if certain payments were made by 3 July 1995 which date was subsequently extended. The respondent acknowledged that the applicants had not waived the breach either pursuant to this agreement or the agreement of 23 February 1995 and agreed to facilitate and not oppose judgment being entered. The respondent also abandoned any claim against the plaintiffs in respect of any alleged interference with the respondent in its attempts to seek finance prior to 30 May 1995. A Notice of Default in payment of rental to the Lands Department dated 4 July 1995 was forwarded to the respondent with forfeiture to take place on 1 August 1995 if payment was not made. The rental was eventually paid on 23 August 1995. On 3 October 1995 a further Notice of Forfeiture issued to take effect if the rent was not paid today, 1 November 1995. The rental due is -- 4 of 7 -- 3 about $140,000. There is no evidence whether the respondent intends to pay this sum which it is obliged to pay under Clause 4 of the Agreement. Mr. Boccabella was prepared to rely on two bases for the relief sought. He submitted that summary judgment under Order 18 was open on the basis that the writ sought to enforce the personal covenant under the mortgage to pay the principal due. There had been default within the meaning of Clause 28 and the whole sum had fallen due by reason of Clause 1. Alternatively, he submitted that he could get summary judgment to enforce a compromise (General Credits Limited v. Fenton (1985) 2 QdR 6.) He relied on the provision in each of the compromise agreements of 23 February 1995 and 30 May 1995 as varied as establishing consent to judgment for $2.38 million plus costs on a solicitor and own client basis and interest. He submitted that the respondent was estopped from opposing judgment for those sums. Mr. Redmond for the respondent submitted that the underlying assumption of the agreement was that the respondent would be able without continuing interference by the applicants to obtain finance to meet the plaintiffs' claims pursuant to the mortgage and generally to obtain development funds. Mr. Redmond did not put any material in evidence specifically raising this issue for the purpose of the present proceedings. He read affidavits which had been previously filed which indicate that there had been a dispute about the right of one or other of the applicants to be on the island and allegations that his continued presence there was inhibiting the process of bringing prospective financiers to the Island. The evidence is in my view very peripheral and insubstantial and to the extent that it is asserted that the principle in Walton's Stores (Interstate) Ltd v. Marr (1987-8) 76 ALR 513 is invoked, I am not satisfied that there is a serious question to be tried on this issue. It was submitted that even assuming that default was not induced by the actions of the applicants, acceleration of the obligation to pay moneys under s.28 effected a significant penalty. -- 5 of 7 -- 4 To this end an affidavit from an actuary was read for the purpose of establishing that the present value of the total of instalments to be paid as at the 23 February 1995 was some $650,000 less than the sum demanded. Associated with that was a submission that the difference in monetary values due to the operation of the acceleration clause provided an unjust enrichment to the applicants for which they were accountable to the respondent. In my view the clause upon which the acceleration is based is one whose affect is to make the total sum demanded payable. I do not accept that the actuarial evidence lays the basis for either of the suggested defences and there is no serious question to be tried in respect of them. It was also submitted that there had been a settlement negotiated in August 1995 which superseded the earlier agreements. It was submitted that the payment of rental to the Lands Department was an act of part performance. Mr. Redmond's affidavit sworn on 3 October 1995 is intriguingly indefinite as to the status of a document sent by him to the solicitor for the applicants. All that is deposed to is that on 28 July 1995 the parties agreed to adjourn the hearing of the matter to 30 August 1995 pending the entry into formal terms of settlement. He further deposes that on 18 August 1995 he prepared terms of settlement which he submitted to the applicant's solicitors for execution. He further deposes that the document has remained unexecuted. On the other side of the record there is evidence suggesting that no final agreement had been reached. On the material presently before me, and I stress that phrase, I am not satisfied that there is a triable issue that there was a concluded agreement superseding the preceding agreement. That being the case the payment of rental which is alleged to be an act of part performance cannot affect the issue. It was further submitted that there had been conduct on the part of the applicant's which led to the inability of the respondent to obtain finance. Particular reliance was placed upon Clause 14 of the agreement which provided for postponement of the applicants' security in favour of a second -- 6 of 7 -- 5 security provided that the respondent would be required to provide at the time of postponement that any moneys so secured by the second security would be raised and secured solely for the development or enhancement of the land. The underlying basis of the argument that there is a triable issue in this respect is that a document to achieve the postponement was forwarded to the applicants but not executed by them. However, it is plain from the documentation exhibited to Mr. Redmond's affidavit that the applicants' solicitors refused to execute the document because, inter alia, no information was provided to indicate to whom and for what purpose the additional funds were to be disbursed. According to the correspondence that had been the subject of prior discussion. On the material before me I am not satisfied that there is a serious question to be tried. It is plain from what has been said that in my opinion there is no serious question to be tried under any of the points raised by Mr. Redmond. Accordingly, the applicants are entitled to judgment. In my view the judgment is properly based upon the compromise. The total set out in the draft order provided to me is established as the sum payable on that basis. If I am wrong in that respect the pre-conditions for summary judgment have been established and summary judgment would have been entered in favour of the plaintiff's had I not taken the view that the compromise entitled the applicants to judgment. I order that the defendant pay the plaintiffs $2,467,654.10. I further order that the defendant pay the plaintiff's costs of and incidental to the action including reserved costs to be taxed on a solicitor and own client basis. -- 7 of 7 --